Marathon Oil Company News

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) notified 13 companies whose deepwater drilling activities were suspended by last year’s deepwater drilling moratorium that they may be able to resume those previously-approved activities without the need to submit revised exploration or development plans for supplemental National Environmental Policy Act (NEPA) reviews. Before resuming those activities without additional NEPA review, however, the companies must comply with BOEMRE’s new policies and regulations. “Going forward, we are substantially enhancing our environmental reviews and analysis under NEPA,” said BOEMRE Director Michael R. Bromwich.

The Neptune TLP, which is located approximately 120 miles off the Louisiana coastline, was scheduled to start up first oil and natural gas production by the end of March and the company is currently assessing all the options in order to re-commence start up activities. The schedule for first production will be updated. BHP Billiton is designated operator of the field with a 35 per cent interest. Partners include Marathon Oil Company (30 per cent), Woodside Energy (USA) Inc. (20 per cent), a subsidiary of Woodside Petroleum Ltd., and Maxus (U.S.) Exploration Company (15 per cent). Neptune is a single-column TLP and was installed in 4,250 feet (1,300 meters) of water on Green Canyon Block 613.

In connection with minor repair work the derrick of the drillship, West Navion, it has been uncovered cracks in the wire sheaves in the hoisting system of the dual derrick set (Ram Rig). As a result of the findings, operations on West Navion are temporarily halted. It is expected that the halt will last for another 2-3 weeks before operations are resumed. Maritime Hydraulics, the supplier of the dual derrick set, has issued a request to "All users of Maritime Hydraulics' Ram Rigs" to inspect all drilling units equipped with the dual Ram Rig. Consequently, Smedvig will initiate inspection of the drilling rig West Venture, which is also equipped with the Ram Rig derrick set. West Navion is Contracted to Marathon Oil Company Offshore Canada.

The deepwater drillship, West Navion, is currently operating for Marathon Oil Company in Canada. Due to delay in operations earlier this year and changes to the drilling program, the contract with Marathon will have a longer duration than initially planned. West Navion will subsequently be mobilized to west of Shetland for Amerada Hess. The contract with Amerada Hess includes drilling of two deepwater exploration wells and is expected to last until November this year. contract includes a one well option in 2003. As a result of the delayed drilling program in Canada, Esso Norge AS has decided to exercise their right to cancel the drilling contract for the drillship West Navion. The commencement was planned from August this year with an expected duration of three months.

Horizon Offshore, Inc. announced the election of John T. Mills to its board of directors. John T. Mills is senior vice president and chief financial officer of Marathon Oil Corporation. Mills joined Marathon Oil Company in 1976 as a tax specialist. He became chief tax counsel in 1984. In 1986, he became director of taxes and energy for USX Corporation. He was appointed vice president of taxes for USX in 1987. In September 1998, Mr. Mills was appointed senior vice president of finance and administration at Marathon Oil Company. Prior to joining Marathon, Mr. Mills was employed by Coopers and Lybrand for three years. Mr. Mills earned a bachelor's degree in economics from Ohio University in 1969 and a law degree from Ohio State University in 1973.

Horizon Offshore, Inc. announced the board of directors has elected J. Louis Frank as chairman of the board of the Houston-based marine construction company. Replacing outgoing chairman, James Devine, a UK national, with Frank, a U.S. citizen, allows Horizon to meet certain U.S. regulatory requirements relevant to a recently awarded contract. Mr. Devine remains a member of the board of directors. J. Louis "Corky" Frank joined the board of directors at Horizon in July 2001. Frank has extensive oil and gas and management experience, having held numerous positions of responsibility over 43 years with Marathon Oil Company, including service as president of Marathon Ashland Petroleum. He retired from Marathon in 2001.

A unit of Williams has announced that it has commissioned a new production handling platform in federal waters approximately 60 miles south of Mobile Bay, Ala. Gas production from approximately 35,000 acres of federal leases is dedicated to the platform. Construction of Williams' Canyon Station -- a fixed-leg platform in 300 feet of water in East Main Pass Block 261 -- was completed on schedule at the end of June. The jacket was installed in October 2001, followed by the deck and all of the topsides equipment in May 2002. Phil Wright, president and chief executive officer of Williams' energy services unit, said, "The deck is set, the generators are running and we're raring to go.

ssistant Secretary of Land and Minerals Management, C. Stephen Allred signed agreements with BP, ConocoPhillips, Marathon Oil Company, Shell, and Walter Oil and Gas Corporation, addressing deepwater Gulf of Mexico offshore oil and gas leases issued in 1998 and 1999. Under the agreements these companies will pay royalties on oil and gas produced under leases issued in 1998-1999. Revenue will be received for products starting from October 1, 2006 onward. Deepwater leases issued during this time included a royalty incentive to encourage companies to explore for oil and gas in areas where the costs to explore and produce were high. The incentive allowed companies to produce a set volume of oil and gas before they would begin paying royalties.

The U.S. Department of the Interior's Minerals Management Service (MMS), in New Orleans, held a sale of offshore oil and natural gas leases in the Central Gulf of Mexico attracting $171.8 million in high bids from 67 companies. Sale 172 is the seventh lease sale held subject to the provisions of the Deep Water Royalty Relief Act, passed in 1995. The MMS received 272 bids on 207 offshore tracts. 3,806 tracts comprising approximately 20,368,385 million acres offshore Alabama, Louisiana, and Mississippi were offered. The total of all bids was $199.6 million. The highest bid received was $16.6 million, submitted by Marathon Oil Company and Kerr-McGee Oil and Gas Corporation for Walker Ridge, Block 121.

According to the U.S. Department of the Interior's Minerals Management Service (MMS), deepwater drilling (1,000 ft. and deeper) shows the greatest potential of development, and certainly has garnered the attention (as well as the E&P dollars) of offshore oil production industry leaders. By yearend 2003, the MMS estimates as much as 63 percent of the oil production and 29 percent of the daily gas production will come from deepwater reserves. In August of 1998 there were 30 (temporary and permanent) deepwater rigs drilling simultaneously in the Gulf of Mexico's Outer Continental Shelf (OCS), at depths greater than this. The proliferation of deepwater development projects will likely continue to grow…

Noble Drilling Corporation announced its fourth successful EVA-4000TM semisubmersible conversion, Noble Amos Runner, began its five-year contract for Kerr-McGee Corporation, Marathon Oil Company and Murphy Exploration and Production Company in the Gulf of Mexico. The unit, capable of drilling in water depths up to 6,600 ft., was delivered from the shipyard in August. The company also reported Noble Paul Wolff, the second EVA-4000TM conversion, has successfully drilled a well in a water depth of 8,017 ft. for Petroleo Brasiliero S.A. (Petrobras), which sets a new world water depth drilling record. The unit, a dynamically positioned semisubmersible unit capable of drilling in water depths up to 8…