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Living Our Values2015 Corporate Sustainability Report
Marathon Oil Corporation’s Living Our Values Corporate
Sustainability Report is issued in a digital-only format. This
allows stakeholders to assemble and print specific sections
into a customized report that meets their individual information
needs. As a result of this customization, PDFs that are created
will not include a table of contents or page
numbers. For the complete version of Marathon Oil’s 2015
Sustainability report, please visit:
http://www.marathonoil.com/Social_Responsibility/Reporting/
GOING FURTHER.DOING MORE.
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Marathon Oil Corporation’s 2015 Living Our Values Corporate
Sustainability Reportillustrates our efforts to advance our
nonfinancial performance and to promote
economic, social and environmental sustainability where we live
and work. We
provide examples of how we are “living our values” – to be
healthy and safe,
environmental stewards, open and honest, community partners and
results
focused – through our business activities.
Unless otherwise stated, all information and performance data
relate to exploration and productionoperations. In some cases, we
include information on our non-operated assets, such as Equatorial
Guinea LNGHoldings Limited (EG LNG) that is material to our
corporate sustainability performance.
Our reporting follows the Oil & Gas Industry Guidance on
Voluntary Sustainability Reporting, a joint publication ofIPIECA,
the American Petroleum Institute (API) and the International
Association of Oil & Gas Producers(IOGP). This framework for
the petroleum industry helps Marathon Oil select indicators to
demonstrate ourperformance related to governance, society, the
workplace and the environment. Our approach to reporting isalso
informed by the Global Reporting Initiative (GRI)
Sustainability Reporting Guidelines. We includequantitative and
qualitative metrics to provide relevant and meaningful information
about our operations andnonfinancial performance.
This report was reviewed by Marathon Oil subject matter experts,
legal and accounting staff, executives andthe Board of Directors.
It was not evaluated by any third party or external assurance
agency, except for thefinancial and operational highlights
excerpted from the 2015 Form 10-K Annual Report.
Materiality Determination
Report materiality was based on a review of risks identified
during the Enterprise Risk Management processand on engagements
with Marathon Oil managers and subject matter experts; socially
responsible investors(SRIs) and other investors; business partners;
industry associations; nongovernmental organizations; andnonprofit
and community partners. Investment reports and media coverage also
informed the materialitydetermination. In addition, we reviewed
peer company reports to benchmark our reporting practices.
Theseinternal and external perspectives help us identify,
understand and consider the risks and opportunitiesassociated with
new and emerging issues, regulations, standards and leadership
practices.
INQUIRIES OR COMMENTS Marathon Oil Corporation The Office of
Corporate Communications 5555 San Felipe Street Houston, TX
77056-2723 USA Telephone: +1 713-296-3911 Email:
[email protected] www.marathonoil.com
Forward-Looking Statements
This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of
1934. These are statements, other than statements of historical
fact, that give current expectations or forecasts of future events,
including, without limitation:
Marathon Oil’s operational and financial goals and strategies,
including planned expenditures, drilling plans and projects,
capital discipline, continuous improvement,
reducing operational risk, workforce reductions, non-core asset
sales, and emissions mitigation; our ability to successfully effect
those strategies and the expected
timing and results thereof; Marathon Oil’s financial and
operational outlook, and ability to fulfill that outlook;
expectations regarding future economic and market
conditions and their impact on Marathon Oil; our ability to
accelerate production when commodity prices rebound; our ability to
expand our operations to create
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value for shareholders; and our international projects and the
expected timing and results thereof. While we believe the
assumptions concerning future events are
reasonable, a number of factors could cause results to differ
materially from those projected, including, but not limited to:
conditions in the oil and gas industry,
including supply/demand levels and the resulting impact on
price; changes in political or economic conditions in the
jurisdictions in which we operate; capital available
for exploration and development; well production timing;
availability of drilling rigs, materials and labor; difficulty
obtaining necessary approvals and permits; non-
performance by third parties of contractual obligations;
unforeseen hazards such as weather conditions, acts of war or
terrorism and the governmental or military
response thereto; cyber-attacks; changes in safety, health,
environmental and other regulations; other geological, operating
and economic considerations; and the risk
factors, forward-looking statements and challenges and
uncertainties described in Marathon Oil’s Annual Report on Form
10-K for the year ended December 31,
2015, Quarterly Reports on Form 10-Q and other public filings
and press releases, available at www.MarathonOil.com. We undertake
no obligation to revise or
update any forward-looking statements as a result of new
information, future events or otherwise.
© 2016 Marathon Oil Company
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MARATHON OIL AT A GLANCE
Marathon Oil Corporation (NYSE: MRO) is an independent global
energy company. Based in Houston, Texas,the Company operates in
North America, Europe and Africa. Each of the Company’s three
reportable operatingsegments is organized based upon both
geographic location and the nature of the products and services
itoffers. The three segments are:
North America Exploration and Production (E&P) – explores
for, produces and markets crude oil andcondensate, natural gas
liquids (NGLs) and natural gas in North America.
International E&P – explores for, produces and markets crude
oil and condensate, NGLs and natural gasoutside of North America
and produces and markets products manufactured from natural gas,
such asliquefied natural gas (LNG) and methanol in Equatorial
Guinea.
Oil Sands Mining – mines, extracts and transports bitumen from
oil sands deposits in Alberta, Canada, andupgrades the bitumen to
produce and market synthetic crude oil and vacuum gas oil.
© 2016 Marathon Oil Company
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TO OUR STAKEHOLDERS
Marathon Oil Corporation’s goal is to be recognized as a
premier independent exploration and production (E&P)
company, a goal that requires the Company to be a
sustainable investment, employer, business partner and
corporate citizen. Our business strategy drives what we do
to achieve long-term viability, while our core values and
corporate sustainability commitments guide how we develop
oil and gas in a responsible, ethical and safe manner.
Marathon Oil believes that a company must address its
nonfinancial risks and responsibilities to achievebusiness
sustainability. Our 2015 Living Our Values Corporate Sustainability
Report describes the Company’sheadway in addressing critical risks
in our operations, the communities where we work and our industry,
anddemonstrates our accountability to stakeholders for our
nonfinancial performance. We work with ouremployees, business
partners, communities, regulators, investors and other stakeholders
to earn and keep ourlicense to operate.
Our strategy is to be the lowest-cost, highest-margin North
American focused independent E&P company. Thelow commodity
price environment in 2015 prompted Marathon Oil to assess every
aspect of our business andmaintain the programs that further this
strategy and deliver results. This led to difficult but
necessarydecisions, including cutting our capital spending in half,
reducing drilling activity, selling non-core assets andreducing our
workforce 20 percent compared to 2014.
Living Our Values
Yet, Marathon Oil remained committed to Living Our Values
to be healthy and safe, environmental stewards,open and honest,
community partners and results focused. We set a new safety record
for the Total RecordableIncident Rate for employees and contractors
combined, even accounting for the lower level of field
activity.Third-party contractors remained a large part of our field
workforce, and improved safety performance waspartly the result of
steps we took to further strengthen our contractor management
activities.
As environmental stewards who believe compliance is
non-negotiable, we broadened the use of technology toimprove our
ability to comply with the growing number of federal and state
environmental regulations.Recognizing that climate change, global
greenhouse gas (GHG) emissions and local air emissions are
keystakeholder concerns, we continued a number of programs to lower
methane intensity as a means of reducingGHGs in our operations. In
the interest of transparency, this report includes enhanced
emissions managementdisclosures regarding climate change, as well
as environmental performance data and management practices.
A key accomplishment in 2015 was executive approval of our
Responsible Operations Management System(ROMS) to drive continuous
improvement and reduce operational risk across the enterprise. ROMS
supportsour commitment to high standards of health, environmental,
safety and security (HES&S) performance. Toassure ROMS’
effectiveness, each element has an executive owner accountable for
setting priorities andreporting progress. ROMS is complemented by
Corporate Sustainability Guidelines we developed in 2015 toassist
in managing our commitments to economic, environmental, safety and
social sustainability in ourcommunities.
As part of our 2015 business assessment, Marathon Oil reviewed
our social investments and philanthropicspending with community
partners. As a result, we are supporting select education and
public health initiativesmost likely to deliver positive outcomes
in our communities. We believe investing to develop educated,
healthycommunities will build a sustainable workforce for the
future.
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As we move toward sustainability, Marathon Oil can look to our
successful Alba B3 compression projectoffshore Equatorial Guinea as
a model. The project has been executed safely and remains on budget
and onschedule, with hook-up and commissioning nearly complete.
Start-up is expected in mid-2016. The projectsupports
economic sustainability by extending the life of our Alba field
beyond 2030 to provide stableproduction and cash flow. This in turn
allows Marathon Oil to continue contributing to social programs
thatbuild national capacity and improve wellbeing in Equatorial
Guinea.
Our clear emphasis is on creating a business that is sustainable
for the benefit of our key stakeholders. Guidedby our values,
Marathon Oil took the necessary steps in 2015 to manage through a
challenging period, and weare now laying the groundwork to
accelerate production when the price of oil rebounds. We remain
committedto operating safely and cost-effectively, complying with
regulations, protecting the environment, investing inour employees,
creating value for shareholders and positively impacting our
communities. Thank you for takingthe time to learn about our
approach to managing risk, addressing stakeholder concerns and
overcomingchallenges as we build our business for the long
term.
