Marathon Oil to Buy Western Oil Sands

After pursuing Canadian oil-sands investments for over a year, Marathon Oil Corp. has agreed to buy Western Oil Sands, Inc. for $5.46 billion.  The deal will allow Marathon to access crude deposits in the tar-soaked sands of Alberta, Canada.  Marathon said the deal will immediately add 31,000 barrels per day of bitumen output, and it expects production to reach more than 130,000 barrels per day by 2020.  Marathon also said that the Western deal will boost its proved reserves by 436 million barrels, with potential for 2.6 million more.  It plans to build a coker unit at its Detroit refinery instead of processing the bitumen in Alberta.

The deposits in Alberta may turn out to be the largest outside of Saudi Arabia.  The oil sands are believed to contain 175 billion barrels of recoverable oil, which is second only to the 259 billion barrels in Saudi Arabia.  Numerous other companies are involved in the Alberta oil sands.  For example, Shell, Western, and Chevron are partners in the Athabasca Oil Sands Project, which seeks to produce 770,000 barrels of output per day.