July 5, 2007 / 2:20 PM / 11 years ago

UPDATE 2-'Accumulating risks' to world energy supply-US NPC

(Adds oil analyst comment)

By Chris Baltimore

WASHINGTON, July 5 (Reuters) - The world is not running out of crude oil and natural gas but there are “accumulating risks” to securing global supplies through 2030, a high-level board of U.S. oil company executives found in a report obtained by Reuters on Thursday.

Those risks include “political hurdles, infrastructure requirements and availability of trained work force,” according to the study by the U.S. National Petroleum Council, conducted at the behest of U.S. Energy Secretary Sam Bodman.

The NPC, whose members include executives of big oil companies like ExxonMobil (XOM.N) and Chevron Corp. (CVX.N), will present the study at its July 18 meeting.

The council, formed in 1947 at the request of President Harry Truman, is chaired by Lee Raymond, the former chief executive of ExxonMobil.

When Bodman called for the study in October 2005, he asked the council to study the concept of “peak oil,” whether the globe was running out of hydrocarbons.

“Perspectives vary widely on the ability of supply to keep pace with growing world demand for oil and natural gas,” Bodman wrote at the time.

In a draft letter to Bodman outlining its findings, the group says, “The world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources relied upon historically.”

The group calls for “a new assessment of the global oil and natural gas endowment and resources to provide more current data for the continuing debate.”

Matt Simmons, founder of Houston-based Simmons and Co. International, who has argued that world oil production is declining irreversibly, criticized the report’s findings.

Simmons, a member of the council who provided input for the report, pointed to a graph showing oil production from existing reserves falling below 20 million barrels per day (bpd) by 2030 from current levels near 75 million bpd.

In that chart, the addition of output from known reserves, enhanced oil techniques, unconventional sources like Canada’s oil sands and “exploration potential” boosts the total to near 120 million bpd by 2030.

    “We don’t have any idea where those reserves are going to come from or how we are going to get them out of the ground,” Simmons said. “The odds of this ever happening are zero.”

    On the other side of the issue, prominent energy expert Daniel Yergin, chairman of oil consultancy Cambridge Energy Research Associates, who served as vice chairman of demand issues for the council, has dismissed the idea of “peak oil.”

    Instead, Yergin’s group has predicted an “undulating plateau” of crude oil production over several decades, followed by a slow decline.

    The National Petroleum Council also debunked the idea that the United States can wall itself off from dependence on foreign oil suppliers like Saudi Arabia and Venezuela, a notion popular with some U.S. lawmakers.

    “The concept of energy independence is not realistic in the foreseeable future,” the study says.

    The study calls for boosting energy efficiency across all sectors -- including transportation -- and expanding energy sources like coal, nuclear, biomass and unconventional hydrocarbon sources.

    The only mention of OPEC -- the producers group that controls a third of global oil exports - is in a footnote.

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