French petroleum giant Total SA could add fuel to the oil sands' resurgence as the company nears a decision on a major expansion project, the company's new Canadian head said yesterday.
A construction decision on a 90,000-barrel-a-day expansion of Surmont, which is operated by co-owner ConocoPhillips, will come in late 2009 or early 2010, said Jean-Michel Gires, recently named president and chief executive officer of Total E&P Canada Ltd.
Surmont currently produces 20,000 daily barrels. An expansion would come as the first in a series of decisions that Total, which employs 300 in Canada, plans to make in coming years under Mr. Gires, who has spent more than 20 years with the company. The company hopes to gain regulatory approval for its proposed Edmonton upgrader by early 2011, and for its Joslyn mine by the end of 2011.
But the road ahead is marked with numerous obstacles, many of them environmental issues brought to the fore by a series of recent Greenpeace protests.
In a wide-ranging interview with The Globe and Mail at his Calgary office yesterday, Mr. Gires shared his thoughts on Total's future in Canada.
Total bid for, and then pulled away from, UTS Energy Corp. Are you still interested in further oil sands acquisitions?
[With existing properties] we should be in a position to get 250,000 barrels per day production by 2025, with an investment of between $15- and $20-billion. It's already a pretty significant portfolio to work with. Doesn't mean that it couldn't be optimized, so we will always be looking for potential synergies. ... But we have a pretty good portfolio we can work with, and this is definitely the core of my mandate to start with.
Both Suncor Energy Inc. and EnCana Corp. say it now makes more sense to export heavy oil to the U.S. than to upgrade it in Alberta. Does Total still plan to build an upgrader in Canada?
We definitely feel like we need some upgrading capacity in Canada in order to match the level of production we expect from our portfolio. ... It looks for the short term, to 2015, that yes, there is enough conversion capacity in the U.S. ... But most of the projects we are contemplating are for 2020, 2025, 2030.
You served six years as Total's executive vice-president of sustainable development and environment, and worked with the company's carbon capture and storage (CCS) pilot projects. How ready is CCS for the oil sands?
It is an important option. But I've been insisting that it comes after the other options. If we have other ways to improve our [extraction]processes, we should do that first. Energy saving and energy efficiency is by far the very important rule of the game. ... [CCS]is a long-term possibility.
How significant do you see the risk to the oil sands from climate legislation, both here and internationally?
By the end, obviously some system will be put in place. There will be a [carbon]cost in the system.
What carbon price does Total use in modelling its projects?
We currently use €25 [$40 Canadian]per tonne. It's a pretty high cost. ... But that's the internal rule of the game. [With any new project]we have to justify that yes, it can adapt to such a requirement.
You've watched Greenpeace break in to three oil sands projects in the past three weeks. How damaging is the "dirty oil" moniker to the industry?
It's a pretty significant issue. ... and is now coming to a level where it does impact the reputation of the oil sands.
What should industry do to combat it?
It's up to the industry to be a little bit more pro-active about that. Not a little bit: Significantly more pro-active than we used to be. We need to better tell our story, better explain what the oil sands are all about. ... It's not only environmental performance, but, as well, our social performance which is at stake. Those are pretty strategic issues, at the same level as the industrial size and the industrial challenges of our projects. ... We have in [the Canadian Association of Petroleum Producers]an organization which is named the Oil Sands CEO Task Group, and which is already trying to work in that direction. And we expect industry to develop a much better performance. ... You need R&D, you need demonstration projects, you need commitment, perseverance and courage over the long-term period. It's not going to be done over the next year or the next three years.Report Typo/Error