Athabasca Oil Sands Project (AOSP)

The AOSP is a joint venture between Marathon Oil (20 percent), Shell Canada (60 percent) and Chevron Canada (20 percent). Shell is the operator. The AOSP's base project encompasses the Muskeg River Mine and the Scotford Upgrader. At full production, the mine's current gross
production is 155,000 barrels per day (bpd) of bitumen, a naturally occurring thick oil comprised mainly of hydrocarbons.

There are several steps in the oil sands mining process. Using some of the largest trucks and shovels in the world, ore is extracted from the oil sands and then crushed into smaller pieces. Warm water is added to the ore, which allows the bitumen to be separated from the sand and clay particulates. The bitumen is then processed by a froth treatment facility where it is diluted with a special solvent. Diluted bitumen is transported through a 300-mile pipeline to the Scotford Upgrader, located in Fort Saskatchewan, Alberta. Scotford's upgrading process adds hydrogen to the bitumen, breaking up the large hydrocarbon molecules through a process called hydrogen-addition or hydrogen-conversion. This process upgrades the bitumen into a range of high-quality, synthetic crude oils that are sold into the market for further processing at refineries.

Expansions

A series of expansions is anticipated for the AOSP. Expansion 1 is currently under construction and will add mining and extraction facilities at the new Jackpine Mine, which is adjacent to the currently-operating Muskeg River Mine. Expansion 1 will also provide expanded froth treatment facilities and an increase in capacity at the Scotford Upgrader. The project is due onstream in late 2010. When Expansion 1 is complete, Marathon will have more than 50,000 bpd of net production and upgrading capacity in the Canadian oil sands.

Additional future expansions are at various stages of the planning process. Expansions 2 and 3 are in the feasibility stage and are projected to be onstream in late 2012 and late 2013/early 2014, respectively. Each is expected to add approximately 100,000 bpd of gross production. In addition, there is significant acreage available for potential future expansions.

Following all phases of expansion, Marathon anticipates reaching net production of approximately 130,000 bpd from the Canadian oil sands operations by the end of the next decade, providing a long-lived, secure production stream.