Business, Government Legal News from throughout WVMarathon begins refining crude oil from Utica shale

The Marathon Petroleum Corp. refinery at Catlettsburg, Ky., which is less than 10 miles from Huntington, could soon begin refining crude oil from Utica shale deposits in Ohio.

Marathon's refinery at Canton, Ohio, has taken its first deliveries of Utica crude, and plans are in the works to transport crude from Ohio to Catlettsburg by truck or barge.

The end result could be people in southern West Virginia using gasoline refined from shale oil from Ohio.

"Right now we're just in the preliminary stage of evaluating that," said Angelia Graves, spokeswoman for Marathon Petroleum.

Utica shale lies under the Marcellus shale. Both produce natural gas. Drilling efforts in West Virginia have focused on Marcellus shale, with just a few test wells having been drilled into the Utica. But producers in eastern Ohio are investing heavily in the Utica.

The Ohio Department of Natural Resources estimates that the Utica has 1.3 billion barrels to 5.5 billion barrels of recoverable crude oil. According to information posted on the Marathon website, there is no known crude in the West Virginia part of the Utica shale.

In an investor presentation late last month, Mike Palmer, senior vice president of supply, distribution and planning, said Marathon Petroleum "has more infrastructure in this area than anyone else does. And we're taking first mover advantage in capturing the short and the long term opportunities.

"We already have the capacity to move this oil in by truck, and in fact we're doing so. We have a 1,000 barrel-a-day temporary truck rack that we set up in Canton. By the end of the second quarter of '12, we'll have a permanent truck rack that'll be capable of 12,000 barrels a day and expandable to 24,000. Catlettsburg also has a permanent truck rack in place now that's capable of 18,000 barrels-a-day. "

Catlettsburg's total refining capacity is 212,000 barrels per day, with one barrel equaling 42 gallons. It truck rack already receives crude from wells in the area.

"Longer term, we've got a team that's looking at the conceptual ideas to handle the further growth in this area," Palmer said. "As I said, we've got other infrastructure in the area. So we've got terminals at West Wellsville and at Steubenville (Ohio) that have access to the river. So one of the ideas is to truck barrels to these terminals, load it onto barges and then take it to Catlettsburg."

Graves said she did not know the qualities of the Utica crude – light, heavy, sour, sweet – but Catlettsburg can refine them all. The crude would go into the refining process with oil from other sources and would make the same products, such as gasoline, diesel fuel and asphalt, she said.