Total seeks partners for its mega-projects

Total is a truly global operator with a presence in nearly every corner of the globe.

 The company is on a roll—last year they strengthened their upstream position and portfolio, production is on schedule to increase, and reserves will build
continuously over the next several decades, says Victor Obadiah, President and CEO, Total E&P New Ventures.

 “Most of our projects take 6, 8, or 9 years before they’re done,” he says. “Moving forward we will expand our efforts to form partnerships and joint ventures. These are big projects and we like to have partners.”

 An important development for Total is its North American portfolio.
 

“Our company’s strategy in this region has evolved as a new focus,” says Obadiah. “We will continue to capitalize on the expertise of certain operators in the U.S., who are now our partners. We’ve seen a significant increase over the past five years in our proved and probable reserves, with proportionate spending increases.”

 Through New Ventures, Total signed a $2.25 billion partnership agreement with Chesapeake Energy, which gives Total a 25 percent stake in their portfolio. The agreement includes 300,000 net acres, 90 percent of which is in the core area of the Barnett Shale. The agreement gave Total an immediate net production of 175 mcf per day.

 Total entered into three other partnerships of similar scale in 2009. They were awarded the Halfaya field in Iraq with PetroChina and Petronas, entered a field development agreement with Gas de France in Kazakhstan, and signed a partnership agreement in the Ahnet gas field in Algeria.   Total’s 2010 exploration budget is estimated at $1.8 billion providing an exploration risk potential of about 3.6 billion BOE.

 “We renewed our resources base by enhancing our exploration portfolio in the Gulf of Mexico, Cameroon, Guyana, Egypt, Norway, Azerbaijan, and Vietnam,” he says. “We will continue using joint ventures to expand our resources while balancing the type of upstream asset in the portfolio between OECD and non-OECD countries. We will continue in conventional, non-
conventional, onshore, and offshore.”

 Total began several major projects in 2009. The Tahiti project in the Gulf of Mexico will yield 125,000 barrels a day; two projects in offshore Nigeria will yield 225,000 barrels; the Qatar Gas II project with ExxonMobil began production in 2009 and holds the record for the largest LNG train, and Yemen LNG began in October.

 Obadiah says that Total’s investment levels for 2010 are intended to sustain growth objectives. The company expects $18 billion gross with upstream capturing almost $14 billion.
 

Among the company’s major investment projects is Phase II of the company’s oil sands project in Canada, which is apartnership with ConocoPhillips. Total also owns 80 percent of the Laggan and Tormore gas fields in West of Shetland, U.K., along with the gas gathering infrastructure—Obadiah says it’s one of the country’s largest infrastructure projects in decades. By 2014, he estimates that Total will produce 800,000 barrels of oil equivalent per day.

 “Among our plans to get there is further development drilling in the Barnett Shale, which alone will provide 250 million cubic feet per day with a significant increase in unproved reserves,” he says. “We’re also seeking a better balance between our conventional reserve portfolio and those that require high technology extraction methods. The bottom line is that since 2004, we not only have renewed our reserve resources, but also diversified that base from prior years.”