More than half of the five hundred plus oil and gas executives in a recent poll said they didn't think mass production of renewable fuel would happen in the near future.

The KPMG audit, tax and advisory firm polled 553 financial executives from oil and gas companies, and released the results today.

While the petroleum company leaders said they're keen to see renewable energy sources becoming a mass produced reality, 60 percent said it will not be possible by 2010. Of those that believe it will, 18 percent identified ethanol is the most viable for mass production by then, 13 percent said biodiesel and only 3 percent said cellulosic ethanol.

There are new, recent warning signs about the commercial viability of corn-based ethanol (see the Cleantech Group's Ethanol sector slapped on bad VeraSun earnings [1].)

Bill Kimble, National Line of Business Leader, Industrial Markets for KPMG LLP, told the Cleantech Group the survey was not qualitative, only quantitative, so survey leaders didn't have a chance to probe responses in detail. But he speculated the findings reflected two big big issues regarding alternative fuels.

"What is the definition of mass production? Ethanol is a very small, small percentage of fuel production today. And secondly, what's embedded in here is the economics. Without incentives from the government, I don't think people are that positive on it until we get it right," he said.

Survey respondents said government involvement in supporting the development of renewable energy sources is necessary to alleviate the problem of declining oil reserves.

Twenty-five percent of the respondents said that at least 75 percent of government funding into energy should be directed at the renewable sources sector, and a further 44 percent said that at least 50 percent of funding should be allocated in the same way. These feelings stem from the overwhelming majority, or 82 percent, citing declining oil reserves as a concern.

"These executives are deeply concerned about declining oil reserves, a situation they see as irreversible and worsening," said Kimble. "Oil and gas companies are sending a clear signal to the government that intervention is needed."

While 65 percent of the respondents said that they believe global warming is occurring, they called it a natural weather cycle. Eleven percent said that they do not believe it is occurring. Just under a quarter said they believed global warming was CO2-induced.

Sixty percent of the executives said they believe the trend of declining oil reserves is irreversible. And, when asked about the impact of emerging markets, such as China, will have on declining oil reserves, almost 70 percent of the executives said that it would lead the situation to worsen.

When asked about their upstream capital spending, the majority indicated that investment will be a factor in helping them manage declining oil reserves.

Sixty-nine percent said that it would increase by more than 10 percent, a jump of 49 percent over 2005.

"The reserve opportunities are tougher, so what are you going to do? You could invest in technology, or start playing more in the alternative energy space," said Kimble.

Mergers and acquisitions continue to be a trend, with 24 percent of the executives saying that they expect their company to be involved in one in the next year. Sixty eight percent of respondents expect private equity to play a larger role over the next year than it has in previous years.

Responding to perceived risks facing their companies, KPMG's Kimble told the Cleantech Group it was a "jaw-dropper" that forty-four percent identified their biggest risks as financial, specifically issues like satisfying regulatory requirements like Sarbanes-Oxley, shareholder demands and corporate social responsibility requirements.

"We put in things like access to access to drilling rigs, political unrest in foreign countries, like the west coast of Africa, environmental damage, plants having problems, access to equipment," said Kimble. "None of those emerged as big factors."

"Corporate social responsibility seemed important. They've got to get that right. That could have an impact on the market value of a company."