France's Total: Gas Must Play a Major Role
In view of the “COP 21” UN Climate Change Conference set for December of this year in Paris, France, the CEO of French E&P Total, Patrick Pouyanne, said his company is convinced that gas must play a major role in the future energy mix, in a speech at the 26th World Gas Conference (also in Paris).
“Our main challenge is to satisfy the growing needs of energy of all the population of the world, to act against climate change. We are strongly convinced of the fact," he stated.
In fact, “Committed to better energy,” is Total's slogan, according to Mr. Pouyanne, who said that all types of energy will be needed to satisfy the needs of the planet. “Fossil fuels and renewables – both are complementary and should not oppose the other.”
Each one, he explained, has a role to play. While renewables will develop rapidly, he said that fossil fuels represent 80% of the global energy mix.
“Among these, we believe that the share of gas with its very low CO2 emissions and its flexibility should also progress to become the second, if not the first, global energy source,” he said.
Noting the massive development of renewables in Europe and other places, Mr. Pouyanne pointed out the large share allotted to coal rather than gas for power generation, because of the lower price of coal.
“The CO2 emitted by coal is twice that of natural gas and one and a half times more than oil,” he said. “To lower greenhouse gas emissions, it is urgent to promote, together with renewables, the use of natural gas as a basic energy in power production due to its low emissions and high level of flexibility.”
Global carbon prices, which were implemented as an incentive, would enable the replace ment of coal by natural gas. He commented, “This would be a contribution at a lower cost for our communities to the ambitous climate objective that we all have and would represent a consensus.”
By simply changing 50% of coal power station consumption to gas, he opined, would result in a savings of 2.5 billion tons of CO2 per year – 5% of the current global emission level.
The importance of reducing carbon, he explained, had convinced Mr. Pouyanne to sign, along with other major hydrocarbons producers, the United Nations Charter, which calls for the setting of a fixed price for carbon, explaining the active participation of Total to the carbon initiative made public last week.
“To introduce carbon price fixation mechanisms in the countries where this is not yet the case, and setting up an international framework for the better connection between all of our national systems, which are all very different.”
He observed that this agreement is a sign of the awareness that the industry has taken of its responsibility. “But also the will that we have as being part of the solution. This is a major challenge for all the players of the energy sector,” he commented, offering that political commitments will follow.
For Total, he said, it is important to have the oil and gas industry committed in a very firm way, and be aware of its activities regarding climate change. “Yes, we are aware of the consequence of our activities, but also, as an industry, we can bring answers to mitigating the effects of climate change and limiting its impact on the environment is a priority for Total,” he said.
This means, he explained, a strong and growing involvement in renewable energies whose technical and economic performances are promising. He named photovoltaics, biofuels.
Improving the efficiency of industrial installations is also key, according to him, as well as helping customers consume less energy.
One example, he named, is Total's target of distributing 5 million solar lamps to 25 million people in Africa.
Natural gas as LNG, said Mr. Pouyanne, should be recognized as an energy for the future in which Total has a strong belief. The WGC, he said, shows a real turning point in the awareness of the role that natural gas has to play in satisfying global energy needs, “while constituting a key element in really combating climate change.”
He commented “For gas, an energy of the future, contributing to these discussions on global warming, in light of the importance of gas for Total, is of essential interest.”
Recalling the history of the company's gas production in the 1950s, in locations like Algeria, Indonesia, Nigeria and Qatar, he explained that gas is an integrated activity for a company like Total, covering the whole value chain from exploration, marketing and trading, to production, liquefaction, transportation and regasification. “We are, as Total, a global reference worldwide.”
Total, reported Mr. Pouyanne, is positioned as the second largest integrated global player of LNG.
“In the last 10 years, gas in our production has gone from 35% to 50%. In other words, Total is a gas and oil player, a tend which is likely to continue in years to come, given that gas markets are globally growing at a rate of 2% per year – LNG at 4% per year.”
