Delta Air Lines is looking for a partner to run its Monroe Energy refinery in Trainer, the airline's adventurous six-year-old experiment in producing aviation fuel.
Delta announced Tuesday night that it has hired Barclays Bank and Jeffries LLC to seek out potential joint-venture partners for the Delaware County refinery. Delta bought the refinery in 2012 from ConocoPhillips for $150 million to create an in-house supply of jet fuel for its fleet.
Delta said it expects to retain an ownership stake in the Trainer plant to ensure it maintains current levels of jet fuel production, while a strategic partner would focus on gasoline, diesel fuel and other refinery products. The refinery employs about 480.
"After several years of ownership it is natural for Delta to seek other opportunities that might exist to optimize the benefits to Delta and maximize the value of other aspects of the refinery for a potential joint venture partner," Paul Jacobson, the airline's chief financial officer, said in a statement.
Delta's move to get one foot out of Trainer is the latest shift in the region's beleaguered refining sector, which experienced the closure of refineries in Westville, N.J., in 2009 and in Marcus Hook in 2011, as well as the recent bankruptcy of Philadelphia Energy Solutions.
Delta rescued the Trainer refinery from potential closure in 2012, at a time when oil prices were high and the airline was spending $12 billion a year on fuel.
Delta says the refinery generates $300 million in "annual value" for the airline, but some analysts have criticized the investment in the mercurial and capital-intensive refining sector, saying that the airline could achieve better results by simply hedging its fuel supplies.
Philadelphia area refiners, many of which are configured to process costlier sweet crude oil, have struggled to compete with Midwestern refiners or overseas producers that have access to cheaper raw material.
The Delaware River refiners experienced a respite from 2012-2014, when they attracted heavily discounted North Dakota crude oil by rail. But they lost that advantage in 2015 with the decline in crude oil prices, and the Obama administration's lifting of the crude-oil export ban, which increased demand for American crude oil. Philadelphia refiners turned, once again, primarily to importing petroleum supplies by ship from Africa.
Delta hired a consultant in early 2017 to assess the impact on its jet fuel expenses if the carrier sells or closes the refinery, Reuters reported.
The airline said it expects the investment banks to finish the current evaluation by the end of the year, and said "the process may end without any change to the ownership or operating structure of the refinery."