Sincerely,
Lee M. Tillman President and Chief Executive Officer
© 2016 Marathon Oil Company
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A MESSAGE FROM OUR BOARD
Amid this year’s energy industry pressures, Marathon Oil
Corporation’s board and management have not been
distracted from the Company’s longstanding central tenet,
“Living Our Values.”
We trust these principles, outlined in this online report and
the companionbrochure, are not merely an advocacy platform for
Marathon Oil’s license tooperate. The objectives, standards of
accountability and concrete actionsembody the manner in which our
people around the world undertake their
dailyresponsibilities.
Admittedly, Marathon Oil’s management is challenged by the
prolonged market downturn and ever-increasingdemands of exploration
and production operations. Yet every Marathon Oil employee
continues to seek notonly improved financial and nonfinancial
results and to control risks, but also to demonstrate their
fundamentalcommitment to sustainability.
We believe that this underlying motivation will yield
significant benefits to our stakeholders and fellowworkers, the
industry more broadly and the communities where we operate.
Wherever one stands in the debate on global climate change,
there is broad and reasoned consensus on thevalue of
sustainability. And that is reflected in the continued increase in
our transparency on environmentalperformance, detailing water and
waste management, spills and releases and – particularly – air
emissions.
In addition to improving processes to enhance sustainability,
your Company’s management – while preparingfor the return to higher
activity levels – is taking the current environment as an
opportunity to strengthencompliance, workforce training and risk
management.
This report – conforming with the common framework of the
petroleum industry’s corporate sustainabilityreporting – summarizes
Marathon Oil’s record and progress on these specific matters, as
well as aspects ofgovernance and our interactions with government
authorities and the broader public. We invite your review ofhow
Marathon Oil’s board and management, in the interests of
sustainability as well as financial results, aredealing with the
environmental, social, political and workplace issues of our
business, both recurring and new.
We acknowledge that our shareholders properly focus on how the
Company is optimizing our economic value.Marathon Oil’s board
shares that objective. But we trust there is a common understanding
of how stewardship,citizenship and sustainability are irrevocably
intertwined with our financial performance.
We hope this report’s specificity and commitments inform your
evaluation of our achievements and furtherambitions. Your comments
on our progress and suggestions as to how these efforts may be
further invigoratedare most welcome.
Philip Lader Chairman, HES&CR Committee Marathon Oil
Corporation Board of Directors
© 2016 Marathon Oil Company
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PERFORMANCE SUMMARY
Sustainability Performance Highlights
Category 2015 2014 Change
Fatalities (Employee and Contractor Workforce) 0 0 N/A
Global Safety Performance - Total Recordable Incident Rate
(TRIR) 0.39 0.75 -48.0%
Social Investments - Philanthropic and Sustainable (million
dollars) $24.20 $29.30 -17.4%
Global Greenhouse Gas Emissions (million tonnes CO₂e) a, b, c, d
4.64 4.29 8.2%
Global Greenhouse Gas Intensity (tonnes CO₂e on a weighted
basis/production) a, b, c 24.47 23.25 5.2%
Methane Emissions (million tonnes CO₂e) a, b, c 0.64 0.57
12.3%
Methane Intensity (tonnes CO₂e on a weighted basis/production)
a, b, c 3.36 3.10 8.4%
Energy Use (trillion BTU) a 56.10 56.20 -0.2%
Global Spill Events to the Environment ≥ 1 bbl - number a, e 47
54 -13.0%
Global Spill Volumes to the Environment ≥ 1 bbl - barrels a, e
3,605 1,151 213.2%
Employees - Minorities as a Percentage of Workforce (U.S.) f, g
23.80 23.10 3.0%
Employees - Females as a Percentage of Workforce (Global) f
25.20 27.40 -8.0%
a Excludes East Texas/North Louisiana (discontinued assets).
b Greenhouse Gas (GHG) carbon dioxide equivalent (CO₂e)
emissions are based on carbon dioxide, methane and nitrous oxide
from Marathon Oil-operatedfacilities only.
c Discontinued assets (Norway, and Green River and Powder River
Basins in Wyoming) were removed from previous years' data for
comparing year-on-yearperformance.
d Gross production of all hydrocarbons increased by 5 percent in
2014.
e Data includes spills outside of secondary containment greater
than or equal to 1 barrel.
f Workforce statistics reflect year-end data.
g As defined by U.S. Equal Employment Opportunity
Commission.
Financial and Operating Highlights (dollars in millions, except
per share data) a
Category 2015 2014
Total Revenues and Other Income 5,861 11,258
Income (Loss) from Operations (2,691) 1,599
Income Tax Expense (Bene�t) on Continuing Operations (754)
392
Income (Loss) from Continuing Operations (2,204) 969
Discontinued Operations - 2,077
Net Income (Loss) (2,204) 3,046
Income (Loss) from Continuing Operations - Basic (3.26) 1.42
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Discontinued Operations - Basic - 3.06
Net Income (Loss) - Basic (3.26) 4.48
Income (Loss) from Continuing Operations - Diluted (3.26)
1.42
Discontinued Operations - Diluted - 3.04
Net Income (Loss) - Diluted (3.26) 4.46
Dividends 0.68 0.80
Long-term Debt b 7,276 5,295
Stockholders’ Equity b 18,553 21,020
Capital Expenditures c, d 2,936 5,495
Average Daily Net Sales:
North America Exploration and
Production Segment (mboed) 269 238
International Exploration and
Production Segment (mboed) d, e 116 127
LNG
(mtd) f 5,884 6,535
Methanol
(mtd) f 937 1,092
Condensate and LPG (boed) f 13,041 12,208
Oil Sands Mining Segment Synthetic Crude Oil (mbbld) g 53 50
Net Proved Reserves: b
Crude Oil and Condensate, Natural
Gas Liquids, Natural Gas and Synthetic Crude Oil (mmboe) 2,163
2,198
Number of Employees b 2,610 3,330
a Marathon Oil sold our Angola assets and our Norway business
and they are reflected as discontinued operations in 2014.
b Reflects year-end data.
c Capital expenditures includes accruals.
d Excludes discontinued operations.
e Includes natural gas acquired for injection and subsequent
resale of 8 and 6 mmcfd in the years ended December 31, 2015 and
2014, respectively.
f Reflects net share of equity method investee volumes.
g Includes blendstocks.
© 2016 Marathon Oil Company
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STAKEHOLDER ENGAGEMENT MAP
Marathon Oil engages with stakeholders through formal and
informal means. Our stakeholders voice concerns,provide suggestions
and help us in our efforts to seek continuous improvement in
conducting our business in amore responsible and productive manner.
Below is a snapshot of the priorities and mechanisms we use
todiscuss and resolve issues.
© 2016 Marathon Oil Company
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MANAGEMENT SYSTEMS
Marathon Oil identifies and monitors our most significant risks
and mitigation
activities using the recently enhanced Enterprise Risk
Management process, with
input from executive management, business units and internal
audit.
Internal champions, together with the business units,
participate in the assessment process that considerscurrent and
potential future risks and creates detailed assessments at all
levels. Business units are responsiblefor managing identified
risks day-to-day.
Marathon Oil informs our Board of Directors and executive
management on our risks and reports the mostsignificant risks in
our 2015 Annual Report on Form 10-K. In 2015, these risks included,
but were not limitedto, global oil and natural gas prices, supply
and demand; operational costs; OPEC production controls; the
levelof operational activity in response to market conditions;
political instability in producing regions; changes inweather
patterns and climate; natural disasters; and governmental
regulations and taxes.
RESPONSIBLE OPERATIONS MANAGEMENT SYSTEM (ROMS)
Our Responsible Operations Management System (ROMS) is the
framework to drive continuous improvementand reduce operational
risk across the enterprise. The goals of ROMS, which replaces our
previousmanagement system, are to promote safety and environmental
protection and to ensure reliable operationsand asset integrity.
There are 14 elements with expectations to assist our business
units in identifying,addressing and managing their operational
risk. The system is scalable to individual business units’ size
andtype of operations.
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ROMS supports our commitment to high standards of health,
environmental, safety and security (HES&S)performance, while
HES&S standards clarify our expectations for organizational
performance to driveconsistency. Our Corporate Sustainability
Guidelines complement ROMS by outlining how we demonstrateour
commitment to economic, environmental, safety and social
sustainability in the communities where weoperate.
By standardizing and simplifying all Marathon Oil standards and
tools, ROMS reduces redundancy andhighlights opportunities for
continuous improvement. Greater consistency will accelerate
employeeonboarding and transitions among assets, and improve
effectiveness and knowledge transfer. ROMS alsoallows us to quickly
identify trends and make decisions based on improved information
tracking and sharing.
To develop ROMS, a steering team of executives, senior leaders
and subject matter experts reviewed ourexisting management systems,
peer and industry management systems, and industry standards such
as ISO14001 and the American Chemistry Council’s Responsible Care
performance system.
Subject matter experts performed a gap analysis for each element
and identified opportunities forimprovement, including:
Enhancing the Management of Change (MOC) standard process to
meet ROMS expectations.
