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Oil and Gas Execs Say Focus on Renewable Energy Sources Key to Addressing Declining Oil Reserves, KPMG Survey Finds
But Mass Production of Renewable Fuel Not A Near-Term Possibility, Say 60 Percent
60 Percent Believe Trend of Declining Reserves is Irreversible
HOUSTON, May 11 /PRNewswire/ -- Oil and Gas Executives say
government involvement in supporting the development of renewable
energy sources is necessary to alleviate the problem of declining oil
reserves, according to the results of a survey conducted by KPMG LLP,
the audit, tax and advisory firm.
In the KPMG survey, which polled 553 financial executives from oil
and gas companies in April 2007, twenty-five percent of the respondents
said that at least 75 percent of government funding into energy should
be directed at the renewable sources sector and a further 44 percent
said that at least 50 percent of funding should be allocated in the
same way. These feelings stem from the overwhelming majority, or 82
percent, citing declining oil reserves as a concern.
"These executives are deeply concerned about declining oil
reserves, a situation they see as irreversible and worsening," said
Bill Kimble, National Line of Business Leader, Industrial Markets for
KPMG LLP. "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. 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 percent say that will not
be possible by 2010. Of those that believe it will, 18 percent say
ethanol is the most viable for mass production by then, 13 percent say
biodiesel and only 3 percent say cellulosic ethanol.
Sixty percent 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 percent 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 that the next
time they are purchasing a family car they would consider one that
consumes less gasoline, such as a hybrid," said Kimble. "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 will be a
factor in helping them manage declining oil reserves. Sixty-nine
percent said that it would increase by more than 10 percent, a jump of
49 percent over 2005. The 2007 survey suggests that increases in
spending are flattening, with 35 percent saying they expect and
increase of more than 10 percent, 19 percent saying they expect an
increase of up to ten percent, and 38 percent say it will stay the
same. Only seven percent expect to see a decrease.
Mergers and acquisitions continue to be a trend, with 24 percent
of the executives saying that they expect their company to be involved
in one in the next year -- a three percent 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 say that
the biggest risk facing their company at this time is financial; such
as satisfying news regulatory requirements and shareholder demands. The
next biggest risks cited, at nine percent each, were "political unrest
in certain countries in which your company has operations" and
"insufficient access to drilling rigs".
Other Findings
Sixty-five percent of the respondents say that while they believe
global warming is occurring, it is a natural weather cycle, and 11
percent say that they do not believe it is occurring. Just under a
quarter believe CO-2- induced global warming is occurring.
KPMG will be discussing these survey results during its Fifth
Annual Global Energy Conference, the event for financial executives in
the oil and gas industry on May 22nd and 23rd at the Intercontinental
Hotel in Houston.
This year's keynote speakers will be William H. Donaldson, the 27th
Chairman of U.S. Securities and Exchange Commission and David Crane,
President and Chief Executive Officer, NRG Energy, Inc.
The conference will address global issues and will feature leaders
in the industry from around the world. Topics that will be addressed
include: Business Challenges Facing Today's Energy CEO; Alternative
Energy -- The Real Story; and Utilizing Tax Incentives in Alternative
Energy Projects.
Please see the conference website for more information www.kpmgglobalenergyconference.com.
KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com),
is the U.S. member firm of KPMG International. KPMG International's
member firms have 103,000 professionals, including 6,700 partners, in
144 countries.
Contact: Sam Azzouni KPMG LLP Tel: (201) 307-8386
SOURCE KPMG LLP
Related links:
www.us.kpmg.com
www.kpmgglobalenergyconference.com/
~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~
Recommended by reader FTX at The Oil Drum.
I was surprised by the awareness of declining oil reserves (aka peak oil) and the support for demand reduction:
Sixty percent 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 percent 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 that the next time they are purchasing a family car they would consider one that consumes less gasoline, such as a hybrid," said Kimble. "They clearly see demand-side as part of the solution to declining oil reserves."
Rather dismaying is the perception of global warming:
Sixty-five percent of the respondents say that while they believe global warming is occurring, it is a natural weather cycle, and 11 percent say that they do not believe it is occurring. Just under a quarter believe CO-2- induced global warming is occurring.-BA
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