Monday, February 25, 2013

Time for Delivery


André Goffart, new CEO of Total E&P Canada, embraces a mandate to start executing 

on major potential; photo from here

This article appears in the March issue of Oilsands Review

By Peter McKenzie-Brown
When you talk to André Goffart, you get an immediate sense of Gallic charm. The new president and CEO of Total Canada, the 55-year-old was born on a farm near the French town of Valenciennes, halfway between Paris and Brussels. As far as he knows, his forebears were mostly part of the farming community, but he decided early on to take a different tack. He trained as a civil engineer at the École des Ponts ParisTech, the world’s oldest civil engineering school.

His first job was in Africa, where he built bridges. In 1982 he joined Total, which, by market capitalization, is now the fifth largest of the world’s six super-major oil companies. With that company he has held roles in drilling, project and asset management in eleven countries. From 2002 to 2006, he held senior roles in Angola – first as asset manager for the ultra-deep offshore Block 17, then as deputy general manager for Total’s Angolan exploration and production operations.

Before his transfer to Canada, he worked in Russia, where he served as exploration vice-president, and was deeply involved in project management for the Total, Gazprom, Statoil consortium developing the Shtokman gas field in the Barents Sea. Probably the world’s second-largest gas deposit in the world (the largest is an offshore field containing more than a quadrillion cubic feet, shared by Qatar and Iran), Shtokman management now has still to deal with a classic dilemma: Where will that gas be marketed? “When I first went there in 2007,” Goffart said in an interview, “our intention was to develop it for export to the United States, but of course many things have changed since then.” With North American gas markets glutted, the consortium is investigating delivering its product instead to China, India, Japan and other parts of the world.

International Assignments
A veteran of assignments in 11 countries – “working worldwide has given me great opportunities to learn about countries that are not very well known,” – as part of his career rotation Goffart was parachuted into Calgary primarily to oversee the company’s oilsands projects, which include five joint ventures. At a SAGD project at Surmont, the company is partners with ConocoPhillips, the operator. Total operates the Northern Lights mining project on behalf of a 50/50 partnership with SinoCanada Petroleum.

Total is also operator of the Joslyn North Mine, with Suncor, Occidental, and Inpex Canada as partners. Suncor operates the Fort Hills project, with Total as an almost-equal partner, and Teck Resources owning 20%. Finally, Suncor operates the Voyageur Upgrader, in which Total owns 49%. Goffart characterizes the company’s partnerships with Suncor as an excellent fit – allegations to the contrary by a journalist notwithstanding. Suncor “brings to the table experience in oil sands mining. We bring international experience and the ability to manage very large projects. It’s a very good combination.”

Although the company’s current employee base is only 362, Total’s Canadian arm has plans to invest something in the order of $20 billion during this decade. Goffart describes Calgary as having a “very dynamic business environment – especially when you arrive from Europe, which is so downbeat right now. The industry here is based on free markets, compared to Europe and other parts of the world,” where governments typically own a share in the sector. He notes that, compared to even ten years ago, when he regularly visited Calgary, the city “has become quite diverse.”

Another observation from ten years on is this: “Canadian industry is less competitive and more collaborative. With all the momentum that has been created within the industry we believe there is a better environment for delivering good projects and meeting the concerns of our stakeholders.” The shift to a more collaborative industry is “a good change,” he says – one that is directly tied to public concern about the environment. He says that when the ERCB issued Directive 74 four years ago – the directive presented strict new regulations on tailings – it “was a wake-up call for the industry. It was a step-change. It became essential for the industry to share environmental technologies,” with the outcome that the Oil Sands Leadership Initiative (OSLI), and Canada’s Oil Sands Innovation Alliance (COSIA) were formed. “It was the start of a new era. I see that event as the catalyst for a new approach. I’ve never seen so much collaboration as I am seeing here.”

Ask Goffart to summarize his management philosophy, and he breaks the process into three elements. The first is project management. “We are making huge investments, in the tens of billions of dollars, so project execution, which must be exemplary.” The second is technology. “We have a very strong focus on technology, because what we see is that the industry is now being pushed to break the limits on almost every project. New technology often brings risk, and we must manage that risk.” The third is environmental: “The license to operate is really key, so we must have good relations with stakeholders.”

On the matter of motivating personnel, he also has a philosophy which also has three elements. “Our people must understand the project and the strategy behind the project,” he says. “This can often be challenging for people on teams, because these projects are often very complex.” Second, he thinks “our teams must understand that we are there for the long term, and they must build for that.” Finally, “we must trust our teams and give them the opportunity to deliver.”

The IEA Report
In the wide-ranging discussion, the topic of last fall’s report from the International Energy Agency frequently came up. That report forecast that oil production in North America would continue to rise, and that by 2030 the United States could even be self-sufficient. While Goffart acknowledged that there were medium-term concerns – “conditions are now more challenging because of unconventional production, plus logistical constraints (lack of pipeline capacity) in the United States,” he said. “In view of this environment we have reviewed all of our projects to make sure they are all as cost-effective as possible. This has worked well with the mines, although it is more problematic with the upgrader.”

“Everybody believes that in the medium term there will be less place for the oil sands at least in North America,” he says although “We don’t agree with the IEA that the US will become oil self-sufficient. That idea is unrealistic. In the long term we are not changing our plans, but we must be ready to adjust in the near term. (Oil price) differentials will be a problem for the near term.” As regards the Keystone and Gateway pipelines, he is optimistic that both will be developed. “They will diversify our markets. That is essential if we want to improve the value for Canadian oil.” He adds that Americans will never lose sight of the fact that “the oilsands give (them) opportunities to reduce imports from other, less friendly, parts of the world.”

Presumably, Goffart will eventually be rotated to another assignment within Total’s global operations. If that happens, what would he like his legacy to be? “I would like to see all my mining projects launched. I’m here to make sure our projects get launched. My project background is probably why the company chose me to be here now. Now it’s time for project delivery.” He adds, “I would also like to see more collaborative work with other companies on environmental issues.”

Total S.A., the formal name of the global behemoth, is the private-sector successor to what originated as a company formed by the French government in 1924. The interview settled into a discussion of the brief, dramatic period that began in the late 1990s, when the world’s large private sector oil companies merged to form the super-majors.

What was it like from his side? “It was a bit of a surprise when we merged,” he deadpans. “I was surprised that Total was the company to survive, since Elf-Aquitaine was actually the larger company. We also absorbed Fina, the Belgian company.” He adds, “There were differences in corporate culture, and those had to be smoothed out, but the companies had complementary portfolios. Unlike the experience of other companies during those mergers, the mergers created no redundancies.” 

Headquartered in Paris, today’s Total S.A. has about 96,000 employees in more than 130 countries on five continents.


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