That growth of gas in Total's portfolio of assets, he said, is linked to major projects like the Yamal LNG project, as well as projects in Australia, which represent over $100 billion in investment.
In his speech, Mr. Pouyanne referred to Russia, which he said possessed the most important gas reserves in the world. He stated, “Supply of Russian gas in Europe has been for many years, despite some difficulties we've had in the past, the gas line has always been there, standing for good – upstream and downstream being strongly connected. Russian gas comes to Europe via Ukraine without a single sustainable interruption, showing the resilience of our links.”
Gas, he said, has enticed diplomats to seek dialogue in finding pragmatic solutions to disagreements of a geopolitical nature.
“Russia is a necessary and essential partner for all the global energy sector and especially for Europe,” he added. “Total has been betting on the partnership with Russia and we intend to go on having this partnership maintained and developing.”
He lauded the efforts of France and Germany to facilitate a diplomatic solution to what he termed the “current difficulties.”
Gas is an energy of the future and a point of strength in efforts to decarbonize economies, said the next speaker, Gerard Mestrallet, CEO, Engie (formerly GDF Suez), who added that defending the climate should involve gas.
He said, “Our energy landscape has changed significantly over the past few years and now there are strong dynamics that are shaping the industry. There is a transition toward lower carbon production and consumption, supported by awareness of what's at stake from a health and environmental standpoint, and this phenomenon is gaining speed and extending from Europe to the rest of the world.”
According to Mr. Mestrallet, a sustainable and successful energy transition requires the combination of decentralization, decarbonization and digitization our the energy system, along with energy efficiency efforts. Against this backdrop, he argued gas is critical in the energy mix.
Of gas' virtues, he said, “Gas contributes to reducing atmospheric emissions, as it supersedes oil and, more importantly, coal; gas emits no particles and improves the quality of the air in large cities; gas is complementary to renewable electric energies and it offsets their intermittent nature; gas provides energy efficiency, notably do to the fact that heating equipment affords greater performance; finally, gas contributes to sustainability, given the opportunities that are afforded via biomethane for collective fleets and natural gas in maritime or water way transport.
“These virtues have allowed gas to take a greater and greater place in global energy demand,” he continued, “notably in countries that consume the most energy and emit the most CO2 – the US and China come to mind, as they've decided to use gas in a prominent way in their mix, and at the same time have made hard-nosed, official commitments to protect the climate.”
He observed that gas looks to play an ever-greater role in the global energy mix.
Mr. Mestrallet announced, “As a global energy player, considering the energy sector contributes 60% of greenhouse gas emissions, Engie has decided to be fully committed to the global energy transmission, and to fighting global warming.”
This, he said, involves choices for which gas is at the forefront of the company's businesses.
Engie, he said, offers developing countries the solutions to meet their specific needs, regarding production and LNG, or transport and storage infrastructure. The company, he said, has taken strong positions, as with the Cameron liquefaction terminal in the US, a project along with Sempra and Mitsubishi. He offered, “It will be the second American LNG export project as soon as it will be commissioned in 2018.”
Twelve million tons of LNG will be on the market, he said, to supply new, growing markets in Asia, the Middle East and South America.
Meanwhile, he reported that the market of gas-powered vehicles is increasing by 18% globally, a trend that Engie would like to contribute to, creating a subsidiary in France dedicated to it.
Of LNG fuel for maritime navigation, he said, “This is a solution in which we strongly believe when it comes to meeting more stringent environmental requirements.”
Towards that, he explained that Engie had entered a global partnership with NYK and Mitsubishi for the development of a network of LNG supply services in the leading ports of the world.
Of the COP 21 meeting, Mr. Mestrallet said that Engie, along with many other members of the business community, hopes there will be a clear, multilateral agreement to restrict global warming to 2 degrees C.
A stable and clear agreement, he said, is better than no agreement at all, which would signal uncertainty. “The time has come to send the right signal to guide investors and consumers towards low carbon solutions, specifically towards gas instead of coal.”
-Drew Leifheit