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Daily Telegraph: We're not running out of oil says record-breaking Shell

By Christopher Hope, Industry Editor (Filed: 03/02/2006)
Royal Dutch Shell yesterday shrugged off suggestions from US president George W Bush that America should lose its addiction to oil, adding that the world was nowhere near to running out of black gold.
The news came as Shell, the world's third biggest oil and gas company, unveiled record profits for a British-listed company of $22.9billion (£12.9billion), up 30pc, on surging oil prices and strong refining margins. This is likely to beat the $21.7billion forecast for BP next week.
Jeroen van der Veer, Shell's chief, said: “President Bush has to run America and we have to run Shell, but there is a huge energy challenge in the world. We have plenty of opportunities. This is not about proved resources, but hydrocarbon resources.”
Shell was feeling “very good” about the prospect of finding plenty of oil and gas, by developing hitherto untouched parts of the globe.
World oil and gas production was nowhere near peaking because of the potential of untapped reserves made economic by the higher oil price.
He said: “There is the theory of 'peak oil' – that the big discoveries have all gone. But we don't know where the peak will come with oil sands. With oil shale, we have not yet started. There will be many peaks in many time frames.”
Shell's production last year fell from 3.7m barrels a day (bpd) to 3.5m after hurricanes in the Gulf of Mexico knocked out some platforms. Production would not be more than 3.65m bpd in 2006, it added, although Shell is targeting up to 5m bpd by 2015.
A lingering concern was local unrest affecting the company's interests in Nigeria, which meant that Shell has lost 1m barrels of oil production over the past 10 days. Shell was working to bring full production back on stream, it said. It admitted it only replaced six or seven of every 10 barrels the company extracted last year, up from five out of every 10 in 2004.
It stuck to a target of averaging a “reserve replacement ratio” of more than 100pc, a figure it last surpassed in the 1990s, between 2004 and 2008, however.
Shell is increasing capital expenditure to try to find more oil and gas, spending $19billion on looking for more hydrocarbons this year, compared with $15.6billion in 2005.
Last year seven out of 12 “big cat” prospects – containing more than 100m barrels of oil and gas – were drilled successfully. This year, Shell will drill between 15 and 20 similar wells.
Shell brushed off renewed claims it was profiteering, though pre-tax profits were up 41pc to $44.5billion, less than the world record $59.4billion posted by Exxon Mobil last week. Despite record petrol prices in the UK, Shell said it derived only a small part of these profits at UK petrol pumps. Its UK tax bill doubled to $1.2billion. Shell's shares closed down 49 at £19.56.
In London last night, the Brent oil price closed down $2.15 at $62.88.
Listen to Christopher Hope talk to Jeroen van der Veer at podcast.telegraph.co.uk

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