UPDATE 1-Marathon Garyville units in sequential start-up

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By Haitham Haddadin

NEW YORK Nov 3 (Reuters) - Marathon Oil Corp (MRO.N) said Tuesday some new units at its 256,000 barrel-per-day Garyville, Louisiana, refinery were already in sequential start-up with the crude unit start-up seen in mid-November.

Other new units, including a hydrocracker unit, will be started up after the crude unit, with the process seen completed by year-end, a company executive told analysts in a conference call to discuss quarterly earnings.

The refinery has been undergoing a major expansion since March 2007 to increase its oil refining capacity by 180,000 bpd.

"We are 98 percent complete. We are already in sequence start-up of some of our units and we expect the crude unit to go through that sequence in mid November," said Gary Heminger, Marathon's executive vice president for the downstream sector.

"We expect all units to be mechanically complete by the end of the year," he added.

But he also reiterated that the refinery will have an extended planned turnaround on existing units in early January.

The entire facility, the existing base and expansion, is expected to reach full refining capacity by the second quarter of 2010, Marathon said in its third-quarter earnings release earlier in the day.

Meanwhile, Marathon's expansion of its 100,000-bpd Detroit, Michigan, refinery will be delayed to the end of 2012 from the previously announced date of mid-year 2012, Heminger said.

The Marathon officials said that, due to market economics the Garyville refinery will run a medium crude slate initially, contrary to its design specifications.

"We designed it to be able to run a very heavy slate," Heminger told the analysts.

"When you look at how the markets are and the sweet-sour (crude oil) differentials today as we start to gear up we ... are going to run more of a medium slate of crude on the front end, just because of where the markets are today," he added.

Asked about company thinking regarding its other refineries, he said: "We look every day at the crack spread and ensure that these plants can run and hurdle the economies for the crude that's available and the markets that we are supplying, and today they all do."

Houston-based Marathon has a total of seven refineries in Louisiana, Texas, Kentucky, Illinois, Michigan, Ohio and Minnesota, with a total crude oil processing capacity of over 1 million bpd, according to the company's website.

Earlier Tuesday, Marathon posted a big drop in quarterly profit to $413 million from $2.06 billion a year ago, hurt by weak fuel demand caused by the global economic slowdown, but its results beat Wall Street expectations. [ID:nL3729539] (Reporting by Haitham Haddadin; editing by Jim Marshall)