Paula Dittrick
OGJ Senior Staff Writer
HOUSTON, Mar. 8 -- More investments are necessary if oil production is to keep up with spiraling demand worldwide, and industry is increasingly relying on partnerships to spread financial risk and share expertise, oil company executives told the IHS-CERA energy conference in Houston.
Total SA Chairman and Chief Executive Officer Christophe de Margerie said sufficient short-term oil supply exists worldwide despite civil unrest in the Middle East. But he said more investments are needed if long-term oil and gas production is to meet forecast demand.
Industry is responsible to produce more oil and gas in an acceptable way given rising environmental concerns, De Margerie said. “For the time being, there is no reason to consider a shortage of supply,” he said. Total is relying on numerous partnerships worldwide to grow its oil and gas production, he said.
John B. Hess, Hess Corp. chairman and chief executive officer, said he foresees an energy crisis coming as a result of rising oil demand. Current rising oil prices are a warning, he said.
“While we are not running out of oil…we are not investing enough to grow production capacity to keep up with demand,” Hess said. “The world’s surplus oil production capacity is currently about 3-4 million b/d. As demand grows in the next decade, we will not have the oil production capacity we will need.”
Calling for a US energy policy, Hess advocated energy efficiency, increased oil supply, and he urged government to maintain tax provisions that encourage drilling.
“As we moderate demand for oil, we must do all we can to increase supply,” Hess said. “It serves nobody’s purpose for our political leadership to vilify oil producers…. Our country needs to do everything it can to encourage more drilling to strengthen our energy security, including proper regulatory oversight to ensure protection of the environment.”
A US energy policy also needs to emphasize natural gas for electricity generation, invest in research for new forms of energy, and set realistic targets for reductions in carbon emissions, Hess said.
IHS CERA Chairman Daniel Yergin said he expected the conference to be dominated by questions about the Middle East, uncertainty about oil prices, and what it means for the global economy.
"The future of the economic recovery and its vitality are very much front and center," Yergin said.
Contact Paula Dittrick at [email protected].
Rystad Energy.
