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Liquefied Natural Gas

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Liquefied Natural Gas

Marathon is a pioneer in liquefied natural gas (LNG) production and has a major stake in one of the longest, continuously running LNG plants in the world — the first to be built in the United States. The Company has established an Atlantic Basin LNG business that encompasses both ends of the LNG process - the liquefaction, or source side, and the regasification, or marketing side. This builds upon a long running Alaska LNG business where Marathon, along with its partner ConocoPhillips, has owned an LNG liquefaction plant and associated shipping for more than 35 years.

Equatorial Guinea

Operations in Equatorial Guinea are a key component of Marathon’s integrated gas strategy. LNG from this West African country promises to play an increasingly important role in meeting the growing energy needs of the Atlantic Basin.

Marathon and its partners completed construction of an LNG facility located on Bioko Island in the second quarter of 2007. Train 1 encompasses a 3.7 million metric tonnes per annum (mmtpa) liquefaction plant that is aligned with, and integrated into, Marathon's Equatorial Guinea gas processing operations on Bioko Island. Natural gas is purchased from the Alba Field participants (Marathon, Noble Energy, Inc. and a government-owned entity) under a long-term gas supply agreement. Approximately 3 trillion gross cubic feet of dry gas from the Alba Field will be processed through the LNG facility under a 17-year contract with BG Gas Marketing Ltd. Marathon holds a 60 percent interest in the LNG project.

Elba Island

Marathon has delivery rights for up to 58 billion cubic feet (bcf) of LNG per year into the Elba Island, Georgia, LNG regasification terminal through the year 2021, with a possible extension to 2023. To further capitalize on growing U.S. demand, Marathon signed an LNG supply agreement with BP Energy Company. Under the terms of the agreement, BP is supplying Marathon with 58 bcf of natural gas per year, as LNG, for a minimum of five years through 2010. The agreement allows Marathon to fully utilize the Company’s rights at Elba Island over the next five years, while retaining the long-term flexibility to commercialize other gas resources beyond 2010.

Alaska

Marathon has a 30 percent ownership in a natural gas liquefaction plant and two tankers used to transport LNG to customers in Japan. Located in Kenai, Alaska, these operations are a model for safe, efficient and reliable operation. Feedstock for the plant is supplied from a portion of Marathon’s natural gas production in the Cook Inlet.

From the first production in 1969, the LNG has been sold under a long-term contract with two of Japan’s largest utility companies. This contract has been extended to continue through March 31, 2009.

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