April 24 (Bloomberg) -- Crude oil will likely return to its all-time high of $78.40 a barrel this year, according Boone Pickens, the Dallas hedge fund manager whose bullish bets on energy prices have earned him a place on the Forbes list of the richest Americans.

Dwindling fuel supplies from some of the world's largest fields will boost prices, Pickens, said in an interview. Yet those higher prices won't curb consumption, which continues to climb. Fuel demand is rising as the world economy is forecast to grow 5 percent this year, the International Monetary Fund said Jan. 16.

``I see no indication at $65, $75, $85 oil that demand is going to be materially affected,'' said Pickens, who manages more than $4 billion in energy-related equities and commodities at BP Capital LLC. ``Big fields, like in Kuwait, in Saudi Arabia, all of them are starting to decline. Look at the North Sea, last year declined 17 percent. That is huge.''

Pickens said deeper offshore wells, such as Chevron Corp.'s Jack discovery in the Gulf of Mexico, won't pick up the slack of tapped out wells.

``If you look at the production in the deep Gulf today, the decline of that production is almost unreal. You peak and immediately go into a decline,'' Pickens said. He said the Jack tested at 6,000 barrels of oil per day only after operators stimulated the flow of hydrocarbons using hydraulic fracturing techniques that pump fluids into the well and fracture the rock.

``Those wells will not be economical,'' Pickens said.

15 Billion Barrels

Chevron's $3 billion Jack prospect, located in the deepwater Gulf, was the first well to tap into the Wilcox trend, a 200-mile long formation some geologists estimate could hold 3 billion to 15 billion barrels of oil. The company expects to resume drilling on the project in July, after a shortage of rigs forced the company to halt work in September.

Mickey Driver, a spokesman for Chevron, said in an interview today that the Jack well tested only 40 percent of the pay zone. He said improvements in seismic mapping and drilling technology will make the prospect work.

``When T. Boone Pickens says it's not going to be commercially viable to do that, well that's what people said about other projects'' 10 to 15 years ago, Driver said. ``That's one view but we're plugging right ahead.''

Crude oil for June delivery fell $1.31, or 2 percent, to $64.58 a barrel on the New York Mercantile Exchange. Futures touched $66.30, the highest intraday price for a front-month contract since April 2.

To contact the reporters on this story: Brian Sullivan in Los Angeles at bsullivan@bloomberg.net; Amy Strahan in Houston at astrahan@bloomberg.net.

Last Updated: April 24, 2007 16:33 EDT