Marathon Gets Go-Ahead for Equatorial Guinea LPG Expansion

Marathon Oil reports that the Government of Equatorial Guinea has approved the company's Alba field phase 2B expansion project. This expansion will increase gross liquefied petroleum gas (LPG) production from approximately 2,700 barrels per day (bpd) to more than 16,000 bpd (8,000 bpd net to Marathon) and also increase gross condensate production by 8,000 bpd. Marathon expects to complete the phase 2B expansion by October 2004.

The phase 2B project includes an expansion of the existing LPG plant by increasing processing capacity, storage, and offloading facilities, as well as the installation of a fractionation unit allowing for the production of propane and butane. This expansion will complement Marathon's phase 2A expansion project announced in September of this year, which will increase gross condensate production from 17,000 to 46,000 bpd. Gross condensate capacity following the completion of phase 2B will be approximately 54,000 bpd (30,000 bpd net to Marathon).

"The approval of Phase 2B marks a continuation of our robust strategy to commercialize Marathon's significant gas resources in Equatorial Guinea and to generate superior value growth from this core area of our operations," said Steve Hinchman, Marathon senior vice president of Worldwide Production. Upon approval of both the phase 2A and 2B expansion projects, Marathon's net proven reserves in Equatorial Guinea will total approximately 300 million barrels of oil equivalent (boe). The full-cycle finding and development cost of these reserves is estimated at $4.60 per boe.

The current Alba production facilities include two offshore platforms, an onshore condensate stabilization plant, and an existing LPG processing plant. Marathon holds a 63.3-percent interest in the Alba field and related condensate production facilities, as well as a 52.2-percent interest in the Bioko Island LPG plant. In addition, Marathon holds a 45-percent interest in the Atlantic Methanol Company methanol plant that processes approximately 120 million cubic feet of lean Alba field gas per day into 2,500 tons per day of methanol.

Other equity holders are Noble Energy, Inc. with a 33.7-percent interest in the Alba field and related condensate production facilities, a 27.8-percent interest in the Bioko Island LPG plant, and a 45-percent interest in the Atlantic Methanol Company methanol plant. GEPetrol, the state owned oil company of Equatorial Guinea owns the remaining equity interests in the Alba field. The Equatorial Guinea state-owned company, Guinea Ecuatorial Oil and Gas Marketing (GEOGAM) owns a 20-percent interest in the LPG Plant and a 10-percent interest in the Atlantic Methanol Company methanol plant.

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