Matt Simmons Remembered

Jim Brown
 
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I wrote a short article a couple weeks ago on the death of Matt Simmons and recent controversial remarks. We still need to remember that Matt Simmons was a powerful force in the bringing the topic of Peak Oil to the forefront.

To counter my article and illustrate the contributions of Matt Simons I am going to reprint an article penned by Steve Andrews, Sally Odland, John Theobald and Randy Udall for the ASPO website. They knew Matt much better than I did and I believe Matt needs to be remembered for his decades of contributions. He helped the cause immensely.

Remembering the Remarkable Matthew R. Simmons

Matt Simmons was arguably the most influential individual on this side of the Atlantic to warn about the coming peak-and-decline of world oil production. Beginning in 2001, when he published his ground-breaking white paper on the world's giant oil fields, Matt alerted presidents, politicians and whoever else would listen that our energy joyride was headed for deep trouble. He drove himself tirelessly, riding the speaker circuit at breakneck speed, visiting some 25 countries to deliver over 400 fact-filled energy talks to industry, investment, academic, and general interest audiences.

Then, suddenly, he was gone. Matt died Sunday evening, August 8th, at his home in Maine. He will be missed enormously by his wife Ellen, five daughters, his close associates, and all of us who knew and respected him.

Matt was a contrarian thinker with high-level access and influence. The access was due to his decades of stunning success in the energy investment banking business, where he made his fortune; the influence came from his research, timing, acumen and luck-and from swimming ahead of the crowd. Matt's energy investment firm, Simmons & Co., Int'l., helped clients navigate through the oil industry's historic down cycles. By the mid-1990s, with a high-profile column in World Oil magazine and a growing number of top-level media appearances, Matt began to leverage the reach of his ideas.

How high up the ladder did his viewpoints climb? To the very top. Matt co-chaired the energy task force of presidential candidate George W. Bush in the fall of 2000. (He also shared his energy insights with staffers for a Democratic candidate earlier in the year.) Matt helped Bill White win election as Mayor of Houston, and provided advice and support to Republican presidential candidate Mitt Romney in his 2008 campaign. During a short session in the Oval Office with President Bush in early 2001, Matt shared his concerns about our emerging energy crisis. In subsequent years, he would testify before several House and Senate committees, an experience he would compare to "shouting down a well." More recently, he gave a one-hour presentation in the Pentagon auditorium that stretched another hour with intense questioning.

In 2003, Matt began questioning the conventional wisdom that Saudi Arabia could someday produce 15 or even 20 million barrels a day. This forced the Saudis to publicly defend their reserves and production capacity. In early 2004, at a symposium sponsored by the Center for Strategic and International Studies, Saudi Aramco officials worked hard to directly rebut Matt's claims that their oil fields were depleting faster than acknowledged.

Of course, Matt wasn't the only one speaking about peak oil. In 1998 Campbell and Laherrere had published a landmark piece in Scientific American, "The End of Cheap Oil." A number of excellent books soon appeared, from Deffeyes, Heinberg and others. But Matt, along with other industry analysts like Charley Maxwell, Henry Groppe and Tom Petrie, helped bring peak oil to the boardroom and to Wall Street. He doggedly pushed the topic on cable news shows, buttressing peak oil's intellectual and numeric underpinnings, reinforcing its respectability. In doing so, he helped animate a new generation of researchers whose findings would be published in books, magazines, and websites.

When Matt's opus, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, appeared in May 2005, it was an instant sensation. Within Saudi Aramco, engineers fixated on a few of the book's factual errors, thereby missing the big picture. On the world stage, however, the book brought a harsh dose of reality to the happy talk proffered by Cambridge Energy Research Associates and others. Daniel Yergin might remain a cheerleader for abundance, but no longer could it be assumed that Saudi Arabia's "endless oil" could solve the world's larger energy problems.

In response to Twilight's assertions, Saudi Aramco mounted a PR campaign, stating it could boost production to 12 million barrels a day and maintain that level for decades. Ironically, this knocked some stuffing out of the U.S. Energy Information Administration, whose annual forecasts often seemed like a vision in search of reality, particularly those which foresaw Saudi production reaching 20 million barrels per day by 2020.

