Oil & gas

Marathon Oil

Last edited by Phil Mattera on March 27, 2010 - 3:07pm
Company Snapshot: 

Marathon, founded as the Ohio Oil Company, has gone through several incarnations over the decades. For a while it was taken over by the Standard Oil Trust, later it was acquired by U.S. Steel, and still later its refining and marketing operations were for a time part of a joint venture with Ashland Oil. Today Marathon is independent and is among the mid-sized oil majors based in the United States. The company has faced controversy in connection with the air pollution caused by its U.S. refineries, its involvement with environmentally hazardous oil sands in Canada and its ties to the dictatorship in Equatorial Guinea, the African nation where the company operates a major liquefied natural gas facility.

Profile editor: 
Phil Mattera
Number of employees worldwide: 
29,000
Chief executive officer: 
Clarence P. Cazalot Jr.
Website: 
http://www.marathon.com/
Global Fortune 500 rank: 
86
Tel: 
713-629-6600
Net Income: 
US$3.5 billion
Total revenue: 
US$78 billion
Corporate accountability
Tax issues: 

In 1994 Marathon agreed to pay $122 million to settle a dispute with the state of Alaska concerning oil and gas taxes. The case involved tax liabilities extending back to 1976.

In 2001 Marathon agreed to pay the U.S. government $7.7 million to resolve charges that the company underpaid royalties due for oil produced pursuant to federal and Indian leases between 1988 and 1998.

Labor: 

Some workers at Marathon’s refineries in Catlettsburg, Kentucky; Canton, Ohio; and Texas City, Texas are represented by the United Steelworkers. The Teamsters union represents some workers at the refineries in Detroit and St. Paul Park, Minnesota.

In December 2007 the U.S. Occupational Safety and Health Administration announced that Marathon had agreed to pay $321,500 in fines to settle 44 workplace safety and health violations at its refinery in Canton, Ohio.

Environment and product safety: 

According to its most recent 10-K filing, Marathon has been named a potentially responsible party at ten hazardous waste sites. The company said it expected its liability to be less than $1 million at five of the sites and less than $4 million at two others. It said it could not estimate potential costs at the remaining three.

In May 1991 Marathon agreed to pay $900,000 in fines and to spend $3 million in environmental improvements to settle federal charges that it violated the Clean Water Act through illegal dumping at one of its Rock Island Refining plants.

In 1995 Marathon, along with Unocal and Shell Western Exploration and Production, agreed to pay $1.1 million to settle a dispute concerning more than 4,000 alleged violations of the Clean Water Act at Alaska’s Cook Inlet.

In 2001 Marathon Ashland agreed to pay a civil penalty of $3.8 million and to spend $265 million to update pollution control equipment as part of a consent decree with the federal government to settle charges that the company violated air pollution regulations at its oil refineries in seven states.

The refinery in Texas City, Texas continued to have problems with emissions. State officials charged that the plant was releasing dangerous levels of benzene and proposed fining the company, but Marathon (along with BP) disputed the claims (Houston Chronicle, October 5, 2001). As of September 2008, the benzene level was still found to be above recommended levels.

Marathon was part of a group of oil companies that in 2008 agreed to pay a total of $423 million to settle lawsuits filed by hundreds of public water systems in connection with contamination caused by the gasoline additive MTBE.

Human rights: 

In 2004 Senate investigators looking into money-laundering allegations against Riggs Bank said they found evidence about questionable payments made by Marathon, Amerada Hess (now Hess) and Exxon Mobil to members of the Equatorial Guinea ruling elite, including President Teodoro Obiang Nguema Mbasogo. This prompted the Securities and Exchange Commission to begin an inquiry into such payments by those companies as well as ChevronTexaco. The payments were believed to be part of an effort by U.S. oil companies to gain access to oil reserves in the West African country. A 2005 article by Peter Maas in Mother Jones magazine charged that the oil companies were propping up the dictatorial and corrupt Obiang regime. No charges were ever filed against Marathon.

Anti-competitive and consumer protection: 

In May 2007 the Attorney General of Kentucky sued Marathon, claiming that the company overcharged consumers by some $89 million after hurricanes Katrina and Rita. The price-gouging suit is still pending.

