Monroe Energy, a wholly owned subsidiary of Delta Air Lines, took over and retooled the former ConocoPhillips refinery in Trainer, Pennsylvania in June of 2012. We spoke with CEO Jeffrey Warmann about Monroe and the region’s energy industry. Warmann comes to the Philadelphia area with 30 years of oil refinery experience.
Delta has the largest non-military jet fuel demand in the world, requiring 300,000 barrels per day. By refining its own fuel and by implementing a highly successful hedging program, Delta’s Fuel Team has lowered fuel costs from $13 billion to $12 billion in just one year. Delta aims to have the lowest jet fuel cost of any carrier.
What makes the Philadelphia area appealing to Monroe?
Delta started investigating how it could get a better handle on one of its largest cost components. At the time, jet fuel was 40 percent of the cost of flying a plane. Delta has a lot of assets invested in nearby airports, including JFK, LaGuardia, and Logan. Delta viewed the shutdown of the Trainer refinery and others in the region as an opportunity to find a creative and innovative solution to the rising costs of jet fuel. This asset was in a strategic location that was advantageous to Delta. We were impressed with the capability of the area workforce as well as the willingness of local, county, state and federal officials to help facilitate our transaction. The Governor, his cabinet and staff and the Governor’s Action Team introduced us to a number of people and helped us understand Pennsylvania’s processes for licensing and transfer of assets. Our Congressman, Pat Meehan and State Senator Dominic Pileggi were also instrumental in helping us to close the deal in an expeditious manner. They were supportive every step of the way.
How did the Greater Philadelphia Chamber of Commerce and its affiliate, Select Greater Philadelphia, help Monroe Energy?
GPCC facilitated introductions at all levels, from helping us meet leaders at PECO and Delcora, to connecting us with housing and real estate agents.
How many people work at Monroe Energy?
We employ approximately 435 people full time, and depending upon the types of projects, we could have another 130 to 160 contractors on-site. The Pennsylvania Department of Labor uses a multiplier of 18 for direct, indirect, and induced jobs. In other words, you take the number of employees and multiply by 18 to understand the effect our facility has on jobs in the area. This would indicate that Monroe Energy helps support over 7,500 job opportunities in the region. From material suppliers to restaurants, even cab drivers tell me they get a lot more business.
What’s going on in the region’s energy industry now and in the near future?
We need to maintain a critical mass of refining operations in the area. We are a refining community competing with the Gulf Coast, China and India. It’s important that Philadelphia Energy Solutions, PBF Energy, and Phillips 66 all play important roles in maintaining that critical mass. These refineries provide base feedstocks for specialty chemical companies such as Braskem.
Tell us about the formation of the CEO Council for Growth Energy Action Team.
We have a chance to capitalize on the natural gas resources in Pennsylvania. I talked about the critical mass of refining and processing; the issue we are trying to work through on the Energy Action Team is producing raw product and then transporting it to centers where it can be converted into many specialty products. Once you are able to transport the raw resources to these centers, the opportunities to convert them to a more usable form are phenomenal. This could include specialty, electricity, and heating. Someone will capitalize on it, and it should be the people of Pennsylvania.
Can you comment on the work of Select Greater Philadelphia?
Select is a focused, targeted group designed to attract facilities and headquarters to this area. You have to target people. Studies have proven that it is ineffective to just go out and mass market. You define those targets and businesses best suited to the area and then go market the advantage of locating a business in Greater Philadelphia to that select group.
To learn more about our region’s growing energy sector, attend our event on February 28, 2014: Energizing our Region: How Companies are Using and Benefiting from Natural Gas