NEW ORLEANS (AP):

Efforts to boost the supply of oil in the face of expanding world demand are being hampered by insufficient investment, despite surging crude prices, the head of a major petroleum services company said on Monday.

The industry dedicated to searching and drilling for oil is having to deal with aggressive state oil companies, shortages of qualified workers and higher costs, said Andrew Gould, chief executive officer of Houston-based Schlumberger Limited.

As a result, building adequate oil supplies "is going to be a slower process than originally anticipated," Gould said during a presentation at a conference sponsored at the Howard Weil Energy Conference, which brings together institutional investors and top executives of petroleum-related companies.

Worldwide reserves

Less than 25 per cent of the worldwide reserves are accessible to private international capital while taxes are going up, Gould said.

Venezuela, for one, is moving to take a greater cut from high oil prices with lawmakers last week giving initial approval to a bill setting taxes as high as 60 per cent on profits from increases in crude prices.

"We have seen developing and developed countries see high oil prices and believe they can tax with impunity," Gould said.

Gould said that much of the current increased investment level is merely covering sharply higher costs for materials and personnel.

At the same time, the industry faces an ageing workforce and is having to go around the world to hire, Gould said. Since 2004, Schlumberger has hired 18,000 new staff members, including more than 6,000 engineers.

"It takes time to train new talent," Gould said.

Gould also said that there would be tight markets and tight delivery times for drilling rigs, especially those used in deepwater development.

Clarence Cazalot, of Houston-based Marathon Oil Corp, also cited a shortage of qualified workers as one of the industry's problems, along with the prospect of additional government mandates.

Forecasts of future energy prices were notably absent from the presentations of several company heads, except for Cazalot, who said Marathon sees "energy prices higher for longer."

Additional oil, natural gas

But there is the prospect of additional domestic oil and natural gas production that was not possible five years ago, said CEO Mark Papa of Houston-based EOG Resources Inc, an independent petroleum producer.

The key is a major technological advance through which a well can be drilled vertically and then turned at a right angle to reach deposits. Papa said the technique makes it possible to drill hundreds, if not thousands of "individually unspectacular wells" and combine production.

"There is a sea change going on with hydrocarbons being found through horizontal plays," said Papa.

EOG currently has seven major domestic projects using the technique, Papa said. He added that he expects horizontal drilling to be developed fully in the United States before it spreads to Canada and then the rest of the world.