At an analyst day in New York, Chevron (NYSE:CVX), the second-largest U.S.-based oil company, gave a presentation that simply added fuel to the fire regarding the difficulty of raising global crude production appreciably. Management indicated that it is reevaluating its major projects, and believes that some could be affected by escalating expenses relating to finding and producing hydrocarbons.

Nevertheless, Chevron, which continues to sport a capital budget of about $19.6 billion for this year, says the projects it has in the works or under review could add as much as 1.1 million barrels per day to its production over the next four years. At the same time, because the costs for oilfield service items are escalating rapidly in the face of increasing demand, the company is conducting a systematic review of the viability of each project. As a result, management did not provide cost estimates for 11 of the programs it has said it expects to begin by 2012.

One project that has been at least temporarily set aside is the development of the large Gorgon gas field off Australia's coast. That project once carried a $10.4 billion price tag, but it is now included among the programs being reexamined.

Of the company's anticipated expenditures for 2007, 39% is expected to go to onshore and offshore projects in North America, 25% to Africa, 19% in the Asia-Pacific region, 7% to the Caspian area, and 10% to other locations. Chevron, like ExxonMobil (NYSE:XOM) and ConocoPhillips (NYSE:COP), has also been a major player in Venezuela, but it appears that the three companies will conform to President Hugo Chavez' edict that they cede control of their major projects in the Orinoco basin to government oil company Petroleos de Venezuela SA by May 1.

So what we have here is the confluence of several interesting dynamics that Fools should be fully aware of. First, such respected forecasters as those operating at ExxonMobil and the U.S. Energy Information Administration have projected that the world's demand for crude oil will jump more than 40%, from just under 85 million barrels per day currently to about 120 million barrels daily by 2030.

At the same time, there will be at least three major impediments to getting anywhere close to that target figure in the specified time frame. First, as indicated by Chevron's comments, increasing costs could thwart the initiation of projects that otherwise might boost productive capacity. Second, as I've indicated to Fools in the past, several of the world's heretofore major production locations are facing sharply declining output. So any growth in production must overcome those declines before net production can be increased. And third, political instability in places like Venezuela, Iran, and Nigeria could constitute yet another impediment to crude production.

So, Fools, in light of all this, energy could be more fun than a barrel of monkeys over the next 20 years or so. I therefore urge you to include solid international energy players in your portfolio, such as the three companies already mentioned, or perhaps Schlumberger (NYSE:SLB), the largest of the oilfield service companies.

For related Foolishness:

Fool contributor David Lee Smith does own shares in Schlumberger, but not in the other companies mentioned. He welcomes your questions or comments. The Fool has a disclosure policy.