Marathon Awards Major Contract for Alvheim Development

abarrelfullabarrelfull wrote on 26 Jul 2012 11:32
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January 28 2005

Marathon Oil Corporation (NYSE: MRO), through its wholly owned subsidiary Marathon Petroleum Norge AS, and its Alvheim project partners, have announced the award of an engineering, procurement, construction, installation and commissioning (EPCIC) contract associated with the companies' Alvheim development on the Norwegian Continental Shelf. The contract, with a total value of approximately USD$350 million (2.2 billion NOK), was awarded to Vetco Aibel of Norway for topsides work related to the floating production, storage and offloading (FPSO) vessel which is a central element of the Alvheim development.

The contract covers construction of all topsides equipment and facilities for the MST Odin, a multipurpose shuttle tanker acquired by the Alvheim partners in 2004, which will be converted to an FPSO. Topsides work will include the design and construction of production separators, gas compression and dehydration, water treatment and power generation systems.

Commenting on the contract award, Steven B. Hinchman, Marathon senior vice president of Worldwide Production, said, ;The award of this major contract represents another key step in our efforts to advance our Alvheim plan for development and operation. Vetco Aibel has a proven track record of delivering top tier products and services, and is committed to do so within the timeline we have established for Alvheim leading to first production in early 2007.

The award of this contract completes a competitive tendering process that began in July 2004. This process included the analysis of proposals from five firms from countries around the world. The tendering process related to Odin hull modifications continues and the company estimates the award of that contract will made later in the first quarter of this year. Following the award of the hull modification contract, all key Alvheim contracts will have been awarded, including those related to drilling, subsea and turret mooring systems.

In addition to the use of the Odin FPSO, the Alvheim development will include subsea infrastructure consisting of five drill centers and associated flow lines. The development also includes the transportation of produced oil by shuttle tanker, and transportation of produced natural gas to the existing U.K. SAGE system using a new 14-inch, 24-mile cross border pipeline.

The Alvheim development comprises the Kneler, Boa and Kameleon fields. Alvheim currently is estimated to contain resources of approximately 180 million gross barrels of oil equivalent. Marathon holds a 65 percent interest in Alvheim and serves as operator.

Recently, the Alvheim group reached agreement to tie in the nearby Vilje discovery, formerly known as Klegg, in which Marathon holds a 46.9 percent interest, subject to the approval of a Vilje PDO which was submitted to Norwegian authorities on Dec. 23, 2004. Production from a combined Alvheim/Vilje development is expected to ramp up to more than 50,000 net barrels per day during 2007. The combined Alvheim/Vilje development is estimated to contain resources of approximately 200-250 million gross barrels of oil equivalent.

Marathon's partners in the Alvheim development are Norske ConocoPhillips AS with a 20 percent working interest, and Lundin Norway AS, which holds the remaining 15 percent interest. The Alvheim field applies to Production Licenses PL 203, PL 088BS and PL 036C on the Norwegian Continental Shelf.


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