Big Profits, Big Worries in Oil Fields

Oil companies have made super profits the last few years thanks to record high oil prices. Chevron, the second-largest American oil company, earned $17 billion in 2006. But oil is harder to find and more expensive to produce. David J. O’Reilly, 60, Chevron’s chairman and chief executive, spoke recently about the challenges big oil companies face in meeting growing oil demand, how technology has advanced the search for oil, the message behind Chevron’s recent ads and the lack of an energy policy in the United States. Following are excerpts:

Q. Is there enough oil out there to meet the world’s growing demand for energy?

A. I think the answer is yes, certainly in the foreseeable future. Now, it is not in easy-to-get-to places or easy-to-recover places. We are accessing more molecules through technology. The Gulf of Mexico has been given up on a number of times and it keeps coming back from the dead. Technology allows us to go further and find oil in places we never thought we could find oil. It’s not so much the molecules, it’s the access to the molecules, either through technology or through the permission.

One of the issues is offshore access in the United States. You know, the Europeans have a much more progressive attitude toward this. The Norwegians produce oil offshore, the British do, the Dutch do, the Danish do. All these people produce oil offshore. And yet we, in our country, don’t seem to be able to come to terms with doing this effectively. There are many areas of our offshore that have not yet been explored.

Q. Some of your advertisements make a point that the rate of consumption is higher than new discoveries. That seems like a compelling argument that there is a problem. What should we make of that?

A. One of the reasons for the ad is to draw people’s attention to the fact that, look, this is not an unlimited resource and it’s one that we ought to use carefully. Behind those ads, I think, you will see a clear message for the need for the public to be more energy-efficient and to treat conservation as a value. This is not an unlimited resource. If you believe the projected growth rates for energy demand, we are going to need to use it efficiently and we’re also going to need to develop all the resources as we can as efficiently as we can across the board. And it’s not just oil and gas: it’s nuclear, it’s coal, it’s renewables. I mean, they all have a role to play. It takes leadership, I think, to recognize that it’s not a matter of not doing this or not doing that. But it’s a matter of doing this and doing that. All the way from the more efficient use of it to the multiple sources of supply.