Improving the risk assessment process by setting minimum
expectations, as well as creating a single riskassessment timeline
and consequence matrix that applies to all business units and the
Enterprise RiskManagement process.
Creating a training standard that sets minimum expectations for
operations-related training andcompetency activities to ensure
consistency across the Company.
To assure accountability for ROMS’ effectiveness, each element
has an executive owner responsible for settingpriorities and
expectations, and tracking and reporting progress to the executive
steering team. In addition,technical advisors work with subject
matter experts and other resources on implementation,
evaluation,prioritization, resource needs and progress. The
business units have a similar structure to further
driveaccountability. Our business units are expected to
complete a gap analysis for each element in 2016 and fullyimplement
ROMS in 2017.
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ROMS Element Owners
ROMS ELEMENT EXECUTIVE OWNER TECHNICAL ADVISOR
Leadership and Accountability CEO Technology and Innovation
VP
Regulatory ComplianceTechnology and InnovationVP
Environmental Manager
Risk Assessment and Management Conventional VP Conventional HES
Manager
Management of Change Conventional VP Conventional HES
Manager
Design and Construction Resource Plays VP Technology Application
VP
Safe Work Practices Conventional VP Health and Safety
Manager
Training and CompetencyTechnology and InnovationVP
Resource Plays HES Manager
Operations, Maintenance and IntegrityManagement
Resource Plays VP Reliability and Process Safety Manager
Operational Readiness Resource Plays VP Production Operations
Director
Emergency Preparedness and CommunityAwareness
HES&S and ReliabilityDirector
Security and Emergency Preparedness Manager
Event ManagementTechnology and InnovationVP
Technical Delivery VP
Third-Party Services Global Supply Chain Director Resource Plays
HES Manager
Governance and Document ControlTechnology and InnovationVP
Worldwide Offshore Drilling and CompletionsDirector
Audit and ImprovementHES&S and ReliabilityDirector
Health and Safety Manager
HES&S STANDARDS, PRACTICES AND AUDITS
Our HES&S standards set expectations and requirements for
performance to drive consistency throughoutMarathon Oil. These
standards are reviewed regularly and updated to reflect changes in
laws or regulations,incorporate recommendations arising from audits
and incident investigations, and continuously
improveperformance.
Our HES&S programs make personnel aware of these
requirements and their role in meeting the expectationsof these
standards. The Company’s tiered HES&S audit program promotes
adherence to these standards andcompliance with regulations.
Business units develop plans and corrective actions to address
audit findings andwe have processes to ensure corrective actions
are completed. HES&S leadership and executive managementare
informed of key audit findings and trends so they can prioritize
solutions for identified gaps or issues.
© 2016 Marathon Oil Company
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CORPORATE COMMITMENTS
Corporate-level commitments covering governance, society, the
environment,
safety and our workforce guide our sustainability activities.
Marathon Oil’s
operations are responsible for working with key stakeholders to
identify and
implement programs to fulfill these commitments at the local
level and to drive
continuous improvement. Highlights of our 2015 commitments and
progress and
2016 focus areas are summarized below.
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Commitments 2015 Progress 2016 Focus
Participate in the public policyprocess and maintain
employeeawareness on issues relevant to ourCompany and
industry.
Promoted responsible, state-based regulation of
hydraulicfracturing and seismicity; safe andreliable
infrastructure; taxstructures that encourageinvestment; regulations
thatpromote clean air and water whileenabling energy development;
andreliable permitting processes.
Collaborated with industry andsuccessfully secured U.S.
oilproducers’ ability to export crudeoil globally.
Conducted oil and gas educationsessions and tours for
legislatorsand regulators.
Promote responsible,state-based regulation.
Host educationsessions and tours forlegislators
andregulators.
Conduct our business with highstandards for
responsibleoperations, business ethics andintegrity, corporate
governance andtransparency.
Approved our new ResponsibleOperations Management
System(ROMS).
Conducted mandatory anti-corruption compliance training forall
designated employees.
Continued our commitments totransparency (USEITI, UKEITI,Canada,
Equatorial Guinea andKurdistan Region of Iraq).
Conducted emergency responsedrills in all operated business
unitsand corporate-level spill responseexercise in Bakken
asset.
Business units areexpected to complete agap analysis for
eachROMS element.
Register with Canadiangovernment to complywith its
ExtractiveSector TransparencyMeasures, and disclosepayments under
UKEITI if required.
Increase asset-levelcapabilities to identify,plan and
managesecurity andoperational risks.
Governance
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Commitments 2015 Progress 2016 Focus
Work with stakeholders tounderstand how our operationsimpact
local communities.
Developed CorporateSustainability Guidelines tosupport economic,
environmental,safety and social sustainability incommunities where
we operate.
Developed stakeholderengagement tool kit to help assetsidentify
and engage stakeholdersand plan engagements.
Increased spending $4 millionyear over year with
TribalEmployment Rights Office (TERO)Tier One suppliers in
NorthDakota and put contracts in placewith 35 new Tier One
suppliers.
Developed local content and builtnational capacity in
EquatorialGuinea as part of Alba B3 project.
Addressed a major communityconcern by reducing heavy
trucktraffic from our Eagle Fordoperations, primarily
bytransporting more crude oil andproduced water by
pipeline.
Continue hiring andcoaching TERO TierOne suppliers to
buildcapacity and contributeto suppliersustainability.
Prepare for oil priceand drilling activityupturn by
focusingSupply Chain onverifying supplierfinancial
viability,partnering withvendors who can helpus compete,
optimizingcost, improvingefficiency andproviding transparencyto run
our businessmore effectively.
Partner with communityorganizations to develop andsupport
projects that addressexisting social issues related toeducation,
health and theenvironment.
Implemented Bioko Island MalariaControl Program interventions
tomaintain low, pre-eliminationmalaria transmission rates,
andsupported first clinical trial ofcandidate malaria vaccine.
Continued support for theNational University of
EquatorialGuinea’s (UNGE) English as aSecond Language
Programtraining program.
Sponsored national nurse midwifetraining program in
EquatorialGuinea through the auspices ofEquatoguinean Ministry of
Healthand Social Welfare, and UNGE.
Continue distributingbed nets to targetedfamilies and
freemalaria combinationdrug therapy throughgovernment
healthfacilities, as well as runsecond trial to testPfSPZ©
vaccineprotectiveness inchildren and adults.
Hand over functioningEnglish LanguageProgram to the UNGEin
Equatorial Guinea.
Maintain and promote
Society
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Continued supporting educationfrom kindergarten throughcollege,
including science,technology, engineering and math(STEM) focused
curriculumenhancements, collegescholarships and
asset-levelvolunteer programs.
Promoted community wellbeingthrough ongoing partnership
withAmerican Heart Association,including providing state-mandated
CPR training for highschools students near our EagleFord
assets.
Provided approximately 170scholarships to develop a
futureworkforce for the oil and gasindustry, including
multi-year Marathon Oil DiversityScholarships.
midwife trainingprogram in EquatorialGuinea.
Expand ReasoningMind math educationprogram in KarnesCounty
IndependentSchool District in SouthTexas Eagle Fordelementary
schools tobuild on improved mathskills and teachersatisfaction.
Expand AmericanHeart Association CPRkits to Oklahomastudents who
need CPRtraining to graduatefrom high school.
Manage security activities in aresponsible and ethical manner
inaccordance with the best practicesassociated with the
VoluntaryPrinciples on Security and HumanRights.
Continued efforts to create onecomprehensive
environmental,social and health impactassessment (ESHIA) for
planningoil and gas activities.
Revamped security training, and provided scenario-based
trainingand new vetting program for allguard force personnel
worldwide.
Continue to respecthuman rights andactively engage inindustry
discussionsaround security andhuman rights.
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Commitments 2015 Progress 2016 Focus
Reduce spills and releases, minimizewastes, and promote
watermanagement, conservation andbiodiversity.
Increased emissions managementdisclosures in this report
toinclude climate changeinformation in continuing effortsto be
responsive to stakeholders.
Proactively used infrared camerasto identify solutions to reduce
airemissions.
Reduced water consumption inour U.S. onshore operations by
34percent from 2014 due to lowerdrilling and completion
activity.Approximately 72 percent ofwater used was nonfresh
water.
Decreased by 13 percent thenumber of spill events to
theenvironment greater than or equalto a barrel from 2014, while
thetotal volume of spills increased 68percent.
Implement strategy toreduce methaneintensity 50 percent by2020
in our Oklahomaoperations, primarily byleak detection,
flaremonitoring andreplacing high-bleedpneumatic controllerswith
low-bleed devices.
Environment
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Commitments 2015 Progress 2016 Focus
Strive for an accident and injuryfree workplace, with safe
andhealthy work practices andconditions throughout
ouroperations.
Continued work to improvecontractor HES performance,including
implementing riskmanagement plans for contractorswith poor
performance. Numberof contractor recordable injuriesdeclined by 15
percent from 2014.
Reduced Company’s TotalRecordable Incident Rate (TRIR)by 48
percent and set new safetyperformance record with a TRIRof 0.39 for
employees andcontractors combined.
