Christophe de Margerie, CEO, Total
Daniel Yergin, Chairman, Cambridge Energy Research Associates (CERA)
Notes from Wall Street Journal ECO:nomics Conference
Santa Barbara, California
March 12-14, 2008
Di Margerie opened the talk stating appropriately in his French accent we need to get “more clever.” We need to reduce consumption.
The two speakers disagreed on peak oil. Di Margerie believes the situation is worse than does CERA, a leading advisor to international energy companies, governments, financial institutions, and technology providers.
While Yergin reiterated issues causing instability for business, he also listed what he called the “above ground risks” of change such as:
- Cost
- Political Climate
- What others will do
- What the implications of not changing will be
Peak Oil Has Been Overestimated
While di Margerie appeared to have subtle disagreements with Yergin on a superficial level, it was in the next level of detail that the issue became apparent. Di Margerie explained that CERA had estimated peak to be 120 million barrels/day, only recently revising this estimate to 105 million barrels/day. Di Margerie simply states it is not possible, the reserves are simply not there. The problem is the much more straight forward one – of simply not finding new fields at the same rate of pumping efficiency.
Di Margerie’s best estimates put peak at 100 million barrels/day.
He stressed “we need to think of the future.” His statements were clear. He accepts the implications of decisions. He described the need for financing, attention and support for development of alternative energy. The issue of getting economically viable alternatives is complicated. “We can not face the demand with fossil energies.”
Total is making commitments to reduce significantly by 2012. “We need to think seriously about reducing consumption.” The primary focus is to get the company’s organization/culture to know that “we’re serious about this.” First we will work to do better at what we know how to do – this speaks to efficiency and reduction of energy use. Second, we will invest in other energies - ones we use the way they are or ones we create through a process. Problems to be solved are 2nd generation bio mass.
Commitment in the Context of Severe Challenge
In response to the commitment di Margerie so clearly expressed in the context of severe challenge, I asked if he had some guidance to give other CEOs based on his experience.
His response was:
Take the risk of being exposed to those who do not agree. It’s the right thing to do. Be really clear on what is doable and what is not, and what is doable at what cost and how it will be managed. Consider “full cycle” impact – explain the real debate. This is what I can do.
Di Margerie explains that his 100 million barrels /day is actually optimistic because he would need Iraq and Iran to deliver as well as having improved access in places like Nigeria and other countries with political issues.
Be optimistic on potential. Need to be more vocal about the importance of this. Economic impact will be “relatively” limited [versus alternative of not acting].
Di Margerie went on to explain that Total was never considered (especially in EU) as “nice.” He wants to change this image - Participate in the debate - Find a way. He explicitly stated the need to go to end consumers and market yourself. Do what we need to do to “get it done.”
He commented on the point that messaging needs to be real (fact based) – it's misleading to use the term “clean energy”- it's not about clean or not clean but about being transparent on what the real implications are of the alternatives.
Possible study
I would love to do a study with just 3-4 companies; the perfect candidates would be GE, Wal-Mart, Total and Dow Chemical. The objective would be to see what we can understand and learn from their experience and get really specific on how to support them in picking up the pace and moving along the challenging process of change that they are obviously committed to. Each of these CEOs expressed deep unwavering commitment to going the long haul and a very realistic mind set about the fact that what they are embarking on won’t be easy but that it must be done - there is no other choice.
Each of these companies has in this commitment what it takes to engage their company in a deep corporate transformation effort.
Tell the rep from DWS Skudder to make sure that he’s got all these guys in his investment pool. He could also probably safely add Edison International, ADM, Chevron and Computer Associates.
So now to the last talk of the conference….
About the author; Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at http://www.revischlesinger.com/blog.html
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