Marathon Oil. Corp.’s annual oil and natural gas production is on track to grow about 7% through 2012, and in that period the Houston-based producer’s proved reserves will increase by 15%, company officials said last week.

During an investor conference in New York City, CEO Clarence Cazalot reiterated an earlier production forecast and said Marathon’s output this year will hit 380,000-420,000 boe. However, Dave Roberts, who runs Marathon’s upstream division, said the forecast “was not withstanding any issues at Neptune,” referring to the deepwater platform in the Gulf of Mexico in which the company holds a 30% stake. The platform is operated by BHP Billiton, but ramp-up was delayed to repair “structural anomalies” (see related story).

Besides Neptune’s planned start-up, first production from two other major development projects is targeted for 2008 in Norway. Another two projects are scheduled to be sanctioned this year: the Droshky development project in the GOM, with first production targeted for the 2010-2011 timeframe; and the Angola Block 31 Northeast development, with first production targeted for 2012. Marathon holds a 100% stake in Droshky, which is estimated to hold recoverable resources of 80-90 million boe (see NGI, Aug. 6, 2007).

“We have in hand today the assets and plans through our integrated business model to fulfill our mission of providing shareholders with long-term sustainable value growth,” said Cazalot.

Marathon’s future success, he said, will be driven by several factors, which include:

Marathon’s resource base at the end of 2001 totaled 2.1 billion boe, but at year-end 2007, the company had “more than tripled this…to include liquid hydrocarbons, natural gas and bitumen,” said Cazalot. “Resource growth drives future reserve additions, and we intend to further increase our resource base and convert barrels into proved reserves and production.” A “major contributor,” he said, will be Marathon’s oilsands mining business in Canada, as well as downstream investments.

“Across all of our business segments, we will access and deploy critical technologies to differentiate Marathon from our competition,” said the CEO. “We will strive to attain top-quartile execution on major projects and employ operational excellence to ensure safe, environmentally responsible and highly reliable operations. Further enhancing our ability to execute our plans, we have contracts in place for most of our major projects and we have and will continue to increase technical human resources in order to meet future needs.”

About $18.5 billion will be invested in the upstream business between now and 2012, and new exploration is expected to lead to an average annual reserve replacement of more than 150%. Between eight and 13 “significant” exploration wells are slated to be drilled every year over the next four years, “with average annual resource additions of 150 million boe at a finding cost of less than $3/boe.”

Technology also is considered a “critical element” to create value for the company, Cazalot noted. The company’s three-pronged technology strategy is to deliver technology solutions to maximize the value of existing assets, create technology differentiation in key areas considered important for access to new resources, and monitor and “selectively invest” in emerging technologies that include: renewable/alternative fuels, energy efficiency, and carbon capture and storage.

Marathon’s proprietary gas-to-fuels technology is part of an attempt to convert natural gas directly into clean transportation fuels such as high-octane gasoline and diesel, and it could potentially be used to monetize stranded natural gas resources around the world, Cazalot noted. The company has proven the technology in the laboratory, and a 10 b/d demonstration plant now is being constructed in Texas. A decision on whether to commercialize the technology is expected sometime this year, he said.

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