Total CEO Talks on Peak Oil, the Future of the Oil Industry
Christophe de Margerie, the opinionated CEO of Total. (image: oubangui.wordpress.com)
Cristophe de Margerie, the CEO of French oil giant Total, is not one to bite his tongue—in September he said that oil should be priced below $60 a barrel. In an interview with the European Energy Review published on Wednesday, de Margerie weighed in on the future of hydrocarbon, peak oil, and working with oil-producing nations.
While many of the world’s politicians and pundits are calling for a drastic reduction in the amount of carbon the world produces, de Margerie says that there will always be a need for oil and gas. And while Total has expanded its portfolio and invested in nuclear, clean coal and biomass projects, it has completely steered clear from developing and wind and solar farms.
As he said:
Hydrocarbon production will remain essential in supplying humanity’s energy needs for a long time. The fact is that the world needs increasing amounts of energy. Thus when I hear people who are against hydrocarbon production and against nuclear too, I can only say, you are against the future.
Where many experts claim that we are running out of oil, de Margerie says that’s not true. Instead, he says, we’re running out of the capacity to produce oil. There are plenty of areas with untapped oil reserves—Venezuela, Canada, Brazil, the Gulf of Guinea, and even the Middle East come to mind. He estimated that, within a few years, the world will need to produce over 100 million barrels a day to meet its energy needs; right now, about 84 million are generated. But unless there are investments in the aforementioned places, these reserves won’t be tapped in time to meet the growing demand, and, in his words, “without energy, there will be no growth.”
De Margerie also said that western oil companies and foreign oil producing nations will always be joined at the hip, and the spirit of cooperation between the two must grow. For instance, de Margerie said that Total would be interested in working with Iran if the time was right. He also spoke at length about Total’s involvement in developing natural gas and oil fields in Russia. In the past, Russia has courted Western investors to the projects, only to force these firms out once they near completion. He said that, on a new project Total is embarking on, the French company is working with Gazprom, Russia’s biggest and most important energy firm in order to protect itself, and other companies should not expect to do business without taking similar precautions:
Russia is Russia. It is not New York. It is not even Paris. How surprising! Russia is a producing country. They want to benefit from the oil and gas they have. Why did we think it would be different? Are we naïve or arrogant or just stupid?
While many will disagree with his statements, it’s certainly refreshing to see someone in de Margerie’s position speak so frankly. In this era of carefully managed public relations, he’s not afraid to be politically incorrect.
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Josh Garrett says: says:
Ian, thanks for your comments. You have raised the point that is at the heart of the debate over peak oil. It is true that many recently discovered oil reserves lie in very hard to reach places, and contain low quality oil that requires vast amounts of money and energy to process. Supporters of the peak oil theory (as I assume you are) say this is proof that soon oil will simply not be worth expense (in wealth and energy) to extract. Peak oil skeptics (like DeMargerie) argue that new discoveries and new advancements in oil extraction and processing will continue to push technology to new highs and in doing so keep the world’s oil supplies steady. There is evidence to support both sides, so the debate will continue until one side or other is proved right by a new reality in the world of oil and energy.
ian says: says:
Perhaps Mr. de Margerie could prove his points with some facts, and original data, particularly the rate of change in aggregate world oil EREOI from the 60s to present. In addition, we’d all be interested in how much oil would have to cost to make the new deepwater reservoirs in the gulf have a significant pay zone.
Yes, these two things would be interesting indeed.
ian says: says:
I hope Mr. de Margerie is neither as innumerate nor as uninformed as this article makes him appear.
*Rapidly* declining energy return and increasing prices are the problems. Oil companies are carefully not discussing either of these issues with any precision (i.e. data), and neither is Mr. de Margerie.
While there’s no doubt that we have a large quantity of oil at our disposal, there’s a rather large question of how much of that oil is both energy positive and affordable.
Much of the new discoveries touted by journalists are in deep water, scattered in smaller reservoirs and made up of “oil” that might more accurately be described as “tar.” It will not be easy, or cheap, to get this oil to market. In fact, given the expense and marginal return on energy investment, there’s a very good chance that much of it will never come to market at all.
kiwichick says: says:
conventional crude oil production peaked in 2005
even with the price almost doubling from 05 to 08
production in 08 was approx. 20,000 barrels/ day less than 05
the IEA stated in it’s 08 report that production from ” mature”
fields will decline by at least 6% annually
this equates to appox. 3 million barrels/ day annually
ie we need another KSA every 3 years
see peakoil.com