Running out of oil may not be the issue at all

All the talk of when the world will run out of oil could be rendered irrelevant because of geopolitical issues that block access to untapped reserves, the head of international exploration and production for Chevron Corp. said Wednesday.

John Watson told energy executives and analysts that the so-called peak oil debate focuses on the level of resources below the ground. He joined the prevailing view of speakers at the Cambridge Energy Research Associates’ annual conference in Houston that the planet won’t run out of oil anytime soon despite opposing theories that a peak and subsequent drop-off in production is imminent or even ongoing.
“Every time we say we’re about to be tapped out, we find new ways to squeeze more out of reservoirs,” he said.

Or, companies find new wells in hard-to-reach places, like Chevron’s huge deep-water Jack discovery last year about 270 miles southwest of New Orleans in the Gulf of Mexico.

But worldwide oil production could still lag behind demand if politics get in the way of access, Watson said.

“The truth is we could still run short of oil, above ground where access and politics come into play,” Watson said.

He specifically mentioned lack of access to areas of the Gulf of Mexico, calling it a “great policy contradiction” to promote energy independence in the United States while blocking the ability to drill in off-limits areas of the Gulf.

Watson said other above-ground risks include gaining access when national oil companies control about 80 percent of reserves.

For example, Venezuela’s state-controlled oil company, Petroleos de Venezuela, or PDVSA, has long been a minority partner in projects in its oil-rich Orinoco Basin. The six main foreign oil companies involved in Orinoco projects are Chevron, Exxon Mobil Corp., ConocoPhillips, BP, Total and Norway’s state-owned oil company, Statoil.

Venezuela President Hugo Chavez said last month that all the Orinoco fields should “wake up under our control” by May 1.

Houston Chronicle