This excerpt taken from the MRO 8-K filed Jan 27, 2005.
Advanced Integrated Gas Strategy
Marathon continued to progress the companys integrated gas strategy throughout the year. This strategy is designed to complement Marathons exploration and production operations focusing on accessing low cost stranded natural gas resources and adding value by applying technology and commercial skills to connect those resources to the major consuming markets.
In June 2004, Marathon, the Government of Equatorial Guinea and Compania Nacional de Petroleos de Guinea Ecuatorial (GEPetrol), the National Oil Company of Equatorial Guinea, announced that the parties had reached a final investment decision for the Equatorial Guinea LNG project. Construction is on schedule for shipment of first cargoes of LNG in late 2007. This project is expected to be one of the lowest cost LNG operations in the Atlantic basin with an all-in LNG operating, capital and feedstock cost of approximately $1 per million British thermal units (mmbtu) at the loading flange of the LNG plant. Efforts are underway to acquire additional gas supply and expand the utilization of this LNG facility above and beyond the contract to supply 3.4 million metric tons per year to BG Gas Marketing Ltd. for 17 years. Marathon also is seeking additional natural gas supplies in the area that could lead to the development of a second LNG train.
During the fourth quarter, Marathon signed an agreement with BP Energy Company under which BP will supply Marathon with 58 billion cubic feet (bcf) of natural gas per year, as LNG, for a minimum period of five years beginning in the second half of 2005. Marathon will take delivery at the Elba Island, Georgia, LNG regasification terminal where the company holds rights to deliver and sell up to 58 bcf of natural gas per year. Pricing of the LNG will be linked to the Henry Hub Index.
During 2004, Marathon secured six cargoes of LNG utilizing its Elba Island delivery rights. The company is continuing to actively seek additional cargoes prior to the start of deliveries under the BP supply agreement.
In addition, Marathon and Syntroleum Corporation successfully completed the construction and operation of a GTL demonstration plant at the Port of Catoosa, Oklahoma. This GTL project was part of an ultra-clean fuels production and demonstration project sponsored by the U.S. Department of Energys (DOE) National Energy Technology Laboratory. The Catoosa plant, which mirrored a commercial scale plant, successfully demonstrated a fully integrated GTL technology that converted natural gas into a finished fuel, producing more than 5,500 barrels of synthetic products, including ultra-clean diesel fuel, which was delivered to Integrated Concepts Research Corporation (ICRC), a project partner, for fleet vehicle testing in Washington, DC, and Denali National Park, Alaska. The successful Catoosa GTL plant supports Marathons ongoing efforts
to explore the potential of GTL technology, and demonstrated how such technology could be incorporated into the design of a commercial GTL facility such as Marathons proposed gas processing project in Qatar.