Panning for black gold, a global challenge

February 13 2008: 3:07 PM EST

HOUSTON (CNNMoney.com) Oil industry executives and experts are gathering here this week for the Cambridge Energy Research Associates' annual conference, one of the sector's most impressive showings of energy industry clout outside of an OPEC meeting. The backdrop of the meeting is tight supplies and rising demand for crude. Executives said, the industry faces serious challenges getting oil to market.The consensus is that the world has enough oil to meet growing demand, but that the industry must focus more attention on harvesting the oil.

John Hess, chief executive of Hess Corp, says that an oil crisis is coming, and sooner than most people think. He also says that all oil producers are not investing enough today while there is enough oil in the ground.

A small but growing number of analysts disagree with Hess' assertion that there is enough oil in the ground. They say production of oil has peaked or will peak soon, and it will cause a major social unrest. Mark Albers, a senior vice president at Exxon Mobil says that there is no question oil is a finite resource, but it's far from finished. He says the world has three trillion barrels of oil left but it's just hard to reach. He also says that producers have to work closely with countries that hold a significant chunk of the remaining supplies. One of those countries is Saudi Arabia. The head of the Saudi state oil company said his firm is making the necessary investments to increase oil production to 12 million barrels a day by 2009, up from between 9 million and 10 million barrels a day currently.
Abdallah Jum'ah, chief executive of the Saudi Arabian National Oil Company, believes that if the prevailing confusion over energy policy continues, there is considerable risk the expansion of resources will be compromised. Jum'ah didn't specify which policies he was referring to, but cautioned against putting too much faith in alternative energy. He also believes that there are expectations for an unrealistic development rate for such resources and that the world cannot afford to leave massive quantities of oil in the ground and move to uncertain technologies.

In this article they ask themselves if renewable energy will cause the problems. The U.S. government says that, under current policies, renewable energy will only meet 2 to 5 percent of the country's total energy needs by 2030. But supporters of renewable energy say it could be much higher up to 50 percent.
Jum'ah said that global warming demands our most serious attention but that we cannot afford to abandon fossil fuels. Because oil helps drive the economic growth and lifts people out of poverty.
Other executives were more forceful in pushing the industry to address the climate change challenge.

James Mulva, chief executive conocoPhillips of the third largest oil company in the U.S., believes that if the industry doesn't engage we'll lose the option of influencing policy.
Mulva chastised the U.S. government for not taking a more active role in dealing with greenhouse gasses. He finds that the United States failed to ratify the Kyoto treaty.
Nobuo Tanaka, executive director of the International Energy Agency, said a mandatory target to reduce greenhouse gasses may not solve the global warming problem.
Tanaka outlined a plan calling for massive reductions in carbon dioxide emissions from power plants, a big jump in energy efficiency along with big investments in conventional energy infrastructure.
The plan would be costly $50 trillion by 2050. And the investment would cause a reduction in greenhouse gas emissions by at least 50 percent by 2050 and avoid the most serious effects of global warming such as widespread flooding and drought.
"The primary scarcity facing the planet is not resources, it's not money," said Tanaka. "It's time."

http://money.cnn.com/2008/02/13/news/economy/oil_conference/index.htm