Major surveys conducted separately by Energy Intelligence and KPMG  this spring confirm some of industry’s worst fears, most notably the fact company executives now overwhelmingly believe the world oil supply is being consumed faster than it can be replaced.
   “These executives are deeply concerned about declining oil reserves, a situation they see as irreversible and worsening,” said Bill Kimble of audit, tax and advisory firm KPMG, which polled 533 financial  executives in April on a number of energy-related issues.
   The survey showed that oil and gas executives believe government involvement in supporting the development of renewable energy sources is necessary to alleviate the problem of declining oil reserves.
   In the KPMG survey, 25% of the respondents said at least 75% of government funding into energy should be directed at the renewable sources sector and a further 44% said at least 50% of funding should be allocated in the same way. These feelings stem from the  overwhelming majority, or 82%, citing declining oil reserves as a concern, according to the survey.
   “They see renewable energy sources as a lifeline, but our survey shows that the execs recognize they cannot count on them as a solution in the short-term,” Kimble said. “Consequently, oil and gas companies are sending a clear signal to the government that intervention is needed.”

   While oil and gas executives are keen to see renewable energy sources becoming a mass produced reality, 60% said that would not be possible by 2010. Of those that believe it would, 18% said ethanol is the most viable for mass production by then, 13% said biodiesel and only 3% said cellulosic ethanol. However, 60% of the executives believe that the trend of declining oil reserves is irreversible.
   And, when asked about the impact of emerging markets, such as China, will have on declining oil reserves, almost 70% of the executives said that it would lead the situation to worsen. The executives also clearly see that there are steps that individuals can take to alleviate the issue of declining oil reserves.
   “One-third of oil and gas executives questioned said the next time they are purchasing a family car they would consider one that consumes less gasoline, such as a hybrid,” Kimble said. “They clearly see demand-side as part of the solution to declining oil reserves.”
   When executives were asked about their upstream capital spending in the 2006 survey, the majority indicated that investment would be a factor in helping them manage declining oil reserves. Sixty-nine percent said that it would increase by more than 10%, a jump of 49% over 2005. The 2007 survey suggests that increases in spending are flattening, with 35% saying they expect an increase of more than 10%, 19% saying they expect an increase of up to 10%, and 38% saying it  would stay the same. Only 7% expect to see a decrease.

   Mergers and acquisitions continue to be a trend, with 24% of the executives saying they expect their company to be involved in one in the next year -- a 3% increase over last year’s survey. Sixty-eight percent of respondents expect private equity to play a larger role over the next year than it has in previous years.
As financial executives, the respondents put a great deal of their focus on the risks facing their companies.
   Forty-four percent said the biggest risk facing their company currently is financial, such as satisfying new regulatory requirements and shareholder demands. The next biggest risks cited, at 9% each, were “political unrest in certain countries in which your company has operations” and “insufficient access to drilling rigs.”
   Sixty-five percent of the respondents said that while they believe global warming is occurring, it is a natural weather cycle, and 11% said they do not believe it is occurring. Just under a quarter believe CO-2- induced global warming is occurring.
   Meanwhile, news publication Energy Intelligence also found that the world is currently producing more oil annually than it is replacing with new reserves. That sobering conclusion was based on an accounting of global liquids reserves.
   In contrast to the gradual rise in global oil reserves that have been reported annually in most surveys based on public sources, the new assessment shows that the trend in worldwide liquids reserves “is actually one of stagnation and modest decline.”

   The survey showed that global oil reserves declining by almost 13 billion barrels, or 0.9%, over the last two years to 1.459 trillion barrels at the end of 2006 on a “proved plus probably” basis. Global oil reserves are liquid hydrocarbons, natural gas liquids, tar sands and crude oil, that are economically recoverable at current prices,  according to Energy Intelligence.
   The survey used a somewhat broader definition of reserves than the other surveys based on public sources and it applies that definition consistently and systematically across all countries, fully accounting for production declines and new additions.
   The main reason for the poor performance in growing reserves is a lack of additions to reserves from new discoveries, which account for 20% or less of additions in the last few years, Energy Intelligence said.
   The high oil prices and sharply increased upstream spending budgets of most oil companies have not yet provided any significant improvement in global additions to reserves, but more time may be needed, according to the survey.
   For 2006, the big increases in reserves were led by Brazil and Kazakhstan. Among the top 20, only eight countries saw increases last year, while the rest were flat or in decline. The survey also confirmed earlier suspicions about the overstatement of reserves by Kuwait and some other OPEC producers. At the same time, the survey also indicates that reserves in Russia and some other non-OPEC countries are much higher than is generally reported.

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