PUC approves Trainer refinery pipelines transfer, easing sale to Delta Air Lines

The Pennsylvania Public Utility Commission on Thursday approved the transfer of pipelines connected with the ConocoPhillips refinery in Trainer, removing an obstacle to the refinery's sale to Delta Air Lines Inc.

FILE - This Thursday, April 19, 2012 file photo shows the ConocoPhillips refinery in Trainer, Pa., near Philadelphia. Delta Air Lines Inc. Monday, April 30, 2012 said it will buy the refinery as part of an unprecedented deal that it hopes will cut its jet fuel bill. Delta is buying the Trainer, Pa. refinery from Phillips 66, a refining company being spun off from ConocoPhillips. Delta says a subsidiary will pay $150 million, including $30 million in job-creation assistance it is getting from the state of Pennsylvania. (AP Photo/Alex Brandon)Read moreAP

by By Andrew Maykuth<br/>INQUIRER STAFF WRITER<br/>

Published Jun. 21, 2012, 6:44 p.m. ET

The PUC approved the late-hour request on a fast track after the companies involved in the sale realized that some pipelines came under the jurisdiction of the utility commission, and that regulatory approval was required. The application was filed on May 25.

Commission chairman Robert F. Powelson extolled the PUC's contribution to efforts to assist in the Delaware County refinery's sale, which is being supported with $30 million in grants from the Corbett administration. Powelson called the commission's role "an excellent example of how government can aid in economic development while still protecting the public interest."

The $180 million sale, announced in April, is expected to close this month, according to the application with the PUC.

The refinery, which will operate under the name Monroe Energy L.L.C., is scheduled to restart operations in September, after Delta spends about $100 million to upgrade it to optimize jet-fuel production. The plant halted operations in September 2011.

Delta spokesman Eric Torbenson declined to comment until the transaction closes.

The logistics network was a critical attraction to Delta, which wants to produce its own fuel to cut the cost of its biggest expense. The Trainer refinery is tied into the Harbor Pipeline, which runs 80 miles in New Jersey, from Woodbury to Linden, and is a major route for fuel produced in the Philadelphia area to reach New York markets. Delta operates hubs at New York's LaGuardia and JFK Airports.

The pipeline network also ties into oil terminals in Chelsea (Upper Chichester Township), Woodbury, and on G Street in Philadelphia's Juniata Park neighborhood. Those terminals are convenient places for buyers of the refinery's gasoline, diesel, and heating oil to collect the fuel.

Though ConocoPhillips' intrastate pipelines in Pennsylvania carried mostly crude oil and fuel produced by the refinery, they are public utilities available for use by other companies, so their rates are regulated by the PUC. The rate structure is unaffected by the sale.