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Houston-Based Marathon Oil to Spend $2.2 Billion Expanding Its Ashland Refinery

Posted on: Monday, 13 March 2006, 03:04 CST

By Esker, Fritz

Houston-based Marathon Oil Corp. expects to spend $2.2 billion expanding its Ashland refinery in Garyville.The project, first announced Oct. 25, is in the initial design and engineering phase. Once plans are complete, Marathon will decide if it is economically and politically feasible, said Linda Casey, spokeswoman for Marathon Oil Corp. There is no doubt the United States needs more refining capacity. The Department of Energy petroleum inventories report for the week ending Feb. 24 shows a 2.6-million barrel decline in total product inventories as lower imports and production more than offset a demand decline.

No date has been set for concluding the initial design phase. Construction could begin in early 2007 with a possible completion date of fall 2009.

A need to increase capacity is driving the proposed expansion. The Garyville refinery can process 245,000 barrels of crude oil per day. The expansion would increase refinery capacity by 180,000 barrels per day, bringing it up to a 425,000 barrels. We're essentially building a new refinery right next door (to the original one), Casey said. Marathon is already the fifth-largest U.S. refiner with 948,000 barrels per day of crude processing capacity in its seven-refinery system.

The original Garyville refinery, built in 1976, will not stop operating during the expansion. Right now, the U.S. demand for fuel and other petroleum products is far greater than the supply and we're trying to help meet that demand, Casey said.The expansion will be important to Louisiana's post-Katrina economy and will bring many new jobs to the area, said Michael Olivier, Louisiana Economic Development secretary. The importance of Louisiana in the energy equation for the nation is underscored by Marathon's $2-billion- plus capital investment, Olivier said. It continues our prominence as an important player in the volume of fuel produced. Louisiana provides 25 percent of the U.S. fuel supply, Olivier said.

Before Katrina, Marathon was considering project options in other states. After the devastation caused by Katrina, Marathon chose to stick with Louisiana. Olivier said the decision emphasizes how Louisiana is a strategic location with many miles of network and pipelines and multiple transportation systems that gets crude oil to the refinery and the finished product to the nation.

At Marathon, Casey said the relationship between Marathon and Garyville has always been harmonious. We've always found the Garyville area to be a really good neighbor, she said. Casey also cites the region's employees as a reason for expanding. We think if this expansion goes through, it will be a great benefit to the area, she said.Anticipated project expenses for the refinery include installation of a new crude distillation unit, hyrdrocracker, reformer, kerosene hydrotreater, delayed coker and additional sulfur recovery capacity.

Marathon is the fourth-largest U.S.-based international energy company engaged in exploration and production, integrated gas and refining, marketing and transportation operations. It has principal exploration and production activities in the United States, United Kingdom, Angola, Canada, Equatorial Guinea, Gabon, Ireland, Norway and Russia.

Marathon also is developing integrated gas projects linking stranded natural gas resources with key demand areas where domestic production is declining and demand is growing - particularly in North America.

Marathon's retail marketing system comprises approximately 5,500 locations in 17 states; nearly three-quarters are Marathon brand locations. Marathon serves the Midwest and Southeast as a petroleum products marketer with 85 light product and asphalt terminals and access to approximately 7,700 miles of pipeline.

(Copyright 2006 Dolan Media Newswires)

Source: New Orleans CityBusiness

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