So-called "peak oil" is coming, but it doesn't have to be a disaster, Chevron Chief Technology Officer Don Paul said Wednesday.
The concept of peak oil is that the oil industry is reaching its maximum production level while the demand for oil keeps growing.
At the Dow Jones VentureWire Alternative Energy Innovations conference in Redwood City, Calif., Paul said many people think the industry will hit this maximum level by 2020.
"The question is will there be peak oil? Yes," said Paul, who also is a Chevron vice president. "But will it be the disaster [some people] expect? I don't think it has to be. We have other ways of making fuel."
The remaining fuel could come from biofuels, oil from tar sands and coal, he said, adding that each of these potential sources has its challenges.
With tar sands, the problem is the need to produce hydrogen, which is added to tar sands to produce fuels, he said.
Converting coal into fuel brings up the problem of what to do with the carbon. Carbon-capture and sequestration technologies, which involve capturing emissions and storing them underground, have not been proven to work on a large scale, he said.
"You can have the best-looking research and the best-looking pilot plant, but by the time you get to scale, it just doesn't work the same," he said. "The only way is to do some real projects at scale."
Chevron is developing the world's largest carbon-sequestration project in Australia, which could reduce emissions by up to 3 million tons per year.
While there could be some technologies that could help solve the problem of capturing and sequestering large amounts of carbon, they won't do any good unless the infrastructure is in place to use them, he said.
And to capture and sequester carbon from U.S. coal plants, "you would need infrastructure the same size as the current natural-gas system, which took 100 years to build," he said. "That's a lot of pipes."
Biofuels also face a set a challenges, mainly the difficulty of growing the technology to large enough volumes to make a difference, Paul said.
"It's going to require a different operating business than someone operating a small plant out at a corn field," he said.
Paul said he is looking for technologies with the potential to produce at least as much as the total U.S. ethanol production today in one plant.
On average, Paul estimates it takes 15 years to bring biofuel technologies to larger scales, he said.
"That will be a shock to some in the tech industry," he said, adding that some entrepreneurs may not realize the challenges of building out larger plants and transporting the fuel to where it's needed. "It's true that with startups, realism isn't always the first thing on the list -- but that's OK."
But there is room for startups in biofuels, particularly when it comes to validating the chemistry, he said.
In general, he said, it makes sense for startups to develop technology, prove it works and possibly create the first plant. Then, it makes sense for big energy players, like Chevron, to step in, he said.
After all, those companies have the infrastructure for a "highly developed" distribution chain in place and are looking to create viable suppliers, he said.
Of course, the oil industry's infrastructure also is in need of investment, Paul said.
"The infrastructure existing in the world today for conventional oil and gas is being stressed by the demands on the system," he said. A period of "very low" prices also led to less spending on infrastructure, he said.
Still, even if all the challenges to biofuels and coal-based fuels are met, Paul said he doesn't expect they will ever displace oil because the demand for fuel is so great.
"You do hear, 'We're going to displace [oil],'" he said. "I don't buy it. If you look at [the demand], we're going to need every molecule."