In 2007 a Marathon subsidiary agreed to pay a $1 million civil penalty to settle charges filed by the U.S. Commodity Futures Trading Commission alleging that the company tried to manipulate the price of crude oil on the spot market.

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History

Marathon’s origins go back to 1887, when a ground of independent producers formed The Ohio Oil Company to compete with the Standard Oil Trust. Known as The Ohio, the company grew rapidly and was soon acquired by Standard Oil. When the U.S. Supreme Court broke up the Trust, The Ohio became independent once again and began expanding its exploration activities to other states such as Kansas, Louisiana and Texas. In 1924 it moved downstream by acquiring the Lincoln Oil Refining Co. Six years later, it purchased the Transcontinental Oil Company, whose logo featured a marathon runner.

Following the Second World War, The Ohio began extensive international exploration in a partnership called Conorada Petroleum with Continental Oil and Amerada. Conorada’s biggest deal came in 1955 when it acquired a huge concession in Libya. In 1962 The Ohio changed its named to Marathon Oil and entered the wholesale gasoline business with the purchase of Plymouth Oil. In 1976 Marathon purchased Pan Ocean Oil, gaining exploration and production assets in the United Kingdom, Nigeria, Norway and Indonesia.

In 1981 Marathon was the target of a takeover effort by Mobil Oil, but Mobil was outbid by U.S. Steel, which the following year paid what was then considered the huge amount of $6 billion to get into the petroleum business. It was then the second largest takeover in U.S. history, surpassed only by DuPont’s $7.8 billion purchase of another oil company, Conoco, the year before.

U.S. Steel, which changed its name to USX to reflect its diversification moves, purchased Texas Oil & Gas in 1986 and consolidated its operations with Marathon. In 1998 Marathon and Ashland Inc. combined their refining, marketing and transportation businesses to form the joint venture Marathon Ashland Petroleum LLC. The entity, in which Marathon held the majority share, became the fourth largest U.S. oil refiner. Three years later, USX spun off Marathon into a separate company. In 2005 Ashland sold its stake in the joint venture to Marathon. In 2006 Marathon, along with ConocoPhillips and Amerada Hess, were allowed to return to Libya after 19 years. In 2007 Marathon spent $5.8 billion to acquire Canada’s Western Oil Sands Inc. In 2008 Marathon announced that its board of directors was considering separating its production and refining/marketing operations into two companies.

Financial information
Stock ticker symbol: 
NYSE: MRO
Fiscal year: 
2008
Fiscal year: 
2008
Major lines of business/segments: 

Exploration and Production. Marathon’s principal exploration activities are in the United States (mainly the Gulf of Mexico) and locations off the shores of Angola, Norway and Indonesia. Principal development and production activities are in the United States, the United Kingdom, Norway, Ireland, Equatorial Guinea and Libya.

Oil Sands Mining. Through its purchase of Western Oil Sands Inc., Marathon holds a 20 percent outside-operated interest in Athabasca Oil Sands Project (AOSP), an oil sands mining joint venture located in Alberta, Canada. The joint venture produces bitumen from certain oil sands deposits in the Athabasca region and upgrades the bitumen to synthetic crude oil.

Refining, Marketing and Transportation. The company owns and operates seven refineries in the United States (located in Garyville, Louisiana; Catlettsburg, Kentucky; Robinson, Illinois; Detroit, Michigan; Canton, Ohio; Texas City, Texas; and St. Paul Park, Minnesota). Martathon is a supplier of gasoline and distillates to resellers and consumers in the Midwest, upper Great Plains, Gulf Coast and southeastern regions of the United States. Marathon’s retail operations include more than 4,400 Marathon branded stations, with an additional 1,600 outlets owned and operated by Speedway SuperAmerica LLC, a Marathon subsidiary.

Integrated Gas. This segment includes natural gas liquefaction and regasification operations and methanol production operations. Its LNG business includes a 60 percent interest in EGHoldings, which in 2007 completed construction of a production facility in Equatorial Guinea.

Additional descriptive data
Link to full list of subsidiaries: 
List of subsidiaries
Sources
Watchdogs and related campaigns: 
Oil Change International
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