Increased focus on hazardawareness and proper gloveselection,
which contributed to 66percent decline in recordablehand
injuries.
Began addressing dropped objectsincidents that accounted for
onethird of the Company’s actual andpotential serious events in
2014.
Established and led industry workgroup to discuss potential
healthand safety hazards and bestpractices associated with
tankgauging.
Focused on our Serious EventRate, a leading indicator that
helpsus prevent events that couldimpact people, the environmentand
the Company.
Standardized root cause analysis(RCA) methodology companywideto
improve the quality of incidentinvestigations, and
trainedindividuals to lead an investigationinvolving RCA.
Implemented a plan forsimultaneous operations in EagleFord to
address an identified riskof conducting drilling andcompletions
operations onproducing well sites.
Focus safety efforts onROMS implementation,transitioning
toelectronic safe workpermitting andconducting
acomprehensiveindustrial hygieneassessment.
Continue reducingnumber and severity ofdropped objectsincidents
by providingadditional tools.
Complete major AlbaB3 compression projectoffshore
EquatorialGuinea with goodoverall safetyperformance.
Safety and Workforce
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Started complying with NorthDakota state requirements tofilter
crude oil for natural gasliquids to reduce volatility beforeit is
transported by rail.
Had zero recordable injuries inOklahoma.
Marathon E.G. Production Limited(MEGPL) had zero
recordableinjuries and lost-time events andset a new record in
December forlongest time to work without arecordable injury (4.8
millionexposure hours) or lost-time event(6.9 million exposure
hours).
Equatorial Guinea LNG HoldingsLimited (EG LNG) employees
andcontractors achieved 3 millionexposure hours without arecordable
injury.
Maintain an inclusive workenvironment where we attract,develop
and retain employees whoactively contribute to growing
ourbusiness.
Improved training, competencydevelopment and workforcemanagement
programs to ensureemployees are properly trainedand positioned to
operate safely ina variety of economic conditions.
Implemented web-based fieldQualifications ManagementSystem
(QMS).
Hosted and led the HispanicAlliance for Career Advancement(HACE)
eight-week academy foremerging Hispanic womenleaders.
Determine criticalcapabilities required torun the core business
inour U.S. unconventionalresource plays to betterpredict needs,
manageworkforce effectivelyand operate safely in adynamic
pricingenvironment.
© 2016 Marathon Oil Company
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LIVING OUR VALUES FOR ETHICAL, RESPONSIBLE OPERATIONS
At Marathon Oil, we are Open and Honest: We hold ourselves to a
high standard of
business ethics and integrity and communicate openly and
transparently in our
operations.
MANAGEMENT APPROACH
The Marathon Oil Board of Directors oversees Company management
and risk management to ensure highlevels of governance, society,
workplace and environmental performance for the benefit of our
shareholders.Our Corporate Governance Principles explain the
composition and functions of the board such as directorselection,
evaluation and compensation.
We maintain an independent Board of Directors in accordance with
applicable laws, regulations, New YorkStock Exchange rules and our
Corporate Governance Principles to ensure proper oversight.
Marathon Oilshareholders elect directors annually, with a majority
of votes cast required for election. In 2015, Gaurdie E.Banister,
Jr., was elected to the board, eight of nine directors qualified as
independent, and two women servedas directors. Interested parties,
including security holders, may communicate with the board through
theMarathon Oil Secretary.
To maintain an independent and effective board, director
candidates are screened and evaluated by theCorporate Governance
and Nominating Committee, with input from the chairman of the board
and the chiefexecutive officer. The committee considers a variety
of professional, leadership and personal qualifications
forpotential board members.
Marathon Oil directors, executives and senior managers have a
financial stake in the Company’s performancethrough stock
ownership. Executive compensation is designed to drive financial
performance and operationalresults through competitive pay, pay for
performance and creation of long-term shareholder value.
Theguidelines and practices for director and executive stock
ownership and compensation are discussed in ourCorporate Governance
Principles and the Marathon Oil Corporation Proxy Statement.
The board’s Compensation Committee considered operational,
financial, safety and environmentalperformance in determining
executive compensation for 2015. Based on the target metrics and
shareholderreturns, the committee decided to keep 2015 base salary
flat with 2014 for named executive officers, limitedthe 2015 annual
cash bonus program and took other actions in the interest of good
corporate governance andsound compensation practices.
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As part of our commitment to good governance, Marathon Oil
respects local laws and regulations wherever weoperate. Our Code of
Business Conduct explains our responsibility to governments and the
law and providesguidance to employees, directors, contractors and
others for complying with laws and regulations.
PROGRESS ON OUR COMMITMENTS
We are committed to participating in the public policy process
and maintaining employee awareness on issuesrelevant to our company
and industry. In 2015, we:
Promoted responsible, state-based regulation of hydraulic
fracturing and seismicity; safe and reliableinfrastructure; tax
structures that encourage investment; regulations that promote
clean air and waterwhile enabling energy development; and reliable
permitting processes.
Collaborated with industry and successfully advocated for U.S.
oil producers’ ability to export crude oilglobally.
Conducted oil and gas education sessions and tours for
legislators and regulators.
Our commitment is to conduct our business with high standards
for responsible operations, business ethicsand integrity, corporate
governance and transparency. To promote awareness and maintain
compliance withrelevant laws, regulations and policies, Marathon
Oil provides education, training and resources. In 2015, we:
Approved our new Responsible Operations Management System
(ROMS).
Implemented a new HES&S audit standard to drive consistency
throughout the Company.
Conducted annual, mandatory anti-corruption compliance training
for all designated employees.
Deployed a revised Annual Code of Business Conduct
Questionnaire.
Continued our commitments to transparency (USEITI, UKEITI,
Canada, Equatorial Guinea and theKurdistan Region of Iraq).
Conducted emergency response drills in all of our operated
business units and a corporate-level spillresponse exercise
covering our Bakken asset.
© 2016 Marathon Oil Company
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BUSINESS ETHICS AND PREVENTING CORRUPTION
Marathon Oil believes integrity, ethical business practices,
corruption prevention
and transparency of payments are crucial to maintaining our
license to operate,
and our relationships with key stakeholders.
The Audit and Finance Committee of our Board of Directors
oversees Marathon Oil’s focus on business ethicsand integrity.
Internal resources and initiatives to promote and uphold our high
standards of integrity andbusiness ethics include:
Business Integrity Office
Integrity Helpline
Policies and procedures related to ethical, legal and regulatory
compliance
Financial disclosures
Enterprise Risk Assessment and risk management
Training
Annual Code of Business Conduct Questionnaire
Preventing Corruption
Marathon Oil complies with all applicable anti-corruption laws
in the countries where we operate, including theU.S. Foreign
Corrupt Practices Act (FCPA) and United Kingdom Bribery Act.
Our anti-corruption compliance program aligns with the U.S.
Department of Justice’s recommendations for aneffective corporate
compliance program. Designated employees take anti-corruption
training, depending ontheir job responsibilities. We also have an
annual anti-corruption compliance audit program for our
operationsoutside the U.S. and outside-operated interests in
countries not in the Organization for Economic Cooperationand
Development (OECD).
Grievance System
Marathon Oil promotes an open and inclusive workplace to help
avoid grievances. We reinforce a culture oftreating others with
dignity, fairness and respect and encourage employees to work with
their supervisors andmanagement to resolve any issues that arise.
Employees can report issues confidentially through HumanResources,
Audit, HES&S, Law and the Business Integrity Office.
Employees, contractors and members of the public can report
concerns about our Code of Business Conduct toour Integrity
Helpline at any time. Reporting of suspected unethical or illegal
activities is anonymous andconfidential, and Marathon Oil forbids
retaliation against anyone who reports concerns in good faith.
Transparency of Payments
Marathon Oil supports transparent reporting of revenue flows
from oil and gas production as a means toprevent bribery and
corruption. We have participated in the Extractive Industries
Transparency Initiative (EITI)since 2004 in various countries where
we have operations to strengthen governance, foster
stakeholdercooperation, aid development of civil society and manage
risk. The Company also communicates ouraggregated payments to
governments.
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Country Status
CanadaThe Extractive Sector Transparency Measures Act was
brought into force on June 1, 2015. Marathon Oil will register with
thegovernment in June 2016 and will be required to report by May
2017 for the 2016 calendar year.
EquatorialGuinea
Marathon Oil continues to support the Government of Equatorial
Guinea in its efforts to become an EITI Candidate. MarathonOil is
in the multi-stakeholder National Commission in Equatorial Guinea,
which comprises representatives from civil society,companies and
government. The Commission was formed to oversee EITI
implementation.
Gabon No longer recognized as an EITI implementing country,
following delisting in February 2013.
KurdistanRegion ofIraq
Iraq is EITI compliant. In May 2013, it produced an update of
its 2010 report, including a chapter on the Kurdistan Region
ofIraq’s oil and gas production from revenues from exports.
UK
EITI candidate since October 2014. UK oil and gas operators are
required to report under the UK EITI. The disclosure thresholdis
£86,000 (~USD$125,000) at a group level for each payment type. For
the reporting year 2014, submitted in July 2015,Marathon Oil
provided data on corporation tax, petroleum revenue tax and
petroleum licence fees. The �rst UK EITI report waspublished in
April 2016.
