Delta Airlines enters Bakken crude-by-rail business

Repost from Business News

Delta sources Bakken crude for Pennsylvania refinery

Deal accounts for one third of refinery’s capacity.
By Daniel J. Graeber   |   July 21, 2014

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ATLANTA, July 21 (UPI) —A subsidiary of Delta Air Lines said Monday it signed a five-year deal to send 65,000 barrels of Bakken crude oil per day to its refinery in Trainer, Pa.

Delta subsidiary Monroe Energy signed the deal with midstream energy company Bridger LLC to supply about 30 percent of the crude oil refined daily at the Trainer facility. The crude oil would be sourced primarily from the Bakken reserve area in North Dakota, which the company says is cheaper than oil imported from overseas markets.

“Supplying a third of the crude refined at Trainer from the Bakken further reduces the overall cost of fuel for Delta,” Graeme Burnett, a senior vice president for fuel optimization for Delta and chairman of Monroe, said in a statement.

Bridger is a midstream company that recently invested $200 million on railcars, which are said to exceed current safety standards for crude oil transportation.

There’s not enough pipeline capacity in the United States to handle the glut of oil, forcing some companies to rely on rail as an alternative transit method.

A federal warning in early 2014 said Bakken crude oil may be more prone to explosion than other grades if involved in a derailment. The 2013 derailment of a train carrying Bakken oil in Lac-Megantic, Quebec, left more than 40 people dead.

Increased crude oil production has sparked calls for U.S. exports, though Burnett told U.S. lawmakers more exports of U.S. crude would mean more imports for some markets, which would lead to higher global oil prices.