When Daniel Lacalle, in his early 20s, took a job with Spanish oil company Repsol YPF SA in 1991, friends chided him for entering a field with no future. “They all said, ‘Why do you want to do that? Don’t you know only 20 years of oil is left in the whole world?’” he recalls.
Two decades and four energy crises later, the U.S. Geological Survey estimates that more than 2 trillion barrels of untouched crude is still locked in the ground, enough to last more than 70 years at current rates of consumption. Technological advances enable companies to image, drill and shatter subterranean rocks with precision never dreamed of in decades past. Trillions of barrels of petroleum previously thought unreachable or nonexistent have been identified, mapped and in many cases bought and sold during the past half decade, from the boggy wastes of northern Alberta, to the arid mountain valleys of Patagonia, to Africa’s Rift Valley.
“Betting against human ingenuity has been a mistake,” says Lacalle, who today helps oversee $1.3 billion as a portfolio manager at Ecofin Ltd. in London. “The resource base is absolutely enormous, so much so that we will not run out of oil in my lifetime, your lifetime, our children’s lifetimes or our grandchildren’s lifetimes.”
Worries about energy supplies have abated, several years after the 9/11 attacks and Iraq war made them central to daily chatter about the U.S. economy and homeland security. In that environment, the late Texas investment banker Matt Simmons was able to jolt traders, policy makers and media with a prediction that global oil production was on the cusp of a death spiral. Goldman Sachs warned that crude price were headed for a $200-a-barrel “superspike.” Concerns about Peak Oil dominated environmental conferences, academic debates about natural resources, and energy-policy discussions for much of the 2000s. They still persist despite dramatic transformation within the industry.
