Refineries. Marathon contended with a relatively heavy turnaround/maintenance schedule at three of our refineries in 2007. Despite the number of turnarounds, crude oil throughput and total refinery throughput at the Company's seven refineries hit records of 1.010 and 1.224 million barrels per day (bpd), respectively. The Company's unscheduled downtime was the lowest since 1998, and Marathon's refining operations achieved a record for combined gasoline and distillate production in 2007.

Work progressed on the expansion of the Garyville refinery. The site was cleared and foundation piles driven, while key vessels and components were undergoing construction in fabrication yards in the U.S., Europe and Asia. The expansion, to be complete in late 2009, will take the refinery's crude processing capacity from 256,000 bpd to 436,000 bpd, making the refinery one of the largest in the U.S.

In 2007, Marathon's Board of Directors sanctioned a projected $1.9 billion (excluding capitalized interest) heavy oil upgrading and expansion project at the Detroit refinery. The project will enable the refinery to process heavy, sour crude oils, including Canadian bitumen blends, and will increase its crude oil refining capacity by 15 percent.

Marketing. Aggressive efforts to add new customers helped increase Marathon Brand gasoline and distillate sales volumes by 11.2 percent compared to 2006. New customer accounts were added across the Midwest and Southeast.

Speedway SuperAmerica LLC, Marathon's wholly owned and operated retail subsidiary, increased 2007 same-store volumes of gasoline and distillate by 1 percent and same-store merchandise sales by 3.2 percent compared to the prior year. Pilot Travel Centers LLC, Marathon's 50 percent-owned joint venture, increased distillate and gasoline sales volumes, as well as non-motor fuel sales.

Renewable Fuels. Marathon has an expanding ethanol investment program that is designed to increase our ability to manufacture, blend and distribute this growing component of the transportation fuel mix. One of the leading blenders of ethanol in the U.S., the Company is investing in transportation and storage assets to increase blending capacity throughout our extensive terminal network. By mid-2008, we will have the capacity to blend to an E-10 level (90 percent gasoline/10 percent ethanol) across our entire gasoline distribution network.

Marathon bases its ethanol strategy on a mix of long-term contracts, spot market purchases and equity production. In 2007, the Company acquired a 35 percent interest in an existing 110-million-gallon-a-year ethanol plant in Indiana. At the same time, new construction proceeded on a second 110-million-gallon-a-year facility in which Marathon owns a 50 percent interest. This plant began production in February 2008.