EXTRA HEAVY OILS IN THE WORLD ENERGY SUPPLY · CSR Field Trip – Canada, June 2012 1 EXTRA HEAVY OILS IN THE WORLD ENERGY SUPPLY Ladislas Paszkiewicz Senior Vice President Americas

CSR Field Trip – Canada, June 2012 1

EXTRA HEAVY OILS IN THE WORLD ENERGY SUPPLY

Ladislas Paszkiewicz Senior Vice President Americas


Increasing need for fossil energies by 2030

0

100

200

300

2010 2020 2030

22%

26%

6% 10% 2% 1%

31%

23%

24%

6%

11% 3% 2%

30%

24%

22%

6%

11% 3% 4%

33%

Solar, wind, others Hydro

Biomass

Nuclear

Coal

Gas

Oil

Energy mix scenario Mboe/d

• In 2030:

─ Gas to become the second-largest energy resource

─ Oil will still represent 30% of global energy needs

─ Extra-heavy oil and oil sands will contribute to 7% of liquid hydrocarbon supply

• Increase in the demand for both renewable energies and fossil fuels


~3,500 Bboe

Oil shale

35

100

80

Already produced

Unconventional resources

Years of production

at current pace

Extra-heavy oil, a major resource to be developed

• ~500 Bb of extra-heavy oil ultimate resources*, incl. oil sands (16 years of world liquid hydrocarbon production at present pace)

─ Of which 50% in Canada

─ Rest: Venezuela, Nigeria, Brazil and Russia

Challenging resource requiring advanced technology and significant investments

Worldwide oil resources

Identified conventional resources

Yet to find and increased recovery rate

Tight oil

Extra-heavy oil (incl. oil sands)

* Includes resources that can be recovered economically with today’s technology as well as resources currently non economically recoverable with today’s technology


Need for liquid hydrocarbons partly fulfilled with extra-heavy oil in the future

• 1% per year overall average liquid hydrocarbon production capacity increase from 2010 to 2025

• 6% per year overall average extra-heavy oil (incl. oil sands) production capacity increase from 2010 to 2025

Crucial to ramp up the production of heavy oils to offset the inevitable decline in conventional production

2005 2010 2015 2020 2025

Worldwide extra-heavy oil production forecast (incl. oil sands) Mb/d

+6% per year

0

5


Bitumen

Heavy and extra-heavy oils

What are heavy and extra-heavy oils?

• 2 characteristics by definition: – Gravity: very dense, between 7 and 25° API – Viscosity (at reservoir conditions): highly viscous, from 10 up to over 10,000 cP

• 3 categories of heavy oil:

Categories Total’s definition

A Class Heavy oil

Gravity < 25° API 10 < Viscosity < 100 cP

B Class Extra-heavy oil

Gravity < 20° API 100 < Viscosity < 10,000 cP

C Class Oil sands – bitumen

7 < Gravity < 12° API Viscosity > 10,000 cP

Mobile

Non mobile

For convenience purposes, in general terms « heavy oils » include categories A+B+C, and « extra-heavy oils » include categories B+C, i.e. extra-heavy oils and oil sands

http://www.the-american-interest.com/ai2/images/issues/v2/n5/Auerswald2B


Huge volumes of heavy oil in place

North America ~1800 Bb → 94% in Canada

South America ~1300 Bb

→ 95% in Venezuela

Middle East CIS

Africa Far East C Class oils sands & bitumen

~1,940 Bb

A Class medium/heavy oil

B class extra-heavy oil

9%

41% 50% 44%

34%

~80% in Americas ~90% for extra-heavy oil and bitumen

Split by region Split by category

4,000 Bb 4,000 Bb 34% 44%


Heavy oil production technologies: depending on viscosity, depth and complexity of reservoir

Complexity of reservoir Non-mobile oil

Dep

th o

f res

ervo

ir

Currently mined

Mobile oil

New technologies are needed to improve recovery and access all reservoirs

In situ production

for homogeneous reservoir

Thermal production: steam assisted gravity

drainage (SAGD)

In situ

production:

cold production

Enhanced oil

recovery:

• Enhanced water injection

(EWI) • Thermal

Electrical heating

Radio frequency

Other technologies (combustion, microwave...)

R&D new

technologies

Heterogeneous reservoir

20 m

100 m


1 10

100 1 000

10 000 100 000

1 000 000 10 000 000

cP

0 50 100 150 200 250 300 °C

Thermal or cold production for in situ production

• Reservoir temperature ~53°C • Viscosity ~1,500 to 3,000 cP Mobile oil

Cold production possible

• Reservoir temperature ~10°C • Viscosity ~1,000,000 cP Bitumen

Thermal production inevitable

500 500 m

Downhole pump 500 m

1400 m

Reservoir

temperature

Viscosity

Athabasca (Canada) Orinoco (Venezuela)


• Substantial investment required (upstream & upgrading)

• Important CSR concerns including environmental and local content

• To lower CAPEX / OPEX along the whole of the value chain

• To increase recovery rate for each reservoir configuration

• To develop a broad range of upgrading solution (for all developments and market conditions)

• To minimize environmental impacts: CO2 emissions, water recycling, footprint

• To develop oil sands in a sustainable way

Long production plateau (20-50 years)

Continue to improve development technologies

Total’s expertise and financial strength are in line with these challenges

What are the challenges?


