Marathon Ramps Up Construction on its Equatorial Guinea LNG Plant

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Marathon Oil Corporation (NYSE:MRO) (Houston Texas) and Compania Nacional de Petroleos de Guinea Ecuatorial (GEPetrol), the national oil company of Equatorial Guinea, through its subsidiaries have finalized agreements to form Equatorial Guinea LNG Holdings (EGLNG). EGLNG was created to manage the new LNG train being constructed on the northwest side of Bioko Island, at Punta Europa, near the capital of Malabo.

Site preparation began on the 3.4 million ton per year train in early 2004 and construction, in earnest, started in late June, after Marathon announced a final investment decision on the Equatorial Guinea LNG Project. Marathon hopes to commercialize a part of Equatorial Guinea’s substantial natural gas resources, when the $1 billion LNG facility comes online in late 2007.

Upon completion the new facility will be one of the lowest cost LNG operations in the Atlantic basin, at approximately $1 per MMBTU. Natural gas for the project will be sourced from the Alba Field, of which Marathon is one of the participants, and the LNG will be sold under a 17-year purchase agreement with BG Gas Marketing Limited a subsidiary of BG Group plc (Reading UK). The primary destination for the LNG will be the Lake Charles LNG Terminal, owned by Trunkline LNG Company (Houston, Texas).

Bechtel Corporation (San Francisco California) was awarded the primary engineering, procurement, and construction contract and has been given notice to proceed. The Equatorial Guinea LNG train will utilize the Phillips Optimized Cascade Process technology for liquefaction and plant facilities will include two LNG cryogenic storage tanks as well as the normal refrigeration, compression, condensation, and marine facilities. LNG tankers ranging in size from 90,000 to 160,000 cubic meters will be able to access loading facilities.

The Alba Field holds an estimated recoverable resource of 4.4 Tcf of natural gas and 400 million barrels of liquids. Marathon is currently constructing its Phase 2B expansion at the field to increase LPG production from 59,000 gross barrels per day to 79,000 barrels per day. That phase should be completed in early 2005.