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Marathon’s focus on living our values played out in concrete steps benefiting all stakeholders in the downstream business.
Marathon’s 245,000 bpd Garyville, Louisiana, refinery is one of a select few OSHA VPP Star sites and is the only refinery recognized in EPA’s National Environmental Performance Track program. Already among the industry’s best, the plant will soon be one of the largest, as a result of a 180,000 bpd expansion due to finish as early as the fourth quarter of 2009
Downstream
In 2006, strong performance across all downstream components resulted in the highest income from the refining, marketing and transportation segment in the Company’s history. Segment income from downstream operations came to $2.8 billion for the year.
Refineries. A major strategic step for the future came with the approval to expand the crude oil distillation capacity of the Company’s Garyville, Louisiana, refinery by 180,000 bpd. The projected $3.2 billion expansion will make the Garyville facility one of the nation’s largest refineries. Construction is expected to begin in mid-2007, with startup planned for the fourth quarter of 2009.
In 2006, Marathon refineries set records for crude oil and total throughput, as well as product yield. Unplanned downtime was minimized and mechanical availability was a strong 94 percent for the year. The Detroit refinery expanded by 26,000 bpd at the end of 2005 and exceeded design rates for most of 2006.
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While Marathon ran its refineries at record throughput rates, we also ran them safely. Across the refining, marketing and transportation component, Occupational Safety and Health Administration (OSHA) safety rates improved, and the number of environmental incidents decreased. The downstream operations office in Findlay, Ohio, was designated as an OSHA Voluntary Protection Program (VPP) Star site, one of the first administrative sites in the region so honored. In addition, the Catlettsburg, Kentucky, refinery received the highest safety achievement recognition awarded by the National Petrochemical and Refiners Association.
Marketing. Aggressive efforts to win new customer accounts helped lift Marathon Brand gasoline and distillate sales volumes by 5.8 percent as compared to 2005. In a market exclusive, Marathon introduced STP® gasoline performance additives.
Speedway SuperAmerica LLC (SSA), Marathon’s wholly-owned and operated retail subsidiary, increased 2006 same-store sales volumes of gasoline and distillate by 2.1 percent and same-store merchandise sales by 7.8 percent as compared to the year before.
Pilot Travel Centers LLC (PTC), Marathon’s 50 percent-owned joint venture, increased distillate and gasoline sales volumes, as well as non-motor fuel sales, for the year. Already the nation’s largest travel center operator, PTC expanded beyond its U.S. base in 2006 with the acquisition of one site in Ontario, Canada.
Transportation. Federal regulations required that refiners begin production of ULSD on June 1, 2006. The transition to ULSD and protecting its integrity throughout the supply chain was a major challenge. Marathon helped ensure product quality by designing a rapid, comprehensive and standardized product testing system.
Marathon is also on the cutting edge of biofuels development. The Company now has the capacity to store and distribute biodiesel at its Louisville, Kentucky, and St. Paul Park, Minnesota, terminals, and has also formed a 50/50 joint venture to produce ethanol.
Marathon maintains the largest private petroleum barge fleet on the inland waterways — a safe, flexible and economic method of transporting petroleum products. In 2006, Marathon added to that fleet, increasing dependable supply service.
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