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Shell (SHEL) and JetBlue Join Forces for Sustainable Fuel

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Shell plc (SHEL - Free Report) , one of the world's leading oil and gas companies, and JetBlue Airways Corporation (JBLU - Free Report) , a low-cost U.S. airline, have recently signed an agreement for the purchase of sustainable aviation fuel (SAF). Under this deal, JetBlue will purchase an estimated 33 million gallons of SAF annually for at least 10 years. This represents an approximate 10% of its yearly fuel consumption at the John F. Kennedy International Airport.

Sustainable aviation fuel, or SAF, is a type of gasoline made from sustainable feedstocks, including waste cooking oil, agricultural residues, forestry waste and municipal solid waste. It can reduce greenhouse gas emissions by up to 80% compared to traditional jet fuel.

The collaboration is aimed at reducing the aviation industry's environmental impact by replacing traditional fossil fuels with SAF. JetBlue’s share of SAF will be produced by Shell Aviation's partner, World Energy, at its biorefinery in Paramount, CA.

As part of the contract, Shell Aviation will provide logistical support to JetBlue to ensure a reliable supply of SAF.  The companies will also collaborate to identify opportunities to further reduce carbon footprint and explore other low-carbon technologies.

This partnership is in line with JetBlue's sustainability targets, which include becoming carbon neutral on all domestic flights by 2022 and reducing net emissions by 50% within 2030. JetBlue has also committed to purchasing more than 2.6 billion gallons of SAF over the next 10 years, which is approximately 10% of its annual fuel consumption. The advanced aviation fuel will also provide JetBlue with improved operating efficiency.

The collaboration is a significant step toward reducing JetBlue’s environmental impact, and providing a safe and reliable travel experience for its customers.

Shell has a target of producing 2 million tons of SAF per year by 2025, as part of its commitment to supporting the industry's transition to a sustainable future. The agreement with JetBlue is a key component of this strategy.

Shell is a multinational energy and petrochemical company, headquartered in London. It engages in the exploration, extraction, marketing and transportation of crude oil, natural gas and natural gas liquids. The company also produces gas-to-liquid fuels and other products.

Zacks Rank and Key Picks

Currently, Shell carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like NGL Energy Partners (NGL - Free Report) ), sporting a Zacks Rank #1 (Strong Buy), and Energy Transfer (ET - Free Report) , holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NGL Energy Partners: The company is worth approximately $451.75 million. Its shares have increased 48.8% in the past year.

NGL is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.

Energy Transfer LP: The company is valued at around $38.99 billion. It delivered an average earnings surprise of 11.43% for the last four quarters and its current dividend yield is 9.48%.

ET currently has a forward P/E ratio of 9.17. In comparison, its industry has an average forward P/E of 9.40, which means the company is trading at a discount to the group.

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