Apr. 2002 Vol. 223 No. 4  European Technology Round Up
France
TotalFinaElf utilizes R&D expertise to maximize offshore developments

Jean Ropers, senior vice president, Development and Operations Techniques, with TotalFinaElf’s Exploration & Production Division, looks confidently toward his firm’s near-future role in upstream development and technical innovation.

Q: How has TotalFinaElf changed from the company Total that you were three or four years ago? What are your company’s goals regarding domestic and international operations, and growth?

A: These last few years have been a fascinating period with the various economic, technical and political environments that we have experienced. For our company, transforming Total into TotalFinaElf and multiplying its market capitalization by a factor of 25 since 1990 has been particularly rewarding.

I believe that in the future, the very large, major oil and gas companies will be in the best position to successfully meet the demands that will be made on our industry. It will be their substantial size that will give them the necessary financial strength to carry out large projects, as well as adequate negotiating power with governments, and the indispensable resilience and flexibility to react to changing environments. TotalFinaElf has the long-term vision to develop major projects that will require major advances in technology or market development, drawing upon the group’s command of leading-edge technologies and management skills.

Size really does matter in meeting the future challenges of the oil and gas industry. In the area of technology, size has enabled TotalFinaElf to successfully master extremely difficult challenges. This is evident when looking at the various projects that we have already successfully carried out, or those that are presently in development phases.

Q: Are there a few important statistics that illustrate the size of TotalFinaElf now, such as number of employees, gross oil/gas production, worldwide countries operated in?

A: TotalFinaElf is present in more than 100 countries around the globe, with 135,000 employees worldwide. In 2001, our production increased 5.3% (excluding the effects of divestments) to 2.20 million boed. Production growth in 2001 resulted mainly from the start-up of the Elgin-Franklin field in the UK North Sea and heavy oil production from the Sincor project in Venezuela. There also was increased production in Norway and Nigeria. Hydrocarbon production rose to 2.39 million boed during December 2001. This is perfectly in line with our target of 10% production growth in 2002 versus 2001.

Simultaneously, our proved reserves continued to grow, increasing to an estimated 10.98 billion boe at year-end 2001, with a reserve replacement rate of 184% at a very competitive cost of $3.40/boe.

Q: How does TotalFinaElf’s 2002 exploration/production budget compare to 2001 spending? In general terms, where will the investment be spent, and how does TotalFinaElf view industry economic conditions this year?

A: The budget for upstream expenditures in 2002 is 7 billion euros ($6.1 billion), which will finance growth within the group. In terms of exploration, the budget for 2002 is $750 million (862 million euros), in line with an effort made by the group over the last few years to access new hydrocarbon reserves. Investments are spread evenly over the world, especially in growth areas for TotalFinaElf, such as the Gulf of Guinea and Northern Europe, but also in South America and the Gulf of Mexico.

In terms of our outlook for 2002, our budget has been prepared with a scenario of around $20/bbl. In addition to its strong production growth, TotalFinaElf still has a substantial contribution to make from the continuing self-help programs underway. It is quite clear that in 2002, the relative weight of growth will be greater than it was in 2001 within our self-help programs. The group has recently demonstrated that its results were resilient to changes in the market environment.

Overall, I would say that we are positioned well strategically, thanks to a well-balanced upstream portfolio and our leadership in the application of new technologies. We have a period of growth that is exceptional for the oil industry. I’m quite convinced that we will be extremely competitive in 2002, as we were in 2001.

Q: What world areas look attractive for investments?

A: We believe that both frontier and mature (potential and existing) petroleum-producing areas throughout the world are attractive for future investment. New technologies are not limited in their application to new frontier zones. One example is deep water, where TotalFinaElf has a strong presence. Another example is existing fields that are mature, and where implementation of cutting-edge technologies may prolong the life of the field and its exploitation. Thus, it contributes to the sustainability of the petroleum resource.

A good example of this debate is the Middle East. TotalFinaElf has been operating in this region with a strong production base since 1956; yet, many opportunities for investment remain. The group’s participation in Saudi Arabia’s Core Venture 3 (memorandum of understanding signed last year) symbolizes a new presence for TotalFinaElf in a country formerly closed to foreign investment. This enables us to share our experience and technological know-how with new partners.