Matt was flooded with speaking requests. His presentation style was always memorable: the phrase "drinking from a fire hose" borders on understatement. Passionate, animated, face flushed, words flowing, Matt commanded the podium, bombarding his listeners with facts, figures and original graphics that often connected established dots to make new points. His material was usually fresh, always insightful, often provocative. He brought a teacher's mindset as much as a businessman's to his talks and appearances. Periodically, he made outlandish statements. Though we admired his chutzpah, Matt's $5000 bet with a New York Times columnist in 2005 that oil prices would average $200 a barrel by 2010 struck us as ill-advised.

Throughout this period, several key threads flowed through Matt's papers and presentations. One was his relentless plea for data transparency; the lack of reliable production numbers frustrated him no end. The most important "missing evidence" was depletion data from mature oil fields. Although drillers took depletion for granted-waged war against it incessantly in their own fields "they hated to talk about it in public. Matt lent his voice early and often on the need to obtain better data on decline rates, thus helping to spark the decline rate study that the International Energy Agency published in 2008. He also called attention to -rust," the aging of energy infrastructure and trained workforce, and to the high-wire act that is deepwater drilling.

Apart from his book, Matt's most insightful analyses derived from two early papers: "Revisiting Limits to Growth: Could the Club of Rome Have Been Right?" (October 2000) and "The World's Giant Oilfields" (late 2001). In "Revisiting Limits," Matt swam upstream against cornucopian groupthink, which held that resource limits would never constrain economic growth. When he reread the book, what he found surprised him.

In September 2000, Matt emailed: "I have just finished the most important white paper I've tackled?I always thought this Club of Rome thing was some bad joke. But I am now of the opinion that historians will mark the book as perhaps the most important piece of 'writing that got ignored' in the last half of the 20th Century." Seven years later, Matt hadn't changed his mind about the value of the "Limits" study: "The world sleep-walked for three decades while believing all natural resources would last forever."

The research that fully awakened Matt to the impact of oil field depletion, however, was his trail blazing "Giant Oilfields" paper. In early 2001, he had noted a worrisome fact: almost 30 years had elapsed since the discovery of the last super-giant oil field that could produce 1 million barrels a day. Then he dug into the numbers. The resulting paradigm-shifting paper proposed that, rather than projecting the world's oil future by examining the size of its debatable reserves, "perhaps it is time for the energy world to focus on the critical role played by today's aging giant oilfields."

Although he was forced to guesstimate production for some fields, the paper highlighted how critically important giant fields are to world production; the largest 3% of fields produced 47% of the world's daily supply. Pair Matt's "Giant Oil Fields" with Chris Skrebowski's research on future mega-project development and you have all you need to convince alert scientists and astute businessmen that it would be wise to start planning for a pending peak in oil production.

"Petroleum is industrial oxygen," Matt liked to say. The more he looked, the more convinced he was that much of our energy system was being red-lined, run on the ragged edge of disaster. Matt was alarmed, and sometimes-as with recent ill-advised comments about BP's Gulf of Mexico oil spill-he could be alarmist. But no matter. The contribution he made was titanic, in every sense of the word.

Aspects of the private Matt that few knew: he painted with water colors, often used on his Christmas cards. He was a devoted family man - his presentations were sometimes delivered via live webcast so that he could attend a daughter's graduation from high school or college. He loved to play the marimba. He liked to cook for his family to relax after a hard day. He and Ellen revived the historic Strand Theatre in his adopted Maine hometown of Rockland-one of the many "pay it forward" endeavors that will be the legacy of this remarkable man.

Let's give the last word to him: "As oil becomes a scarce resource, its use will have to be rationed in one way or another. There are ways to allocate oil use and direct it to its most valuable applications. But achieving such a rational plan will require a carefully orchestrated global effort. Left unattended, this process could quickly evolve into genuine chaos. The global economy can function after oil supplies peak, but not in the same manner in which we live today." (Twilight in the Desert, p. 347)

By Steve Andrews, Sally Odland, John Theobald and Randy Udall Andrews and Udall are retired co-founders of ASPO-USA. Odland is a former ASPO-USA board member. Theobald is a former ASPO-USA conference organizer.

Jim Brown

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