In addition, the EU Accounting Directive requires large listed
or UK incorporated oil and gas producers to disclose paymentsmade
to the government. The �rst year of reporting will be for 2015,
with an anticipated reporting deadline of November 2016.Marathon
Oil UK expects these payments to be required to be consolidated in
U.S. Dodd Frank reporting.
US
EITI candidate, but not yet meeting all requirements. The USEITI
published its �rst report in December 2015, includingpayment data
voluntarily reported by Marathon Oil and 30 other extractive
industry companies.
In December 2015, the U.S. Securities and Exchange Commission
issued a proposed rule on disclosure of resource extractionpayments
by certain public companies, with close consideration of EITI
guidance. The �nal SEC rule is pending.
© 2016 Marathon Oil Company
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PUBLIC POLICY AND POLITICAL CONTRIBUTIONS
Marathon Oil’s commitment is to participate in the public policy
process on issues
relevant to our Company and industry. These issues, such as
regulations and tax
structures that encourage investment, affect our license to
operate, build a
sustainable company and create shareholder value.
We seek to have a voice in regulatory and legislative decisions
so that we can continue to comply withregulations while producing
oil and gas cost effectively, offering competitive employment
opportunities,protecting the environment and having a positive
impact on the communities where we operate.
The Company believes that U.S. state governments are typically
best positioned to regulate oil and gasoperations. Some proposed
federal regulations would slow economic development if enacted
because theyduplicate or conflict with state or other federal
regulations. In 2015, we continued to share insights andconcerns
related to our U.S. unconventional resource plays with legislators
and regulators at the federal, stateand local levels.
Political Contributions and Lobbying Activities
Marathon Oil contributed a total of U.S. $12,500 to candidates,
political party organizations and political actioncommittees
(PACs), where allowed by law, in the U.S. and Canada in 2015.
Contributions are made tocandidates who support responsible energy
development, are based solely on a candidate’s position onbusiness
issues and are made without regard for the individual political
preferences of Company executives.
Eligible employees may contribute to candidates for U.S. federal
and state elected office through the MarathonOil Company Employees
Political Action Committee (MEPAC). MEPAC is registered with the
U.S. FederalElection Commission (FEC) and complies with all FEC,
state and local rules and reporting requirements. In2015, MEPAC
donated approximately $83,500 to 55 candidates, political party
organizations and PACs, and$65,000 to the Marathon Oil Company
Political Action Committee of Texas (MOCPAC-TX). Our donations
tocandidates and PACs at the state and local level in Texas are
made through MOCPAC-TX. In 2015, MOCPAC-TX donated approximately
$4,500 to four candidates and PACs. MOCPAC-TX is registered with
the TexasEthics Commission and complies with all Texas rules and
reporting requirements.
During 2015, we made payments to organizations and trade
associations that engage in, among other things,lobbying
activities. As part of our commitment to good governance and
transparency, we voluntarily providethe 2015 Report of Lobbying and
Political Contributions, which discusses in greater detail these
payments, alongwith our policies and procedures for lobbying and
political activities. The report also discloses:
Our corporate contributions made to all tax-exempt 527
organizations that exceed $35,000.
The lobbying portion of our payments and dues made to trade
organizations that if made directly byMarathon Oil, would not be
deductible under section 162(e) of the Internal Revenue Code and
that exceed$35,000. This is based on information provided to us by
the trade associations of which Marathon Oil is amember.
© 2016 Marathon Oil Company
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EMERGENCY PREPAREDNESS AND RESPONSE CAPABILITIES
Marathon Oil conducts our business with high standards for
responsible
operations, which we believe demonstrates good governance.
As a responsible operator, we maintain comprehensive emergency
preparedness and response capabilities,including:
Requirements in our Responsible Operations Management System
(ROMS)
Response teams at the local, regional and corporate levels,
including the Corporate Emergency ResponseTeam (CERT) that operates
under the authority of the executive-level Crisis Management
Team
A network of response contractors and consultants
Annual training, drills and exercises with government agencies
and key stakeholders
Participation in industry associations to share lessons learned
and drive improvements
A corporate Security and Emergency Preparedness Group with
professionals dedicated full time totraining, drills and
participation in industry emergency response activities
Marathon Oil is increasing business unit ownership of security
and emergency preparedness, while focusingthe Corporate Security
and Emergency Preparedness Group on enterprise-wide activities.
This shift is part of amulti-year plan to maintain institutional
and role-specific competency at the operating level and to build
acorporate effort based on the management system to validate
business unit response capabilities. CorporateSecurity subject
matter experts will continue to fill incident command roles and
coordinate with business unitleaders to maintain effective response
capabilities.
© 2016 Marathon Oil Company
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SUSTAINABILITY OVERSIGHT
Marathon Oil believes that a company must address its
responsibilities for
governance, society, the environment and its workforce to
achieve sustainable
business success and create value.
We look beyond our office walls and operational facilities to
understand how our decisions, actions andoperations affect others,
and how we can address stakeholders’ critical needs.
Our Corporate Sustainability Guidelines outline how the Company
will demonstrate our commitment toeconomic, environmental, safety
and social sustainability in the communities where we operate.
Together withour Responsible Operations Management System (ROMS)
and other resources, these guidelines helpemployees manage our
business and external stakeholder relationships responsibly.
Marathon Oil expects employees to incorporate sustainability
processes and activities such as stakeholderengagement and capacity
building when conducting our business. Sustainability commitments
are set at thecorporate level and asset managers determine when and
how to apply the guidelines to help achieve assetoperational goals
and support sustainability locally.
Delivering on sustainability principles is a collaborative
effort among internal stakeholders. The executive vicepresident,
general counsel and secretary, and vice president of technology and
innovation are responsible forimplementing the guidelines, with
oversight from the Health, Environmental, Safety and
CorporateResponsibility (HES&CR) Committee of our Board of
Directors.
The Marathon Oil executive committee, which comprises operating
component and support function officers,is accountable to the board
for activities related to sustainability.
© 2016 Marathon Oil Company
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LIVING OUR VALUES TOWARD SOCIETY
At Marathon Oil, we are community partners: We build stronger
communities by
developing relationships with our stakeholders and by investing
our time, talent
and resources.
MANAGEMENT
APPROACH
To have a positive impact on communities where we work, Marathon
Oil focuses on our core values, strives toearn and protect our
license to operate, and drives business performance. The principles
by which wedemonstrate our commitment to economic, environmental,
safety and social sustainability in thesecommunities are outlined
in our Corporate Sustainability Guidelines.
PROGRESS
ON OUR COMMITMENTS
Our commitments are to work with stakeholders to understand how
our operations impact local communitiesand to partner with
community organizations to develop and support projects that
address existing socialissues related to education, health and the
environment. In 2015, we:
Developed Corporate Sustainability Guidelines to support
economic, environmental, safety and socialsustainability in
communities where we operate.
Developed a stakeholder engagement tool kit to help our assets
identify and engage stakeholders and planengagement events.
Developed local content and built national capacity in
Equatorial Guinea by contracting with anEquatoguinean firm that
fabricated the bridge and flare structures for our Alba B3
project.
Reduced the number of truckloads of crude oil by connecting 10
central facilities to pipelines in the EagleFord. The average
daily volume of crude oil transported by truck dropped
approximately 70 percent duringthe year as a result of increased
pipeline transportation, as well as the overall drop in production
due tolower activity.
Installed approximately 156 miles of pipeline in the
Bakken for the Hector Ajax Water Gathering System(HAWGS) along with
commissioning 170 Water Allocation Skids (WAS), with five skids to
be completed in2016. Approximately 89 percent of the area’s total
produced water volume flowed through the pipelinedaily at year-end
2015. Transporting this produced water by pipeline eliminated
approximately 115truckloads per day.
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Continued supporting education from kindergarten through
college, based on our Integrated EducationFunding Model. Our
primary efforts were science, technology, engineering and math
(STEM) focusedcurriculum enhancements, college scholarships and
asset-level volunteer programs.
Implemented Bioko Island Malaria Control Project interventions
that resulted in the second lowest malariaprevalence rate to date
(15 percent of youth population), supported the first clinical
trial of a candidatemalaria vaccine and sponsored a national nurse
midwife training program in Equatorial Guinea.
Promoted employee and community wellbeing through our ongoing
partnership with the American HeartAssociation, including providing
state-mandated CPR training for high school students near our Eagle
Fordassets.
Integrated social and security considerations into the
environmental, social and health impact assessment(ESHIA) process
to create one comprehensive impact assessment for planning oil and
gas activities.
Revamped security training to incorporate ethical, legal and
operational aspects, and provided scenario-based training for our
contract and proprietary guard force personnel worldwide.
Launched and provided training on a new vetting program for all
proprietary and contract securitypersonnel.
© 2016 Marathon Oil Company
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STAKEHOLDER ENGAGEMENT
We are committed to expanding our operations to create value for
shareholders
and further economic progress.
At the same time, we will conduct our business with a high
regard for the health and safety of our neighbors,communities,
employees, contractors and the environment. Marathon Oil believes
stakeholder engagementstrengthens our ability to manage community
impacts and risks, access new resources, operate efficiently,avoid
project delays and sustain effective relationships.