In addition, TotalFinaElf is bringing onstream the Elgin/Franklin HP/HT fields in the North Sea. The Sincor heavy oil project in Venezuela has also demonstrated that with the application of innovative and unconventional solutions, it is possible to produce reserves economically that were beyond reach 10 years ago.

Q: What important development projects are you involved in around the world?

A: Within the last 12 months, TotalFinaElf has brought onstream four world-class projects spanning four continents. The Elgin-Franklin development mentioned earlier is the biggest project to be carried out in the North Sea for more than two decades. It is also the world’s largest high-pressure, high-temperature development. Presently in production, the $2.5-billion project has reached its daily, plateau production rate of 220,000 boe. The reservoirs are the deepest, ever, to be put into production in the North Sea.

Angola’s deep offshore is home to TotalFinaElf’s $2.6-billion, Girassol oil field project, which started production in early December 2001. This project is the largest, deepwater stand-alone development to be brought onstream in the world. Located in water depths of 1,350 m (4.429 ft), it will ultimately be composed of 39 subsea wells linked to three riser towers. These will carry production to an FPSO vessel with a storage capacity of 2 million bbl. Production reached a plateau of 200,000 bopd in mid-February.

In Venezuela, the Sincor project recently began production and will, at plateau level, be upgrading 200,000 bpd of extra heavy crude into 180,000 bpd of high-quality, low-sulfur synthetic crude known as Zuata Sweet. This contract covers a 35-year production period.

Finally, the South Pars development in Iran is one of the first projects to be realized on the giant South Pars gas field. It is a $2-billion investment for the production of 2 Bcfgd. One of its innovations is the long-distance, 80-km, multi-phase transport of wet gas from two offshore platforms to the Assaluyeh gas treatment plant onshore.

Q: Regarding technology developments, how is TotalFinaElf working internally, and with industry through joint industry projects, to develop new techniques? What do you see as major economic and physical challenges in developing new world areas?

A. Before turning to the technical trends of tomorrow, let me first point out that in its application of currently available technology, TotalFinaElf adopts a highly integrated approach. This nurtures the transfer of expertise throughout our areas of operation and within each project team. Subsurface analysis is performed by integrated teams of geoscientists, who closely associate reservoir, geology and geophysics. Drilling engineers are also involved in the development program at a very early stage, prior to establishment of a project team that brings together all professionals, including service company representatives.

Research and Development (R&D) teams are naturally in the loop. Using the Girassol project as an example, many solutions were not standard—they issued directly from R&D concepts and proposals, as in the very original riser tower system. Very often, our project team members contribute to R&D projects in addition to their operational duties. Conversely, certain specific projects, such as those involving very sour gas field developments, are directly followed by our R&D Division. Even in such cases, links with operational teams are very strong. These links help tailor R&D programs to meet the needs of our future engagements around the world.

TotalFinaElf’s R&D effort is largely based on cooperation with more than 85% of our R&D budget dedicated to joint industry projects, contracts and/or cooperation with partners, service companies and universities. We are always seeking new ways of working that are more integrated and efficient—our R&D program allows us to test new prototypes. In any major project, as those mentioned above, a close partnership between the operator and the supplier is the key to innovation and success.

Our program combines two distinctive approaches: first, a mid-term strategy aimed at anticipating and providing solutions to the challenges of tomorrow, to grow our reserves and our business; secondly, a short-term strategy, to resolve operational problems and improve working methods to valorize assets in our portfolio. Both are equally important, and we take care to maintain the equilibrium between these two spheres.

In this way, we are involved in studies of technologies applied to new arenas, such as the ultra-deep offshore, development of heavy oil pools and deep discoveries in a folded belt or subsalt context. At the same time, we are targeting optimization of current techniques applicable to mature fields.

A further challenge facing us today is how to ensure sustainable development of the world’s oil and gas resources. TotalFinaElf is focused upon this goal and, within this framework, is carrying out research into acid gas processing, water management and gas sequestration, to name a few examples. By making the most of remaining resources, we will help preserve hydrocarbons for future generations.