Delta back-pedals on Trainer rail investments

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Delta Air Lines has backed off its goal of opening rail offloading infrastructure at its Trainer oil refinery by the end of the year, even as it works to increase the amount of Bakken crude oil it processes from North Dakota.

"We haven't made any decisions on long-term investments," says Paul Jacobson, chief financial officer of Atlanta-based Delta, during an earnings call today.

This differs from his comments in December, when he said: "We fully expect to invest in offloading capabilities to be able to accept crude by rail by the end of 2013."

Delta did not respond to questions on the status of the offloading facilities by press time.

Rail offloading facilities would speed and likely reduce the cost of shipping Bakken crude to the facility. Oil from the formation must travel by rail and then be offloaded onto either barges or trucks to complete the journey to Trainer currently.

Trainer is receiving about 10% of its crude oil from North Dakota, says Jacobson. The first shipments arrived at the Pennsylvania refinery in February.

He says that Delta hopes to source 75,000 to 100,000 barrels per day of crude from the Bakken in the future.

Trainer has a capacity of 185,000 barrels per day, which means more than half of its feedstock could eventually come from Bakken crude.

The refinery lost $22 million in the first quarter, missing management expectations that it would break even. Jacobson says that the facility had recovered from the supply and gasoline production disruptions that occurred following superstorm Sandy in October 2012.

Delta anticipates a "modest profit" from Trainer during the second quarter, he adds.

"Yes, we're glad we bought an oil refinery," says Richard Anderson, chief executive of Delta, responding to reporters' questions on the performance of Trainer during the call.