A Philadelphia energy company has signed a 10-year agreement to produce a mixture of biofuel and jet fuel for JetBlue Airways Corp., a deal aimed at reducing the airline’s dependence on fossil fuels.
The airline announced Monday the contract with bioenergy company S.G. Preston, in which JetBlue will purchase more than 33 million gallons of blended fuel a year. It is among the largest such agreements in the U.S. aviation industry, the New York-based carrier said.
R. Delbert LeTang, founder and chief executive of S.G. Preston, said his company expects to announce at least three more contracts to provide biofuel blends to airlines by the end of the year. Those contracts will provide the demand for a planned $500 million refinery in Ohio that will produce 120 million gallons of fuel a year from oil-rich seeds, he added.
“This sets a path and a foundation forward,” said Mr. LeTang, 43, who grew up in Philadelphia, graduated with a finance degree from Temple University and worked as a senior managing director for Wellbridge Capital before creating the energy company in 2012.
JetBlue said it sought out S.G. Preston as part of an effort to shift more of its fuel portfolio to sustainable sources.
“We need to be proactive to help bring this fuel to market,” said Sophia Mendelsohn, the head of sustainability for JetBlue.
JetBlue projects that fuel from plant oils will cut greenhouse-gas emissions at least 50 percent per gallon, when the full life cycle of the fuel is taken into account. Though there are currently no federal biofuel mandates for air carriers, United Continental Holdings Inc. and Southwest Airlines Co. have made similar arrangements to embrace renewable energy.
The new fuel will be a mix of 30 percent biofuel and 70 percent jet fuel. S.G. Preston is building a refinery to produce the biofuel in South Point, Ohio.
JetBlue says it will begin using it in the first quarter of 2019.
The 33 million gallons JetBlue has contracted to purchase equals about 20 percent of the airline’s annual fuel use at New York’s John F. Kennedy International Airport and 4.7 percent of its total yearly fuel consumption.
The airline and Mr. LeTang said the biofuel will be produced from non-edible oilseeds that do not compete with land used for food production. Mr. LeTang would not identify the potential seed sources, but he said they are among plants that produce oils known as HEFA, or hydroprocessed esters and fatty acids. Some are produced as cover crops between seasons.
“We’re able to offer our clients fuel at a very competitive price, if not near parity, to conventional fuels,” he said.
Mr. LeTang, a native of the Commonwealth of Dominica in the Caribbean who moved to Philadelphia in 1978, said he named the company S.G. Preston after the first names of his three sons.
The company has supplied wood pellets to biomass-energy producers. It was also involved in a venture in Logansport, Ind., last year to buy the city’s coal-fired power plant and convert it to natural gas and biomass fuels, but the deal collapsed after voters swept out the city administration.
“Sometimes that happens,” Mr. LeTang said. “That’s just business.”
In 2014, Mr. LeTang initially announced plans to build the Ohio biofuel plant using licensed technology. The plant, now two years behind its original schedule, would produce a combination of jet fuel and diesel from biofuels.
The Appalachian town, which has rail and Ohio River access for shipping products and receiving raw materials, was receptive to industry, Mr. LeTang said.
“We weren’t dealing with any NIMBY issues because the town and the residents were accustomed to heavy manufacturing,” he said.