"The actions we announced today underscore our confidence in Marathon's strategically advantaged position for the development and processing of Canadian oil sands production," said Clarence P. Cazalot, Jr., Marathon president and CEO. "We have been engaged in discussions with key players in the Canadian oil sands sector for some time, and we now believe the best way to achieve a full recognition of the value of Marathon's downstream offering to Canada's bitumen producers is to engage in a robust and disciplined RFP process that will include a number of potential partners. We continue to believe an integrated project involving our top tier downstream operations with an upstream Canadian oil sands operator is the highest value outcome for Marathon and its potential partners."
Canadian Oil Sands RFP
The Canadian oil sands RFP process is intended to explore various commercial arrangements under which Marathon would provide heavy Canadian oil sands crude oil processing capacity in exchange for an equity interest in a Canadian oil sands project through a joint venture, or other alternative business arrangements that potential partners may choose to propose. TD Securities Inc. will provide advisory services to Marathon for the RFP process.
Detroit Refinery FEED
The Detroit refinery heavy oil upgrading FEED work will include engineering for a new delayed coker, a sulfur recovery complex and hydrogen plant. Additional revamp modifications to the existing crude vacuum distillation unit and hydrotreating facilities may also be required. A new delayed coker would allow the Detroit refinery to process 100,000 bpd of heavy Canadian crude.
This project could significantly reduce Marathon's crude oil supply costs to the Detroit refinery by enhancing the Company's ability to process additional heavy crude oil from Canada, a reliable source of crude oil which holds the second largest crude oil reserves in the world. The Detroit FEED work is expected to be completed by late 2007. The final investment decision concerning this project is subject to completion of the FEED, approval of Marathon's board of directors and the receipt of applicable permits. The value of the Detroit refinery FEED contract was not disclosed.
Catlettsburg Refinery Feasibility Study
Marathon also is advancing a feasibility study involving its Catlettsburg refinery to install heavy oil upgrading facilities. The proposed modifications would allow the refinery to process up to 180,000 bpd of heavy Canadian crude oil. The Catlettsburg feasibility study is expected to be completed by late 2007. After conclusion of the feasibility study, a decision will be made whether to move the project to the FEED stage.
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