Our commitment is to work with people interested in Marathon Oil
projects or operations to understand howour operations impact local
communities and to develop strategies and plans that deliver
mutually beneficialresults.
The Company’s sustainability guidelines encourage local asset
teams to engage stakeholders to shareinformation about our
activities, seek feedback and ensure we understand their concerns
and priorities. In2015, we developed a stakeholder engagement tool
kit that local asset teams can use to identify stakeholdersand
critical impacts, assess risk and plan engagement activities.
Stakeholder engagements are tracked in ourSynergi software as
needed to manage risk and monitor follow-through and resolution of
issues. Engagementstracked in 2015 included landowner and surface
owner concerns about potential environmental and safetyissues and
Marathon Oil’s actions to follow up and resolve the issues.
In 2015, our Oklahoma asset team developed and implemented a
stakeholder engagement program to build onstrong relationships
developed over the past 100 years that Marathon Oil has operated in
the state. To supportfuture operational expansion in Oklahoma, the
program focuses on engaging employees and governmentofficials,
building community awareness of Marathon Oil and strengthening key
business and strategic vendorpartnerships. Oklahoma is using
Synergi to document and verify issues and concerns raised by
externalstakeholders and to track and communicate planned
engagement activities.
© 2016 Marathon Oil Company
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*Total Philanthropic Giving: $6.7 million in corporate giving
and $.7 million in
employee giving; Total Sustainable Investments: $16.8
million.
SOCIAL INVESTMENT
We believe social investment helps Marathon Oil contribute to
the long-term
sustainability of communities where we operate.
Philanthropic Focus
Our commitment is to partner with communityorganizations to
develop and support projects thataddress existing social issues
related to education,health and the environment. We often
collaboratewith business partners and nonprofit organizationsand
seek to connect our partners to furtherstrengthen programs and
communities. MarathonOil emphasizes capacity building so
communities cansustain social programs beyond our investment
andinvolvement.
In light of the drop in commodity prices in 2015,Marathon Oil
reduced our philanthropic spending 45percent compared to 2014,
while maintainingsupport for programs that align with our
businessstrategy and demonstrate positive results. Wecontinue to
review all philanthropic giving based onthe sustainability of
Marathon Oil and ourcommunities.
Strengthening Education
Marathon Oil invests in education from kindergartenthrough
college to strengthen communities and buildthe foundation for the
future workforce. We areguided by our
Integrated Education Funding
Model to drive positive, meaningful change in academicperformance,
graduation rates and interest in STEM fields. The model helps us
identify and invest in promisingprograms, measure effectiveness and
work with stakeholders to address outside factors that can impact
theoutcomes of educational programs, such as parental support and
underlying social issues. To learn more, pleasesee the case study
on our investments in education.
Building Healthier Lives
46%
26%
23%
3%
1%
1%
Marathon Oil Social Investments byGiving AreaTotal Social
Investments: $24.2 million*
Education and Training Health and Human Services
Civic, Community, Culture Employee Giving
Environment and Conservation
In Kind and Pro Bono
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Building Healthier Lives
Marathon Oil has an ongoing partnership with the
American Heart Association
(AHA) as part of ourcommitment to the health and wellbeing of our
employees, their families and communities where we work.AHA
emphasizes prevention and building healthier lives free from
cardiovascular disease and stroke, whichhelps ensure a healthy
workforce.
Several U.S. states where we operate now mandate that high
school students receive cardiopulmonaryresuscitation (CPR)
education before they graduate. In 2015, we trained almost 100 high
school students in ourSouth Texas Eagle Ford asset using
life-saving AHA CPR kits. In 2016, we plan to expand this program
to ourOklahoma asset.
Supporting Local
Communities
To encourage employees to support our nonprofit community
partners, the Marathon Oil Gives programprovides a one to one match
for employee donations to Company-supported organizations. In 2015,
wematched approximately $500,000 in employee gifts, for a total of
$1 million to more than 100 nonprofitorganizations. Marathon Oil
Gives also encompasses a matching gift program to U.S. universities
and encouragesvolunteerism by contributing $500 annually to
qualified nonprofit charitable organizations where
eligibleemployees volunteer at least 30 hours outside of their
normal workday.
On the local level, our asset teams supported a wide range of
community organizations. For example:
We partnered with public and private stakeholders and
non-governmental organizations (NGOs) tosupport social programs
targeting health, education and community assistance in Equatorial
Guinea.
The Oklahoma community relations committee developed and
maintained partnerships with local outreachcenters, food
pantries, fire departments, scholarship funds and health-related
charities.
Our Aberdeen, Scotland, office continued supporting Absafe: The
Safe, an interactive safety center torecognize risk in any
situation, as well as VSA Friends for Life youth clubs for children
and young peoplewith special needs.
Safeguarding the
Environment
To act on our core value of environmental stewardship, Marathon
Oil seeks opportunities to protect andconserve natural resources,
habitats and environments through social investment and
philanthropic giving.
In 2015, we continued to support the National University of
Equatorial Guinea (UNGE) Pico
BasileConservation Project that improves forestry management and
develops environmental education programsand interventions. The
project developed anti-littering and anti-poaching television spots
encouragingEquatoguineans to take care of their environments and to
respect the national forest reserves. It alsodeveloped the first
documentary on Equatoguinean wildlife conservation, “Secrets of the
Forest,” which isbeing shown to primary and secondary school
children throughout the country in 2016.
Through our partnership with
Green Standards in the U.S.,
Marathon Oil helped 12 nonprofit organizationswhile minimizing
waste. Whenever possible, we donate surplus furniture, appliances
and other materials toGreen Standards instead of sending it to a
landfill. Green Standards then resells, recycles and donates
thesematerials to minimize waste and help communities.
Green Standards Program Impact
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Green Standards Program Impact
© 2016 Marathon Oil Company
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SECURITY AND HUMAN RIGHTS
Marathon Oil respects the human, cultural and legal rights of
individuals and
communities. Our commitment stems from the United Nations
Universal
Declaration of Human Rights (UDHR) and the International Labor
Organization’s
(ILO) Declaration on Fundamental Principles and Rights at
Work.
We promote the goals and principles of the UDHR within our
business relationships and work to preventabuses and advance human
rights in the communities where we operate.
We have been a participating member in
the
Association of the Voluntary Principles on Security and HumanRights
since 2005 to emphasize our commitment to the UDHR. Due to the
fundamental changes in ourbusiness strategy and geographic scope in
recent years to focus on North American unconventional
resourceplays, Marathon Oil withdrew our membership in the
Voluntary Principles association in May 2016. In our twosignificant
operating areas outside of the U.S., the U.K. and Equatorial
Guinea, we have well-established andeffective security and human
rights policies. Additionally, Marathon Oil intends to remain
actively engaged indialogue around human rights through our
participation in oil and gas industry associations. We will
continueto focus on operating safely and securely throughout the
world, while respecting human rights.
Before entering a new location, we assess the security and
social risks associated with our business activitiesand determine
mitigation measures based on the risks we identify. We develop
mitigation activities to promotebusiness continuity, protect
assets, safeguard personnel and minimize any potentially adverse
impacts of ouroperations on stakeholders.
Our commitment is to manage
security
activities in a responsible and ethical manner in accordance with
thebest practices associated with the Voluntary Principles. We
manage security through our ResponsibleOperations Management System
(ROMS) element for Emergency Preparedness and Community
Awareness.This element requires Marathon Oil to identify and engage
with local communities, government emergencyresponders and other
stakeholders within or adjacent to our operations regarding
potential risks and plannedresponse measures. We assess compliance
with security and human rights practices using our
three-tieredaudit program. In addition, principles in our Corporate
Sustainability Guidelines support our activities relatedto human
rights, stakeholder engagement and other processes in communities
where we operate.
In 2015, Marathon Oil had no known security-related incidents
that resulted in a human rights violation. Ourcountry-level
implementation focused on our operations in Equatorial Guinea,
where we are the operator ofnatural gas production and processing
facilities. We employ a proprietary guard force to protect the
onshorefacilities and engage with the Navy of Equatorial Guinea for
protection of offshore gas production facilities.The launch of an
offshore exploration program and maritime facility upgrade project
in 2015 gave MarathonOil the opportunity to engage with host
country authorities regarding human rights and rules of
engagement.
We continue to participate in the IPIECA Responsible Security
Task Force, which promotes best practicesassociated with
implementation of the Voluntary Principles. Marathon Oil also
participated in a group ofVoluntary Principles corporate members
that was organized by PAX to draft the Model Clauses for
SecurityAgreements guidance.
Our focus areas in 2016 will be to finalize the Environmental,
Social, and Health Impact Assessment (ESHIA)process to support
activities in new locations, and work with IPIECA’s Responsible
Security Task Force andobservers to the Voluntary Principles to
further develop the Memorandum of Understanding for the full
scopeof security cooperation between a company and a host nation
government.
© 2016 Marathon Oil Company
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LIVING OUR VALUES TO PROTECT THE ENVIRONMENT
We are environmental stewards, who responsibly grow and improve
our business
by effectively applying best-in-class technologies, training and
processes to
minimize our environmental impact.
