Full of Energy

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O'REILLY: I certainly agree. We're doing things today to find oil and gas in ways we could have only dreamt of 15 or 20 years ago. We're drilling wells in 10,000 feet of water now. We can model what we believe are our reserves thousands of feet beneath the earth's surface. Technology will allow us to have greater access to energy sources and improve the supply situation--but the demand is also growing rapidly.

TIME: The Securities and Exchange Commission's new standards call for a "snapshot oil price" to be used at year-end to account for reserves. What does that mean for your company?

O'REILLY: The SEC makes the rules. We follow them ... Don't confuse the SEC's definition of reserves, which is somewhat arbitrary, and all the oil and gas available in the world [that] hasn't yet been developed. New technology will allow us to access reserves not currently "proven" by SEC standards.

TIME: ConocoPhillips recently pulled out of Arctic Power, an industry group that has been lobbying to get the U.S. government to approve drilling in the Arctic National Wildlife Refuge. Your thoughts?

O'REILLY: I don't know why they withdrew. We support opening up the Arctic National Wildlife Refuge. Currently, Alaska is only producing a million barrels a day. It used to produce 2 million barrels a day. We're talking about developing less than 1% of the wildlife refuge. Alaska's citizens are very supportive. We think it's good for their economy as well as for the energy security of the United States.

TIME: BP has publicly promoted itself as an environmentally aware energy company. Where is ChevronTexaco in that story?

O'REILLY: The public image is in the eye of the beholder. We provide reliable, affordable energy in an environmentally sound way, and that's what we're about ... We're working hard to better understand the practical applications of alternative energy sources. We started a new project in Chino, California, to provide hydrogen for automobiles. We're expanding the use of wind to generate electricity for our facilities. We're testing solar power with photovoltaic technology in Bakersfield, California, and we also have a battery company for hybrid automobiles ... There's nothing we do in the world that doesn't have some environmental consequence--even farming. But we can do it better, and we must.

TIME: Last month more than 140 countries enacted the Kyoto Protocol, but obviously not the U.S. ChevronTexaco is the second largest U.S. oil-and-gas company. How would it affect your company financially if we signed on?

O'REILLY: We're operating in most of the countries that signed, so we're already complying with Kyoto in those areas. Just because the U.S. has opted not to participate doesn't mean it doesn't affect us. It's something we've been planning for. The important thing to ask is what it would mean for the economy of the United States if we were signatories. If it were to be applied in the U.S., our company would certainly comply. Since it would apply to everybody, it wouldn't be a competitive disadvantage.

TIME: What keeps you awake at night?

O'REILLY: I sleep well at night. I feel good about how our employees operate, and it's reassuring to have great people in an organization.

 

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