Total will halt making new investment in dry shale gas in the United States while gas prices remain low, chief executive Christophe de Margerie has said.
The French oil major has joint ventures with Chesapeake
Energy in the Utica shale area of eastern Ohio and the Barnett gas shale
area in Texas.
"It is not great because we have invested on the basis
of gas prices that were far higher than today," de Margerie said in an
interview with French daily Le Monde on France's current national debate on its energy future.
"Our investment in Texas shows a
serious loss which, of course, does not question Total's results or
development," he said. The Total chief said the company had invested in Texas on the basis of gas at more than $6 per British thermal unit, but
that "today we are at $3.2 (per btu). It does not work".
"It is clear that we [should] soft-pedal. I see no
point in investing ... where there is no profitability," de Margerie said
of the dry shale gas market. “The fields are still there, the permits are still valid and
production will restart when gas prices return to above cost levels,” he added.
The situation in the Utica area was different because it was
based on more profitable gas rich with condensates, he said.
Much of the industry is cutting back on dry gas activity in
the US and shifting capital to areas offering more valuable liquids-rich gas
output, as North American markets remain oversupplied, partly because of the
shale gas production revolution.
De Margerie said that Total would continue to invest in
countries it considers more promising in the shale gas sector, including China,
Poland and Denmark where it intends to spud a shale exploration well this year.
In 2010, Denmark awarded Total two shale gas exploration
licenses in partnership with the Danish North Sea Fund. Total also has several
joint exploration licences in Poland. And it reached a preliminary agreement
last March on a joint venture with Chinese group Sinopec to hunt for shale gas.