Executive Q&A viewpoint

Jérôme Ferrier, senior vice president of corporate, Total; president of the association for Française du Gaz; and president of the International Gas Union, Paris, France

The oil and gas industry has undergone massive changes during the past three years and continues to be in flux. Hydrocarbon production supports international economies; yet, the oil and gas supply boom creates challenges for worldwide exploration and production companies.

Also, while natural gas production is more than sufficient to meet global demand, LNG imports and exports are needed to balance the markets. As a result, timely information on future energy development is critical to every executive riding the crest of this dynamic and ever-changing market.

To bring clarity to the market and direction to executives and strategic planners, the International Gas Union will present its triennial World Gas Conference in Paris during the week of June 1. As a preview to the event, Gas Processing talks to Jérôme Ferrier, senior vice president of corporate for Total, president of the association for Française du Gaz and president of the International Gas Union, about the energy industry’s greatest opportunities and challenges, and the changing role of natural gas.

GP. Due to its global membership, the International Gas Union has a comprehensive overview of the natural gas industry. What would you say are some of the major challenges facing the industry today?

Ferrier. These are indeed challenging times. I cannot recall a period when so much effort has been dedicated to addressing the growing (and, in many cases, unprecedented) social, economic and environmental demands on the entire energy sector.

However, I also see significant opportunities, especially for the natural gas industry. As the price of crude oil continues to plunge and budgets are squeezed across the entire energy supply chain, market dynamics dictate that the gas industry is likely to follow suit and experience similar supply/demand imbalances and the associated financial uncertainties for the foreseeable future.

Furthermore, growing public skepticism toward energy policies is making it increasingly difficult for the industry to make a case for long-term investment decisions, such as improving grid infrastructure and demand-side management to handle a wider mix of energy sources. Much of this mistrust stems from a lack of public awareness and knowledge about the environmental and economic benefits of natural gas as a fuel.

Another challenge is to encourage the industry to channel the appropriate investment into skills, expertise and research. We must ensure that the gas industry is future-proofed as best we can by providing ongoing support and development opportunities for the industry’s workforce.

More widely, existing national commitments to energy efficiency and decarbonization targets are fast approaching, and the pressure is mounting for global leaders to reach binding agreements at the 21st yearly session of the Conference of the Parties (COP 21) to the 1992 United Nations Framework Convention on Climate Change (UNFCCC) and the 11th session of the Meeting of the Parties (CMP 11) to the 1997 Kyoto Protocol. The role of natural gas during these talks will be crucial to setting the agenda for tackling climate change.

GP. What are some of the major opportunities?

Ferrier. I think this is one of the most important questions to ask in 2015. I believe that gas can provide a major part of the solution to many of the problems already mentioned, and that 2015 represents a significant opportunity for the industry to demonstrate its considerable credentials.

In November 2014, the International Energy Agency (IEA) released its World Energy Outlook (WEO 2014), which positively underlined the central role of natural gas in the energy mix. The global share of natural gas is expected to grow from 21% of the global energy mix in 2012 to 24% by 2040. France is proud to have held the presidency of the IGU triennium since 2012, and this year’s 26th World Gas Conference in Paris (WGCPARIS2015) presents the perfect opportunity to ensure that the natural gas industry takes its rightful place at the heart of discussion on global energy solutions.

France’s role at the IGU is to advocate the development of natural gas, not only as a foundation fuel, but also as a key long-term solution for sustainable growth and a more secure energy future. I am confident that the continued responsible development of our industry can help increase energy market stability, reduce CO₂ emissions and improve quality of life wherever it is used. The opportunities, to my mind, lie in three principal areas.

First, we must tell our own story and not leave a vacuum for others to fill. One of the three major IGU Task Force activities is natural gas advocacy. We have ensured that several discussion panels at WGCPARIS2015 are dedicated to presenting updated strategies and new policies for better communication about gas. We must take the opportunity to tell our story clearly, convincingly and effectively.

Second is the urgent need to continue investment and innovation to secure the expanding role of the natural gas sector. Investment is needed in the production, transportation and distribution of gas to improve connectivity. Innovation is needed to move toward improved carbon efficiencies. Developing LNG technologies is a key part of the journey toward reducing emissions in transport and shipping.

Third is the opportunity to encourage dialogue and increased collaboration between key global organizations. In recent years, the IGU has dramatically expanded its presence and influence all over the world, with membership now representing more than 95% of the global gas market. We have also reinforced relationships with the Secretariat of the UNFCCC; the United Nations Industrial Development Organization (UNIDO); the United Nations Educational, Scientific and Cultural Organization (UNESCO); the World Bank; and the IEA.

Our growing and important work with such institutions on environmental and other aspects of energy is a clear demonstration of our industry’s commitment to the proposition that the many benefits of natural gas as a fuel of today and tomorrow should be seen as complementing the move to a low-carbon future, rather than posing a threat to the development of renewable energy sources.

GP. How important, overall, is LNG transportation to the natural gas industry, and do you believe this type of gas transportation will increase or decrease during the coming decade?

Ferrier. Up until recently, LNG was a commodity designed to supplement or replace natural gas flows through pipelines. However, the growth of LNG transportation has highlighted its importance to the wider gas industry. LNG has become an important source of primary power generation and has brought gas to locations far from major gas infrastructure, expanding the global gas market’s reach and the world’s access to cleaner energy.

Many countries are expanding their LNG capabilities, including Australia, Canada, Mozambique, Tanzania and the US. With the added flexibility that this brings to the market, LNG is increasingly being recognized as an economic enabler for developing countries.

