United Airlines biofuel deal to supply Los Angeles hub

Source: Reuters • Posted: Wednesday, June 5, 2013

(Reuters) – United Airlines (UAL.N) announced a deal with low-carbon, fuel maker AltAir Fuels on Tuesday to buy biofuels for flights from its Los Angeles International Airport hub produced by a local refinery.

Privately held AltAir Fuels will produce the fuel from a retrofit portion of an “existing refiner,” but declined to specify which plant.

“The company is not disclosing at this time which refinery,” John Williams, spokesperson for Seattle-based AltAir, told Reuters. “The agreement (with United) is for fuel purchase only.”

AltAir will produce “low-carbon, renewable jet fuel and other renewable products” at the refinery, the release said.

The biofuels are drop-in replacements for petroleum-based fuel, requiring no modification to factory-standard engines or aircraft, the companies said.

United has agreed to buy 15 million gallons of the fuel at a rate of five million gallons per year over a three-year period starting in 2014, with the option to purchase more.

United said it is purchasing the biofuel at “a price competitive with traditional, petroleum-based jet fuel.”

The Los Angeles-area facility will be AltAir’s first fuel production project. A previously planned project to produce fuel beginning in 2012 at Tesoro Corp’s (TSO.N) refinery in Anacortes, Washington, was canceled after an explosion at the refinery, Williams said. More projects are planned in addition to the Los Angeles-area facility, he added.