MANAGEMENT APPROACH
Marathon Oil believes protecting the environment is essential,
and we reinforce with employees andcontractors that compliance with
regulations and laws is not negotiable. We have a long-standing
commitmentto environmental stewardship and continuous improvement
in our environmental performance. We work tounderstand and manage
our environmental risks to produce energy responsibly by using
natural resourcesefficiently and actively managing potential
impacts on air, water, land and wildlife.
Our Responsible Operations Management System provides a
structured approach to managing ourenvironmental risks. We strive
to eliminate or reduce the environmental impacts of our operations
bydeveloping sound practices for managing emissions, water and
waste at the regional and local levels. Weemploy environmental
management strategies and processes to:
Promote compliance with all applicable regulations or, in the
absence of fully developed regulatorystructures, with World Bank
Guidelines in effect at the time of the engineering design of the
facilities orequipment.
Identify and prioritize significant sources of air emissions,
waste and water use.
Systematically identify, evaluate and implement potential
solutions to reduce air emissions, waste andfresh water use and to
prevent spills.
Systematically track and report environmental performance data
and management practices to internaland external stakeholders.
PROGRESS ON OUR COMMITMENTS
Our commitment is to reduce spills and releases to the air,
minimize wastes, and promote water management,conservation and
biodiversity. In 2015, Marathon Oil:
Increased our air emissions disclosures in this report in our
continuing efforts to be responsive to ourstakeholders.
-
Proactively used infrared cameras to identify solutions to
reduce air emissions.
Reduced water consumption in our U.S. onshore operations by 34
percent from 2014 due to lower drillingand completion activity.
Approximately 72 percent of water used was nonfresh water.
Decreased by 13 percent the number of spill events to the
environment greater than or equal to a barrelfrom 2014, while the
total volume of spills increased 68 percent.
Participated as part of an operator consortium in North Dakota’s
Energy & Environmental Research Center(EERC) on improvements to
the efficiency of wellsite operations; design and implementation of
newapproaches to exploration, development and production; and other
projects.
© 2016 Marathon Oil Company
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CLIMATE CHANGE AND AIR EMISSIONS MANAGEMENT
Marathon Oil recognizes the concern about the potential impact
of greenhouse gas
(GHG) and other air emissions on global climate. At the same
time, we recognize
the need for reliable and affordable energy to meet long-term
demand, and the
important role oil and natural gas are projected to play in
meeting that demand.
Marathon Oil remains committed to finding and developing oil and
natural gas in a safe and responsiblemanner, which includes efforts
to reduce GHG and other air emissions from our operations in
accordance withour standards, policies and applicable
regulations.
Marathon Oil understands that additional climate change laws and
regulations may be implemented in thefuture as guided by national
policy and supported by more comprehensive global agreements such
as thatproposed by the 2015 United Nations Climate Change
Conference. Our approach to mitigating the risk ofadditional
regulation includes understanding and mitigating our GHG emissions,
evaluating climate change riskin our investment decisions and
engaging with external stakeholders to understand their
perspectives.
2015
Air Emissions Performance
Marathon Oil periodically evaluates and implements air emissions
reduction strategies and technologies forour operations, which are
described in the Emissions Overview, Methodology and Mitigation
Strategiessection. Emissions reduction strategies and technologies
are used throughout the drilling and productionlifecycle,
including:
Well drilling
Well completions, including hydraulic fracturing
Storage tank controls
Liquids unloading
Equipment optimization
Pneumatic devices
Equipment leaks, including use of infrared cameras
Transportation emissions
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Because our business is focused on producing hydrocarbon
liquids, we evaluate our performance usingprimarily GHG and methane
emissions intensity, expressed as carbon dioxide equivalent (CO2e)
emissions per
all hydrocarbon production.
In 2015, the Company’s gross production of hydrocarbons
increased by 3 percent. However, the reducedcapital spending
program resulted in lower activity and production in many assets,
which contributed to a 5percent increase in our global GHG emission
intensity.
Global
CO2 emissions increased by 8 percent, and
methane emissions increased by 11 percent.
a. Excludes East Texas/North Louisiana (discontinued assets)
b. N₂O emissions are marginal and make up less than 1 percent of
the CO₂
and N₂O emissions
a Excludes East Texas/North Louisiana (discontinued assets)
b N₂O emissions are marginal and make up less than 1 percent of
the CO₂
and N₂O emissions
GHG emissions increased in some growth assets, and decreased or
remained relatively constant in our legacyassets.
In Eagle Ford, while production increased by 11 percent, GHG
emissions and GHG emission intensitydecreased by 4 percent and 13
percent, respectively. Using central facilities to process more
productioncontributed to this decrease by making our operations
more efficient and reducing air emissions and theoverall land
footprint of our operations.
In Bakken, GHG emissions and GHG emission intensity increased by
23 percent and 10 percent,respectively. While we have connected 98
percent of the production facilities to third-party gas
pipelines,flaring of associated gas due to constrained gas pipeline
capacity increased GHG emissions. Across thebasin, we captured an
average 85 percent of produced gas and met the year-end 2015 target
mandated bythe North Dakota Industrial Commission (NDIC). Our
strategies to continue reducing the amount of gasflared include
enabling third-party gas gatherers to build gas infrastructure by
providing our drilling plans,assisting with landowner right-of-way
acquisitions and prioritizing connections to the gas
infrastructure.Third-party gas gatherers began to increase the
amount of gas they processed during the second half of2015, which
decreased flaring.
Production (Millions BO
E)
4.14 4.294.64
2013 2014 20150
1
2
3
4
5
170M
175M
180M
185M
190M
195M
Global GHG Emissions aMillion Tonnes CO2e
CO₂ + N₂Ob Methane
Production (Millions BOE)
23.58 23.2524.47
2013 2014 20150
5
10
15
20
25
30
Global GHG Intensity aTonnes CO₂e/thousand BOE
CO₂ + N₂Ob Methane
-
In the UK, GHG emission intensity increased by 2 percent due to
production declines. However, total GHGemissions decreased by 5
percent compared to 2014 as a result of operational efficiencies
such asprocessing gas through a single gas compressor train on the
East Brae platform, which eliminated emissionsources.
BK: Bakken
EF: Eagle Ford
OK: Oklahoma
WY: Wyoming
GOM: Gulf of Mexico
EG: Equatorial Guinea
UK: United Kingdom
Excludes East Texas/North Louisiana (discontinued assets)
BK: Bakken
EF: Eagle Ford
OK: Oklahoma
WY: Wyoming
GOM: Gulf of Mexico
EG: Equatorial Guinea
UK: United Kingdom
Excludes East Texas/North Louisiana (discontinued assets)
Marathon Oil's methane intensity decreased or remained
relatively constant in our growth assets primarilydue to
improvements in gas capture and operational efficiency. In
Oklahoma, methane intensity decreased by 3percent largely due to
improvements in flare systems and installation of low-bleed
controllers. Continuingcurrent practice, all new wells in Oklahoma
will be outfitted with low-bleed controllers. In addition,
Oklahomaset an asset-wide goal to reduce methane intensity 50
percent by 2020.
BK EF OK WY GOM EG UK0
0.25
0.5
0.75
1
1.25
Global Emissions by Asset aMillion Tonnes CO₂e
2013 2014 2015
BK EF OK WY GOM EG UK0
10
20
30
40
50
GHG Intensity by AssetTonnes CO₂e/thousand BOE a
2013 2014 2015
-
BK: Bakken
EF: Eagle Ford
OK: Oklahoma
WY: Wyoming
GOM: Gulf of Mexico
EG: Equatorial Guinea
UK: United Kingdom
Excludes East Texas/North Louisiana (discontinued assets)
BK: Bakken
EF: Eagle Ford
OK: Oklahoma
WY: Wyoming
GOM: Gulf of Mexico
EG: Equatorial Guinea
UK: United Kingdom
Excludes East Texas/North Louisiana (discontinued assets)
Marathon Oil also evaluates our performance as a measure of
total methane emissions as a percentage of totalhydrocarbon
produced and total methane emissions as a percentage of natural gas
produced. Our overallmethane emissions ratio remains flat at 0.3
percent.
Methane increases in Bakken were primarily due to increased
fugitive emissions from having more facilitiesand their associated
flaring.
Our operations in Equatorial Guinea, which account for 56
percent of our total natural gas production, havethe Company’s
lowest methane emissions ratio of 0.1 percent.
BK EF OK WY GOM EG UK0
0.05
0.1
0.15
0.2
0.25
Methane Emissions by AssetMillion Tonnes CO₂e
2013 2014 2015
BK EF OK WY GOM EG UK0
10
20
30
Methane Intensity by AssetTonnes CO₂e/thousand BOE
2013 2014 2015
-
BK: Bakken
WY: Wyoming
OK: Oklahoma
EF: Eagle Ford
UK: United Kingdom
GOM: Gulf of Mexico
EG: Equatorial Guinea
Excludes East Texas/North Louisiana (discontinued assets)
OK: Oklahoma
UK: United Kingdom
BK: Bakken
WY: Wyoming
EF: Eagle Ford
EG: Equatorial Guinea
GOM: Gulf of Mexico
Excludes East Texas/North Louisiana (discontinued assets)
Criteria
pollutant emissions, which include nitrogen oxides (NOx), volatile
organic compounds (VOCs) andsulfur oxides (SOx), increased from
2014 to 2015. Criteria pollutant emission intensity increased by
22percent. We manage our criteria pollutant emissions in accordance
with applicable emissions controlregulations. In countries that do
not have emission control regulations, we comply with applicable
World BankGuidelines for air quality.
