Total sees oil field future based on technology

Sept. 11, 2003
French company Total AS holds a positive view of the future of oil resources because it knows that nonconventional oil can be extracted at economically sustainable prices and technological breakthroughs will enable oil companies to increase reserves in existing fields and discover and develop reserves that today are inaccessible.

Doris Leblond
OGJ Correspondent

PARIS, Sept. 11 -- French company Total AS holds a positive view of the future of oil resources because it knows 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 an article: "Still a bright future for oil" in Total's monthly "Energies" magazine published in June.

At a recent press conference, Total Chairman and CEO Thierry Desmarest 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 oils 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 brand of optimism is underpinned by its development of nonconventional oil reserves in a variety of sectors such as the extraheavy oils in Venezuela (the Sincor project) and the tar-sands in Canada's Athabasca-Surmont acreage where it has successfully conducted a steam assisted gravity drainage program and is preparing for a Phase 1 development.

Total also can claim success with ultradeepwater activities in the Gulf of Guinea and the Gulf of Mexico as well as the development of the high-pressure, high-temperature Elgin-Franklin gas field in Britain's North Sea, all of which are economically sustainable. And contrary to a number of majors pulling out of the North sea because of depleting resources, Desmarest said the Total group's production there is still growing, and it will continue to be active there over the next 15-20 years.

Technology the key
The group is confident that technological breakthroughs will continue to enable it to extract the most from existing or yet-to-be-found reserves. Total's Exploration-Production Vice-Pres. Christophe de Margerie mentioned further tapping into both deepwater assets and "our fields onshore." The group currently is implementing a plan to boost recovery of ultimate reserves on currently producing fields, using 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—a potential that could be revealed through technological breakthroughs, especially improvements 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 2nd largest international producer, responsible for 18% of its 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 has been singularly bolstered by the group's first exploration and production foothold in Saudi Arabia—in its hostile southern Rub AL-Khali region, which has mainly gas potential.

Disregarding depletionists' warnings that more technology will only hasten depletion (OGJ June 30, 2003, p. 20), Total believes it can sustain, up to 2007, the 5% production growth achieved in first half of 2003 over 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 group also claims that in 2002 it had the lowest E&P technical costs among the majors.

Nonetheless, while pursuing an E&P drive 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 that "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."

The group is planning for the longer term. Already, involved in coal through its wholly owned subsidiary CDF Energie, Total also has a strong foothold in solar energy in partnership with France's national utility Electricité de France within Total Energie, which 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 in excess 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 of ETBE (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 the Total group's commitment to sustainable development more than to a desire to bridge the gap caused by oil and gas depletion.