London — Power outages in Texas this month caused by snow and freezing weather demonstrate the need to keep investing in gas as a complement to renewables, even as Total increases its renewables capacity, CEO Patrick Pouyanne said Feb. 23.
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Speaking at the online International Petroleum Week conference, Pouyanne said his company does not foresee a decline in demand for oil and gas before 2030, although it anticipates oil demand decreasing subsequently.
Stressing the continued need for fossil fuels, Pouyanne underlined the ongoing rise of LNG, noting demand had risen by 3% last year, driven by emerging markets, despite the pandemic-induced economic crisis.
Alluding to the widespread power outages as freezing weather hit Texas this month, attributed to a variety of causes and now subject to official investigations, Pouyanne said, "The recent experience in Texas demonstrated that when it's snowing the wind turbines can freeze and the solar panels can be covered by snow so you have a problem of reliability."
"At the end of the day our customers want reliable energy. For us natural gas is the complement to renewable energy — there is no way to think of a reliable system without having a flexible way to produce electricity. Gas is offering this flexibility," he said.
"That there is a very strong push on natural gas has been demonstrated in 2020... Natural gas demand is driven by emerging countries — China, India, even Korea wants to shift, so a shift from coal to gas is pushing demand for gas and for LNG in particular," he said, adding Total sees it as an "absolute duty" to tackle methane emissions associated with LNG.
Pouyanne outlined Total's plans to increase both its gas and electricity production by 2030, repeating a pledge this month to increase its overall energy production to 4 million b/d of oil equivalent by 2030 from around 3 million boe/d currently, within which electricity will account for roughly 15% of the total business. It has already assembled the "portfolio" for 35GW of capacity by 2025 and aims to raise this to almost 100GW by 2030, he said.
The company expects its oil production to remain stable to 2030, but its sales of oil to end users to drop as it seeks to support a reduction in emissions generated by end consumers in Europe, Total's management told investors this month.
"We have definitely decided to embark on a bold strategy to build a real electricity business in the company, 15% of the business by 2030 and that will require more than $60 billion of projects to be financed," Pouyanne told the IP Week event.
In terms of oil, "we anticipate a decrease of demand for oil from 2030 onwards and so we'll adapt our whole production profile to the demand, and when it goes lower we'll lower it, but not for the next 10 years," he added.
Pouyanne voiced enthusiasm for emerging investments in hydrogen, saying the sector would need development "at scale" to make economic sense, but would require commitment from governments in locations such as Europe or Japan.
"Size will be fundamental because if we don't have size we won't be able to lower the cost of hydrogen, which will be the main challenge," he said.
"Hydrogen, providing there's demand, will increase — because for the time being demand for hydrogen is quite limited — but if policies in Europe or in other countries like Japan are pushing to create massive demand for hydrogen, we as Total want to be a massive at-scale producer of hydrogen, either from gas combined with Carbon Capture and Storage or from renewables by electrolysis of water. As we will have large solar farms we envisage being a producer at scale of clean hydrogen."