Two years ago Marathon Oil Corp. began moving in a more high-profile way to pursue an international, integrated gas strategy. Today that strategy is bearing fruit, according to president and chief executive officer Clarence Cazalot, because the gas industry itself has changed. What exactly has changed? "Global gas demand is growing at a faster rate than previously forecast, and by 2020 will outstrip that of oil," he told IPAA and Texas Independent Producers and Royalty Owners members at a recent program in Houston. "That's quite an achievement. Second, remaining gas reserves are twice those of oil, according to BP's 2002 world review. A major challenge is commercializing reserves that are in "awkward" places-stranded far from markets-but that too is changing due to lower production costs, better technology and new ways to transport the gas, especially if it's in the form of liquefied natural gas (LNG). LNG is a cornerstone of Marathon's approach-the company has projects in Alaska, Equatorial Guinea, Qatar and Mexico. LNG represents the fastest-growing form of gas demand. From 2003 to 2008, global oil demand will grow 2%, global gas demand 3%, global LNG demand 10%-and LNG in the U.S. alone, 28%-he said. To take advantage of these trends, Marathon has organized three business segments: exploration and production, refining and marketing, and integrated gas. "We want to supply nations in the OECD [Organization of Economic Cooperation and Development], and we think there is far more supply than is needed. It is going to be critical to have excellent relationships with national oil companies. "Despite our best efforts drilling in the U.S. and Canada, there is still a substantial gap that can be filled by LNG. But there will not be 35 regasification plants built in the U.S as have been proposed. We'll probably see only half that number." Marathon is moving forward on its Tijuana regional energy center in Mexico, which will include an LNG regasification plant, a desalinization plant and a power-generation plant. The LNG supplies may come from Peru and Bolivia, the Far East or even Alaska, he said. This will create arbitrage opportunities between prices and geography. And, the company is pursuing its integrated strategy in Equatorial Guinea as well, with partner Noble Energy Inc. They produce 800 million cubic feet per day from the Alba Field. Train I of an LNG plant is being built, with first production to come onstream in 2007. The LNG is already contracted and will land at Lake Charles, Louisiana. "We get to book our share of the 3 trillion cubic feet of gas in the field when we commercialize it in 2007," Cazalot said. Marathon claims to have a cost advantage, with its landed LNG costs to the U.S. not quite $2 per thousand cubic feet from its plant in Kenai, Alaska, versus nearly $4 from Snoevit Field in the Norwegian North Sea. Marathon and its partners already have access through contracts to 26% of current U.S. regasification capacity. In the third quarter of 2003, Marathon's global gas production averaged 1.1 billion cubic feet a day, down 9.16% from the 2002 third-quarter average.