“What Is Expected From Legal Counsel in Changing Times”
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Transcript of “What Is Expected From Legal Counsel in Changing Times”
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“What Is Expected From Legal Counsel in Changing Times”
Gary R. Heminger President
Marathon Petroleum CompanyCorporate Law Leadership Forum
April 22, 2009
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Global Operations
Exploration
Production
Exploration/Production
Integrated Gas
Refineries
Oil Sands Mining
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The Reach and Scope of Marathon
The few, the proud, the in-house counsel
35 Attorneys
26,000 Employees
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Challenges to Legal CounselProduct Liability
Price Gouging
Protection of Intellectual Property
New Regulations Constraining Advocacy Efforts
Ethics Leadership
Sarbanes Oxley Compliance
Guidance on Contracts and Legislative Initiatives
Anti-trust
Mergers and Acquisitions
Environmental Law
Personal Injury
Medical Monitoring
PMPA and Marketing
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The key expectation –
“Understand the business!”
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Industry Jobs
Direct Industry Total Job Chain
Oil:1.84 million
Auto:Approximately
3 million
Oil:Approximately
5.9 million
Auto:1.1 million
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New Projects, New Jobs, New Energy
Garyville Major Expansion Detroit Heavy Oil Upgrade Project
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Cost of Delay
Additional Adverse Results
Deferred benefits
Time value of investment dollar
Competitor advantage
Typical Cost of Project Delay
Sal
es
Time
With delay
Without delay
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Our Industry is an Industry of Price Takers
Source: NYMEX (WTI crude oil) and AAA (gasoline a diesel)
Threat of Iraq Embargo
Iraq War OPEC Cuts
Hurricane Katrina
Non-OPEC disruptions
Open interest contracts soar
Iran tests missiles
Hurricane Ike
Events drive price
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Annual Price and Margin Sensitivities$ Millions (After Tax)
Refined products wholesale margin sensitivity(per penny a gallon change) $137
Speedway SuperAmerica light product margin(per penny a gallon change) $21
LLS 6-3-2-1 crack spread(per dollar a barrel change) ~$280
Sweet/Sour Oil Cost Differential(per dollar a barrel) ~$110
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Price Discovery
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The Popular View of Price Gouging
“Florida fields hundreds of complaints”
“Hot line established to report price gouging”
“Attorney General to crack down on price gouging”
Media Headlines
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True or False: Cost is Knowable
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USTs and $411 Million
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Who Pays for Cap-and Trade?
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Emissions Comparison
Source: T.J. McCann & Associates
Production Transportation to Markets Refining
Refining Byproducts End Use Consumption
Kg
CO
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Ba
rrel
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Structure of Success
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QUALITY EFFICIENCYPRODUCTIVITY
Business Understanding and Business Focus
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