Total diverse heavy oil portfolio in strategic areas and techniques

Project Production techniques

200 km

Barcelona

PetroCedeño

VENEZUELA

CARACAS

In situ

Orinoco belt

Capital Town

NLP

Surmont

Fort McMurray

Alberta CANADA

Calgary

Athabasca EDMONTON

500 km

In situ

Fort Hills

Joslyn Mining

Voyageur Upgrader

Mining

Mining

Qarn Alam

Niswa

OMAN

200 km

In situ

<

MUSCAT

Sur

In situ

Mukhaizna

PetroCedeño

Upgrader


Orinoco Belt

Pto. La Cruz Caracas

PetroCedeño upgrader (Total: 30.3%)

PetroCedeño (Total: 30.3%)

Total in Venezuela, PetroCedeño (cold production)

Oil characteristics:

• In situ viscosity: ~3000 cP at 50°C

• Gravity: 7.5 - 8.5 °API

Start-up: 2000 (upgrader: 2001)

Capacity: 200 kb/d (upgrader: 180 kb/d)

Cumulated site CAPEX as of end 2011: $8 billion (including upgrader)

About 500 wells drilled and 2,000 additional wells to be drilled to maintain production (up to year 2033)

Infield production

Crude

Diluent

VENEZUELA

Diluted extra-heavy

crude

Diluent

Synthetic crude

(32 °API)

Field production facilities (degasing

dehydration powergen)

Upgrading refinery Tanker

Multiple wells gathered by pads


Long term cash flow and leverage to oil prices

• Long-plateau projects with stable production for 20-30 years

• Expected production by 2020: ~200 kb/d

• High breakeven projects but with interesting leverage to oil prices

• As per alliance with Suncor, aligned

decisions in 2013 for all projects

• Strong cash flow generation

Fort McMurray

Voyageur (49%) Upgrader

Fort Hills (39.2%) Mining

Joslyn (38.25%) Mining

ALBERTA

Northern Lights (50%) Mining

Surmont (50%) In situ

Total-operated

Partner-operated

Exploration blocks

Total in Canada, a strong base to grow production


Total building a diverse and strategic portfolio

• Increasing energy demand requires diversification of supply

• Extra-heavy oil and oil sands contributing to 7% of liquid hydrocarbon supply in 2030: key contributors to world energy supply

• Extra-heavy oil: a major segment of Total’s growth strategy

• Strong R&D commitment to increase recovery, to mitigate costs, to improve energy efficiency, to reduce GHG emissions, to limit environmental footprint and to preserve biodiversity

• Sustainability, acceptability and responsibility remain keys to success


Disclaimer

This document may contain forward-looking statements, including within the meaning of the Private Securities Litigation Reform Act of 1995, notably with respect to the financial condition, results of operations, business, strategy and plans of TOTAL. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risk factors, including currency fluctuations, the price of petroleum products, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, environmental regulatory considerations and general economic and business conditions. Neither TOTAL nor any of its subsidiaries assumes any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Further information on factors which could affect the company’s financial results is provided in documents filed by the Group with the French Autorité des Marchés Financiers and the U.S. Securities and Exchange Commission (“SEC”).

Financial information by business segment is reported in accordance with the internal reporting system and shows internal segment information that is used to manage and measure the performance of TOTAL. Performance indicators excluding the adjustment items, such as adjusted operating income, adjusted net operating income, and adjusted net income are meant to facilitate the analysis of the financial performance and the comparison of income between periods.

Adjustment items include:

(I) Special items

Due to their unusual nature or particular significance, certain transactions qualified as “special items” are excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, transactions such as restructuring costs or asset disposals, which are not considered to be representative of the normal course of business, may be qualified as special items although they may have occurred within prior years or are likely to occur again within the coming years.

(II) Inventory valuation effect

The adjusted results of the Downstream and Chemicals segments are presented according to the replacement cost method. This method is used to assess the segments’ performance and facilitate the comparability of the segments’ performance with those of its competitors.

In the replacement cost method, which approximates the LIFO (Last-In, First-Out) method, the variation of inventory values in the statement of income is, depending on the nature of the inventory, determined using either the month-end prices differential between one period and another or the average prices of the period rather than the historical value. The inventory valuation effect is the difference between the results according to the FIFO (First-In, First-Out) and the replacement cost.

(III) Effect of changes in fair value

As from January 1, 2011, the effect of changes in fair value presented as an adjustment item reflects for some transactions differences between internal measures of performance used by TOTAL’s management and the accounting for these transactions under IFRS.

IFRS requires that trading inventories be recorded at their fair value using period-end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories based on forward prices.

Furthermore, TOTAL, in its trading activities, enters into storage contracts, which future effects are recorded at fair value in Group’s internal economic performance. IFRS precludes recognition of this fair value effect.

(IV) Until June 30, 2010, TOTAL’s equity share of adjustment items reconciling “Business net income” to Net income attributable to equity holders of Sanofi

The adjusted results (adjusted operating income, adjusted net operating income, adjusted net income) are defined as replacement cost results, adjusted for special items, excluding the effect of changes in fair value as from January 1st, 2011 and excluding TOTAL’s equity share of adjustment items related to Sanofi until June 30, 2010.

Dollar amounts presented herein represent euro amounts converted at the average euro-dollar exchange rate for the applicable period and are not the result of financial statements prepared in dollars.

Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to separately disclose proved, probable and possible reserves that a company has determined in accordance with SEC rules. We may use certain terms in this presentation, such as resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 20-F, File N° 1-10888, available from us at 2, place Jean Millier – La Défense 6 – 92078 Paris – La Défense Cedex, France, or at our Web site: www.total.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or on the SEC’s Web site: www.sec.gov.

Documents

EXTRA HEAVY OILS IN THE WORLD ENERGY SUPPLY · CSR Field Trip – Canada, June 2012 1 EXTRA HEAVY OILS IN THE WORLD ENERGY SUPPLY Ladislas Paszkiewicz Senior Vice President Americas