Total sees positive oil supply future based on technology

Oct. 20, 2003
French supermajor Total SA holds a positive view of the future of oil supply because it contends that nonconventional oil can be extracted at economically sustainable prices and that new technological breakthroughs will enable oil companies to increase reserves in existing fields and discover and develop reserves that today are inaccessible.

French supermajor Total SA holds a positive view of the future of oil supply because it contends that nonconventional oil can be extracted at economically sustainable prices and that new technological breakthroughs will enable oil companies to increase reserves in existing fields and discover and develop reserves that today are inaccessible.

This view was expounded in the article "Still a bright future for oil" in Total's monthly Energies magazine published in June.

Total Chairman, CEO
Thierry Desmarest

"Nonconventional oil today is already becoming the conventional oil of tomorrow....There will be other progress capable of maintaining oil production over at least a further quarter of a century, giving us time to prepare for other energy."
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At a recent press conference, Total Chairman and CEO Thierry Desmarest further explained this position, pointing out that "nonconventional oil today is already becoming the conventional oil of tomorrow. Deep offshore became conventional 5 years ago, although it was uneconomical 15 years ago. The same can be said of the Sincor heavy oil venture in Venezuela and the tar sands of Canada's Athabasca-Surmont acreage. There will be other progress capable of maintaining oil production over at least a further quarter of a century, giving us time to prepare for other energy."

Total's optimism is underpinned by its development of nonconventional oil reserves in a variety of sectors, such as the extra-heavy oils in Venezuela (the Sincor project) and the oil sands in Canada's Athabasca-Surmont acreage, where it has successfully conducted a steam-assisted gravity drainage program and is preparing for Phase 1 development.

Total also can claim success with ultradeepwater exploration and development in the Gulf of Guinea off West Africa and the US Gulf of Mexico as well as the development of the high-pressure, high-temperature Elgin-Franklin gas field in the UK North Sea, all of which are economically sustainable.

And despite the exodus of majors pulling out of the North Sea because of declining production, Desmarest said Total's production there is still growing, and it will continue to be active there over the next 15-20 years.

Technology key

The supermajor's executives are confident that technological breakthroughs will continue to enable it to extract the most from existing or yet-to-be-found reserves.

Total Exploration-Production Vice-Pres. Christophe de Margerie cited a company strategic plan to boost ultimate recovery of hydrocarbons from both deepwater assets and currently producing onshore fields with economically viable techniques.

At the same time, De Margerie indicated there is still significant exploration potential—particularly in the major mature oil basins and in structurally complex zones—that could be revealed through further technological breakthroughs in seismic imaging.

He also said he sees a great future in the "still enormous fields" that have yet to be tapped, such as those in the Middle East where Total already claims to be the second largest international producer.

The region accounts for 18% of the firm's production and a number of ongoing developments. The group also sees exploration potential in areas not yet open to privately owned companies. De Margerie's optimism was bolstered by the group's first exploration and production foothold in Saudi Arabia—in the kingdom's remote southern Rub' al-Khali region, which has mainly gas potential.

Sustaining output

Disregarding depletionists' warnings that improved technology will only hasten depletion (OGJ June 30, 2003, p. 20), Total contends it can sustain, up to 2007, the 5%/year production growth achieved in first half of 2003 vs. the same period in 2002.

But it also sees bullish growth "concentrated in high-potential areas" during 2008-12, not only in its oil production but also in the gas and LNG sector, where it is a leading player. The company also claims that, in 2002, it had the lowest finding and development costs among the majors.

Nonetheless, while pursuing an exploration and production campaign in line with shareholder expectations, Total recognizes, in the words of Jean Masset, the group's senior vice-president, geosciences exploration, and production division, writing in Energie, that "oil reserves cannot continue forever," adding, "Growth-simulation models that factor in increases in consumption show that world oil resources will begin to decline some time during 2020-50. At that stage, new energy sources will be asked to take over."

Renewables investments

The company is planning for the longer term with alternative energy investments. Total, already involved in coal through its wholly owned subsidiary CDF Energie, also has a strong foothold in solar energy in partnership with France's national utility Electricité de France .

The partnership, Total Energie, was formed in 1983 and specializes in the design, assembly, and installation of photovoltaic systems.

Total's involvement in wind energy is more recent. It will bring on stream in November a 12 Mw capacity wind farm on its Mardyk refinery site near Dunkirk, France, a project aimed at testing onshore the wind turbines it plans to install later offshore with a capacity of >100 Mw. Total also will install a wind power project with generating capacity of 55 Mw in Galicia, Spain.

Also in the renewables area, Total has a head start in biofuels (from biomass), which it develops in partnership with France's agricultural community. Total claims a European leadership in this segment with a production of 200,000 tonnes/year of ethyl tertiary butyl ether blended with gasoline in its refineries. It also is assessing the potential of fuel cells.

This promotion of energy forms other than oil and gas are a response to "both present and future needs," but, points out Jean-Michel Gires, senior vice-president, sustainable development and environment, they seem to illustrate Total's commitment to sustainable development more than to a desire to bridge the gap caused by oil and gas depletion. F