Marathon Oil Corp. on Wednesday announced an $8 billion capital, investment and exploration budget for 2008, which represents a 67 percent increase over 2007 spending of $4.8 billion.
The increase is primarily due to activity related to the Garyville, La. refinery expansion, the Athabasca Oil Sands Project (AOSP) in Alberta, Canada, and the associated Detroit refinery heavy oil upgrading and expansion project.
"Our robust 2008 program is reflective of our strong inventory of growth projects across our business segments. It also illustrates the extent to which our integrated portfolio continues to provide a broader set of investment opportunities designed to deliver strong returns for our shareholders," said Clarence P. Cazalot, Jr., Marathon president and CEO.
"Our sizeable reinvestment in the business will contribute much needed growth in U.S. refining capacity through our world-class Garyville expansion; further develop our long-life Canadian oil sands resource; capitalize on the ownership of that oil sands resource by upgrading and expanding our well- positioned Detroit refinery; and fund our significant upstream production investments, including new developments in Angola and the Gulf of Mexico, and ongoing exploration activities," Cazalot said.
Exploration and Production
Marathon's 2008 worldwide exploration and production budget of $3.2 billion reflects an increase of 23 percent over 2007 spending of $2.6 billion.
Oil Sands Mining
For 2008, Marathon has budgeted $910 million for its Oil Sands Mining segment, most of which is related to the Phase 1 Expansion of the AOSP -- a world-class project with a long-life, stable production profile. Phase 1 Expansion includes: construction of mining and extraction facilities at the Jackpine mine; expansion of treatment facilities at the existing Muskeg River mine; expansion of the Scotford upgrader; and development of associated infrastructure. Marathon holds a 20 percent interest in the AOSP.
The Company's 2007 Oil Sands Mining spending of $155 million reflects expenditures subsequent to the acquisition of Western Oil Sands Inc.
Refining, Marketing and Transportation
Refining, marketing and transportation spending is expected to total $3.5 billion in 2008, up significantly from the $1.7 billion expended in 2007. Investments in the Garyville refinery expansion and the Detroit refinery heavy oil upgrading and expansion project comprise the vast majority of this downstream budget.
The 2008 budget also includes increased investments in transportation, logistics and marketing assets to allow the Company to leverage and strengthen its position as a leading provider of transportation fuels, particularly with the growing importance of ultra-low sulfur diesel and the renewable fuels standards.
Marathon has budgeted $20 million for integrated gas capital spending during 2008 for continued FEED work for a potential liquefied natural gas (LNG) Train 2 project in Equatorial Guinea. This represents a decrease from 2007 expenditures of $83 million, which included spending associated with the construction of the Equatorial Guinea LNG Train 1 production facility, which began operations in May 2007.
During 2008, corporate spending is expected to total approximately $346 million, of which $308 million represents interest capitalized to assets under construction. The increase of $75 million from 2007 reflects the overall increase in capital spending.
Marathon is an integrated international energy company engaged in exploration and production; oil sands mining; integrated gas; and refining, marketing and transportation operations. Marathon, which is based in Houston, Texas, has principal operations in the United States, Angola, Canada, Equatorial Guinea, Gabon, Indonesia, Ireland, Libya, Norway and the United Kingdom. Marathon is the fourth-largest United States-based integrated oil company and the nation's fifth-largest refiner.