BK WY OK EF UK GOM EG Global0
0.5
1
1.5
2
2.5
Methane Emissions as a % ofNatural Gas Produced
2014 2015
OK UK BK WY EF EG GOM Global0
0.2
0.4
0.6
Methane Emissions as a % of TotalHydrocarbons Produced (BOE)
2015
-
Excludes East Texas/North Louisiana (discontinued assets)
Excludes East Texas/North Louisiana (discontinued assets)
© 2016 Marathon Oil Company
23,013.3
27,690.6
34,919.1
2013 2014 20150k
10k
20k
30k
40k
Global Criteria Pollutant EmissionsTons
NOx VOC SOx
0.131
0.15
0.183
2013 2014 20150
0.05
0.1
0.15
0.2
Global Criteria Pollutant IntensityTons/thousand BOE
NOx VOC SOx
-
MANAGING RISKS
Marathon Oil continuously reviews the potential impact that
future climate change
regulation may have on our business decisions.
We believe that oil and gas development and production will
remain crucial to the world economy, and ourbusiness models are
focused on continued operation in this space. We manage climate
change risks, along withmany other business risks, through our
Enterprise Risk Management, with oversight from Marathon Oil’sBoard
of Directors and management. These risks factor into our business
decisions using our capital planningsystem.
Our capital planning system relies on many inputs including
third-party commodity price forecasting tointegrate various risks
including climate change into our business strategy. These
third-party forecastingservices, which include IHS, Wood Mackenzie
and the PIRA Energy Group, allow us to form price scenarios totest
the investment decisions on near- and long-term projects. In
addition, projects are stress tested across abroad range of pricing
outcomes to ensure they are robust at lower price levels. Price
forecasts from theseservices factor in supply and demand in global
markets and consider the market penetration of alternative fuelsand
potential climate change policies. Each of these services’
forecasts are considered along with Companyspecific insights and
guidance to prepare Marathon Oil’s forecast. Additionally, the cost
of carbon is factoredinto expense and revenue models for assets in
Canada and the UK where current carbon trading
regulationsexist. Profitability and capital allocation will
be based on expected prices, and specific financial targets
orstrategic objectives must be met to sanction a project.
External Engagements
Marathon Oil advocates for reasonable and balanced regulations
that allow flexibility to reduce emissions costeffectively, and in
2015 made payments to organizations and trade associations that
engage in lobbyingactivities. Through these trade associations, we
participate in the U.S. public policy dialogue about
criticalenvironmental and energy policies, including rulemaking
comment periods regarding climate change issues
© 2016 Marathon Oil Company
-
WATER MANAGEMENT
Marathon Oil recognizes that water is a valuable resource that
we share with the
communities where we operate. Our use of water is guided by the
core water
stewardship practices of responsible sourcing, conservation,
reuse and disposal.
Our
water
usage in U.S. onshore operationsdecreased by 34 percent from 2014
to 2015 becauseof reduced drilling and completion activities. In
2015,we used an estimated 40 million barrels of water, ofwhich 3
percent was recycled and 72 percent wasfrom nonfresh water (i.e.,
water that meets U.S.drinking water quality standards).
In the
Eagle
Ford, which accounts for approximately85 percent of our water use,
we preferentially usenonfresh water sources for drilling and
completionactivities. In 2015, we reduced nonfresh water useby 40
percent from 2014 to 2015. We alsopermanently installed recycle
technology that wehad been piloting since 2013, and recycled
1.1million barrels of produced water for reuse in eitherstimulation
or workover jobs.
This data excludes water usage from internationaloperations
where process water is primarily sourcedfrom seawater. We leverage
lessons learned acrossour U.S. resource plays, employ best
practices, and participate in industry efforts to be good stewards
of waterresources and drive technological innovation in water
management.
Marathon Oil engages externally to identifysolutions for
preserving scarce water resources inour U.S. onshore operations. We
participated in amulti-operator effort with the Texas
WaterDevelopment Board (TWDB) to voluntarily provideinformation
obtained from company-owned brackishwater wells in South Texas. The
collaborative effortallowed the TWDB to fulfill the requirements
ofTexas legislation to identify brackish groundwaterproduction
zones for municipal, industrial andagricultural uses. The
proprietary information thecompanies shared also enables the TWDB
to moreaccurately map the brackish water zones of keyaquifers,
thereby providing a better picture of thispotential future
resource.
We also participated in a multi-operator projectsponsored by the
South Texas Energy & EconomicRoundtable (STEER) to study four
aquifers in theEvergreen Underground Conservation District. Thegoal
of the study is to provide the district with
additional scientific data to allow for tailored withdrawal
schemes for individual aquifers to better use theresource and
protect stressed systems.
74
26
Nonfresh Fresh0
20
40
60
80
2015 U.S. Onshore Water UsageMillion barrels
2014 2015
2.6%
25.8%
71.6%
2015 U.S. Onshore Water Source
Recycled Fresh Nonfresh
-
SPILLS AND RELEASES
Marathon Oil focuses on preventing spills and releases of oil
and gas.
We develop procedures, install mechanical safeguards, and
conduct preventive maintenance and equipmentinspections to prevent
spills and releases. We periodically update our plans for storm
water and spillprevention, control and countermeasures to ensure
compliance and continuous improvement. Wheninvestigating spills and
discharges to identify their cause, we look at both the actual and
potential spill severity.The Company takes incident-specific
actions and, if necessary, broad corrective actions including
remediation.
Across our operations in 2015, the total number of spill events
to the environment greater than or equal to abarrel decreased by 13
percent from 2014, primarily as a result of reduced drilling and
completion activities.However, during the same period the total
spill volume increased by 68 percent, mainly due to flowline
failuresin the Eagle Ford and Wyoming.
Incident investigations in the Eagle Ford identified
microbial-induced corrosion (MIC) as the primary cause ofan
increasing trend of flowline failures. We have risk-assessed the
pipeline distribution system and prioritizedcorrective actions
including increased pigging of flowlines and intensified corrosion
treatment. We alsoperform flyovers of flowlines to improve early
detection of spills.
Discontinued assets were removed from the previous year's data
for
comparing year-on-year performance
Discontinued assets were removed from the previous year's data
for
comparing year-on-year performance
© 2016 Marathon Oil Company
Percent of Spill Events Uncontained
2013 2014 20150
20
40
60
80
10
15
20
25
30
Spill Events to the Environment ≥ 1bblNumber
Number Percent of Spill Events Uncontained
Num
ber of Spill Events
4,033
1,151
3,605
2013 2014 20150k
2k
4k
6k
8k
40
50
60
70
80
Spill Volumes to the Environment ≥1 bblVolume
Non‑Oil Volume (bbls) Oil Volume (bbls)
Number of Spill Events
-
WASTE MANAGEMENT
We strive to minimize the environmental impact of generating,
storing,
transporting and disposing of waste from our
operations.
Our operations generate a variety of waste streams, including
spent batteries and filters; scrap metal; tankcleaning residue;
contaminated soil; office and domestic waste such as paper and
light bulbs; and items specificto drilling and production
operations.
In 2015, we disposed of approximately 743 thousand tons of waste
off-site, nearly all (< 99.99 percent) ofwhich was deemed
non-hazardous according to applicable regulations. The volume of
waste decreased by 2percent, relatively flat compared to 2014.
Produced water and process wastewater are not included in thewaste
inventory in accordance with IPIECA’s Oil and Gas Industry Guidance
on Voluntary Sustainability Reporting.
Excludes East Texas/North Louisiana (discontinued assets)
Excludes East Texas/North Louisiana (discontinued assets)
Company assets develop waste management programs targeting their
specific operations. For example, in2015 Oklahoma implemented a
program to reduce the volume of drilling cuttings going to
landfills. Theprogram includes separating and recycling oil from
oil-based drill cuttings and using the dry cuttings as
landfillcover.
Additionally, under our Waste Management Vendor Approval
Program, Marathon Oil reviews vendors’ HES&Sprograms and past
regulatory compliance performance. Vendors with the highest
identified risk undergo anonsite audit, usually conducted by a
third party, and are approved or rejected for use based on the
audit results.Common reasons for rejecting vendors are significant
prior fines and poor safety and environmentalperformance.
© 2016 Marathon Oil Company
19%
38%
41%
1%
2015 Solid Waste SourcesPercentage
Production Drilling Completions
Workover
Total Solid Waste (thousand tons)0
250
500
750
1000
Solid Waste to Offsite DisposalThousand tons
2014 2015
-
LIVING OUR VALUES IN THE WORKPLACE
Marathon Oil conducts our business with a high regard for the
health and safety of
our employees, contractors and the communities where we
work.
MANAGEMENT APPROACH
Our health, environment, safety and security (HES&S) vision
is to achieve an accident- and injury-freeworkplac