Re: Energy Policy / Junk Science Environmentalism

Chevron's 2004 Annual Report (published 3/05) has some relevance to big-oil execs' opinions on the future of oil production. In his introductory letter CEO Dave O'Reilly states, "We are...building a world-class portfolio of capital projects...[lists four]. All of these...are scheduled to come online over the next four years, contributing to our oil-equivalent production goal of 3 million barrels a day by 2008." Chevron production averaged 2.5 million barrels a day in 2004, so this would be quite an increase. According to Don Paul, Exxon is even more optimistic about the future than Chevron. If this exec optimism is justified, it won't of course eliminate the apparently unavoidable supply crunch, but it may defer it several years.

However, the same Annual Report shows Chevron's worldwide production declined monotonically since 2000. So do we believe the trend in numbers or the industry execs? We'll just have to wait and see. But perhaps this optimism explains the apparent relative complacency of some industry execs.

Don

  ----- Original Message -----
  From: Don Winterstein<mailto:dfwinterstein@msn.com>
  To: Glenn Morton<mailto:glennmorton@entouch.net>
  Cc: asa<mailto:asa@calvin.edu>
  Sent: Tuesday, December 20, 2005 1:02 AM
  Subject: Re: Energy Policy / Junk Science Environmentalism

  Glenn wrote:

  I thought you were dismissing what I say because of some imagined interaction Don Paul is supposed to have with government officials. I would bet I have more interaction with the government than Don does. Why? I am exploration manager for a country. In big companies, they isolate people and don't let a technical guy do government relations work. I have worked for ARCO and thus know what I am speaking of. I never saw a director of technology do anything with the government at ARCO. Everyone has their tiny niche and don't dare cross over. In smaller companies, one gets to do lots of things that one would NEVER get to do in a big company. In a big company I would never have been in charge of reservoir simulation but I was in mine.

  First let me say that I dismiss little if anything of what you say on this peak oil topic. I accept your reasoning and assume that the data you present in support is accurate. I haven't found anything to quibble over in either respect. The difficulty I have is that top industry execs don't seem at all convinced that this apparently looming, obvious, imminent problem is a real problem. I cite Don Paul's views because I occasionally see him in person. I have known him for about 30 years and believe I can interpret his body language fairly accurately. As we (several of my former colleagues and I) watched him climb the corporate ladder, we concluded that his boss's views always shone through in what he said. As my Indian friend (who's had little affection for him over her entire career at Chevron) says from time to time, his ideas are "extracranial." So we don't expect him to be a fount of originality; but he's been an exceptionally quick study and--we're quite sure--he faithfully transmits his boss's opinions. His boss is now the Chevron CEO. (Don Paul may have slid back a bit in the hierarchy when Chevron bought Texaco to make room for a Texaco exec. I believe he used to be also VP for environmental affairs.) Furthermore, Don has testified at least once before the US Congress, so he is indeed sometimes assigned government duty.

  When I asked Don about peak oil and the possible bad consequences, everything about his response--words and body language--indicated to me that he (and hence, I believe, also the CEO and I'm assuming also the consensus of the other Chevron execs--because they talk to one another) did not take these possible bad consequences seriously and was actually dismissive of said bad consequences. This puts my brain in a bind. How can these intelligent, well-informed people whose lives are oil not take this apparently looming problem seriously? It's hard for me to believe these hard-nosed guys are blind to the real world, so the next most likely explanation, it seems, is that they know things that are not available to the public. I don't really like this explanation either, but it's a way of dealing with otherwise seemingly irreconcilable facts. Of course, as Al Koop has just pointed out, we may be dealing here primarily with a matter of conflicting time frames, where the industry execs are simply somewhat (or appreciably) more optimistic than you about the timing of the onset. Or can it be they're just so intensely focused on their immediate duties that they've lost perspective? But it's their job to gain and maintain perspective.

  Don
Received on Thu Dec 22 01:59:23 2005