In a recent study, the IGU found that global liquefaction capacity will grow substantially between 2020 and 2025, with regasification capacity set to increase by around 75%. This is a clear sign that LNG is set to grow further over the coming decade.

GP. Do you believe that most countries are concerned about the environmental impacts of developing natural gas reserves, and does IGU offer any advice regarding this issue?

Ferrier. Across the world, we are seeing an increase in concern for the environment, especially in the run-up to the UNFCCC’s COP 21 summit in Paris later in 2015.

I am confident that the gas industry will play a vital role in discussions about our energy future. As the IEA’s WEO 2014 report emphasized, natural gas produces far less NO_x and SO_x compared to coal, and using it for power generation will reduce carbon emissions by 50%. This means that natural gas has an important role to play in our transition toward a lower carbon economy and as a foundation fuel for the future energy mix.

Furthermore, the IGU takes every opportunity to encourage governments across the world to work with industry to develop operational and regulatory approaches that ensure that gas resources are developed in an environmentally progressive manner. We advocate climate policies that introduce a cost of carbon that is uniform and predictable across economies, and that can drive the innovation of both low-carbon technologies and increased energy efficiency.

GP. Given the recently announced layoffs and redundancies of major natural gas exploration and production companies, as well as service and supply companies, do you believe the industry will experience another “brain drain?” What actions should the industry’s leaders take to avoid losing practical expertise?

Ferrier. The so-called “brain drain” of the oil and gas sector has been well documented in the media. It is quite rightly a major concern for those in the industry and one that we take extremely seriously at the IGU.

To develop the gas resources of the world, we need a continuous supply of skilled personnel, from researchers and managers to technicians and operators. As oil prices fluctuate and jobs are threatened, it is imperative that we support those working in our industry.

To contribute to efforts around this issue, the IGU has dedicated the entire Day 4 at WGCPARIS2015 to human capital. Our strategic panel will address the vitally important topic of women in the gas industry, and another session will cover gas communication.

We are also heavily investing in our youth program, which incorporates 200 students and young professionals between the ages of 20 and 30. The program is designed by, and for, young people and comprises high-level workshops and conferences that showcase all that the gas industry has to offer their generation. We need to work together to show young people that our industry should be a major consideration at the start of any ambitious career path.

It is imperative for governments and organizations to encourage people to enter the engineering workforce. We must make determined efforts to understand and address any educational or cultural constraints involved. This is another challenge faced by our industry, but one I am confident we are working toward solving.

GP. What are the advantages of using natural gas for energy as compared to other forms of energy, such as coal, nuclear, oil, wind and solar?

Ferrier. We have already discussed the fact that natural gas produces far less NO_x and SO_x compared to coal, and we know that it burns with 50% less carbon emissions. Natural gas is applicable to most forms of transportation, and it is seen as a good source of electricity supply for a number of economic, operational and environmental reasons.

For example, natural gas processing is a low-risk venture (technically and financially), and gas plants can be built relatively quickly, in around two years, unlike nuclear facilities, which can take much longer and carry their own long-standing and deep-rooted issues. Renewable energy production, such as wind and solar, although improving dramatically each year with technology innovation, still faces major challenges around storage, intermittency and financing.

Each energy source comes with its own set of challenges. The real heart of the matter lies not in which is better, but in how to make a smooth transition from polluting fossil fuels to clean energy while meeting increased energy demand and seriously combating climate change.

GP. Do you have any final comments for our readers?

Ferrier. We have many opportunities to address supply and demand challenges and to advance the global efforts for sustainable development over the course of 2015. This June, the 26th World Gas Conference in Paris will bring together the largest gathering of senior oil and gas leaders and policymakers from more than 600 global organizations. The opportunity for our industry, therefore, is to restate the case for gas and outline its place as a foundation fuel.

WGCPARIS2015. The World Gas Conference encompasses 70 topics spanning the entire global oil and gas value chain, which will serve as a backdrop to discussions at this event. WGCPARIS2015 will take place in Paris on June 1–5.

Key business solutions to ever-changing market conditions will be discussed at WGCPARIS2015. The event will examine market dynamics, showcase new technology and offer analyses on market trends.

Industry professionals can find details on the key topics being discussed, the full list of confirmed global speakers and the numerous networking opportunities available to meet representatives from more than 600 global companies at www.wgc2015.com.

Thousands of delegates from more than 500 companies have already registered to network with industry experts through events designed to facilitate business and foster working partnerships. GP

Jérôme Ferrier, a civil and petroleum engineer, began his career in 1976 with Elf Aquitaine—first in France, then in Africa. He was involved in the Bonaparte Gulf LNG project in Australia in 1984 and the Bonny LNG project in Nigeria in 1985, which was the first LNG project in Africa. After joining the natural gas division of Elf Aquitaine in 1987, he became the head of department for France in 1991, and then the head of department for southern Europe in 1995. In 1998, Ferrier was promoted as the managing director of Gaz du Sud-Ouest, a subsidiary of Elf Aquitaine and Gaz de France, where he was in charge of supplying, transporting, storing and marketing gas in the southwest region of France. Following the merger of Total and Elf Aquitaine in 2001, he was appointed the director for the Americas in Total’s Gas and Power Division in 2002. In 2005, he became president of Total Gas and Power for the Southern Cone in Latin America and the representative of Total in Argentina. In January 2008, he joined Total’s head office as special advisor to the president of Total Gas and Power. At the end of 2008, he was promoted to senior vice president for corporate security. Also in 2008, he was elected president of the International Gas Union (IGU) for the triennium 2012 to 2015. Additionally, Mr. Ferrier serves as president of the French Gas Association (AFG).