Marathon delays Detroit heavy oil project

Oct 30, 2008 01:00 AM

In an effort to pare back spending, Marathon Oil has delayed a project geared toward running cheap grades of crude oil at its Detroit refinery. The project, first announced after the company acquired Canadian oil producer Western Oil Sands in 2007, would enable Marathon to process cheap sludgy grades of crude oil from Alberta, Canada, in its Detroit refinery.
"We have factored in a slowdown of the project into our 2009 plans," Chief Executive Clarence Cazalot said.

Houston-based Marathon had planned to begin construction on the $ 1.9 bn project in the spring of 2008. The company is re-evaluating its engineering for the project, in an effort to trim costs, according to Gary Heminger, who runs Marathon's refining operations.
"We believe we can optimize the project construction schedule," he said. The company has delayed the project to consider cutbacks, but may ultimately complete the project more expeditiously, because of efforts to tighten the construction schedule, Heminger said.

Thecompany is reconsidering the project simultaneous with an effort to review a possible splitting of itself into two entities. If the board of directors decides to approve such a split, Marathon's oil-sands assets would be separated from its refining assets.
The board is expected to decide on the split during the fourth quarter of 2008, Cazalot said.

Source / Dow Jones & Company, Inc.
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