NEW YORK (Reuters) - The surge in oil prices during the past year is backed by the economics of supply and demand rather than the result of a short-lived bubble, the global head of commodities research at Goldman Sachs said Monday.
Goldman has their neck way out there. They're the only major firm looking for higher prices. They've said they could see $100/b. Everyone else seems to be looking for $35/b.nmckay
Goldman has their neck way out there. They're the only major firm looking for higher prices. They've said they could see $100/b. Everyone else seems to be looking for $35/b.nmckay Not true.WASHINGTON (Reuters) - China's growing thirst for petroleum, tight supplies and little spare production capacity will keep oil prices volatile through 2030, with the possibility of spikes as high as $100 a barrel, the International Monetary Fund said Thursday.Odac warns of global shortage of oil after 2007Valerie Darroch, Sunday HeraldTHE world faces a global oil supply shortage after 2007, which would threaten economic growth, according to new research by the Oil Depletion Analysis Centre (Odac) which says that not enough major new fields will come on stream to offset declines .The Bank of Montreal"The combination of the news that there's no new Saudi Light coming on stream for the next seven years plus the 27% projected decline from existing fields means Hubbert's Peak has arrived in Saudi Arabia," says Coxe, referring to data compiled by the International Energy Association's (IEA) August 2004 monthly report. Problematic effects The Canadian bank is the latest in a line of oil opinion-makers to speak out about. Others, notably banker Matt Simmons and the head of the Association for the study of Peak Oil (Aspo), Colin Campbell, have called into question the validity of its stated reserves, supposedly 258 billion barrels. Some say Gharwar may have been damaged by poor managementIf Gharwar, the world's biggest field, is seen to be "in decline", as Coxe says, the effects could be problematic. Markets could panic, forcing prices up, creating shortages and profoundly affecting the world economy. A titanic struggle between supply and demandApr 6th 2005 From The Economist Global AgendaOil hit another new high this week and OPEC promised to raise its production by another 500,000 barrels per day to help ease the pain. But with capacity tight and demand continuing to grow, high oil prices may be here to stayThere are many more, but I get tired of cutting and pasting. There is a growing consensus that high oil prices are here to stay and that they will get much higher in the next few years. Remember, it was only March of last year that both OPEC and most of the market analysts were predicting $20 - $28/barrel by October, 2004. It finally hit $50/barrel in Oct. The market is tight right now with most major non OPEC producers pumping full tilt with no excess capacity and only Saudi Arabia reporting any spare capacity on the OPEC side. Oil traders seem to be saying to the Saudis, "Bullcrap. Show us your cards." The Saudi's have so far replied by saying, "no." As long as there is concern that supply will have a tough time meeting demand prices will continue to rise and there is more than ample reason to have concern.
>>Some say Gharwar may have been damaged by poor managementIs this anything more than a rumor? I have heard that Simmons said this but coming from him I regard that as malicious, self-profiting rumor mongering. He inflames opinion (guess what, to the benefit of his consulting business) by calling the Saudi royal family out-and-out liars. This is not helpful IMO for getting at the truth. I would trust better something from a person who actually knows something about this very large Saudi field.I think I do have access to some info and opinion from a reservoir with relevant experience and contacts. From that I am inclined to disbelieve the allegation that Gawar has been damaged by mis-management.Agreed, the Saudis are way too un-transparent and one is inclined to wonder just why they are so secretive. It's annoying but this is a very secretive culture, as I see it derived from centuries of barely surviving out in the desert where the only law is the sword and the horse. But we have no better option than to deal with it.Best wishes -- C44
When I typed...>>I think I do have access to some info and opinion from a reservoir with relevant experience and contacts....it should have read "from a reservoir ENGINEER with relevant experience and contacts.". Apologies for any confusion. If TMF would allow editing of one's own posts for a limited time, that would be a welcome feature. -- C44
Is this anything more than a rumor? I have heard that Simmons said this but coming from him I regard that as malicious, self-profiting rumor mongering. He inflames opinion (guess what, to the benefit of his consulting business) by calling the Saudi royal family out-and-out liars. This is not helpful IMO for getting at the truth. I would trust better something from a person who actually knows something about this very large Saudi field.Simmons visited Ghawar personally..spoke withand got info from the people there (while researching for hisbook)..so I think it'sfair to say he "knows something"Also he has generally not be just calling the Saudisout and out liars...he even appears on a panel WITHthe Saudi reps ( CSIS event as I recall, posted many monthsback on GlobalPublicMedia.com) so has been politewith them face to face.....Someone else just posted here about apparently "hubbardpeak has arrived in Saudi Arabia" though I have my ownrequest for a reference...for "no sweet crude for next7 years" does poster or anyone else have a "From the horses'smouth" reference to that? thanks..
I just have to make a comment on Simmons. The fact is that he is a very highly respected energy analyst with a great reputation. Even those who disagree with him respect him. You don't get as successful as he is by trying to manipulate the stock market with pronouncements. He is successful because he understands the fundamentals of the market. In anycase, here's an article from Fortune magazine on teh GS predictions.http://www.fortune.com/fortune/streetlife/0,15704,1051267,00.html
Matt Simmons on his new book:http://www.simmonsco-intl.com/files/Boston%20Committee%20on%20Foreign%20Relations%20B&W.pdf
>>Simmons visited Ghawar personally..spoke with and got info from the people there >>(while researching for his book)..so I think it's fair to say he "knows something"I am looking for a higher standard than "Knows Something". I have spoken with people who have actual experience modeling Ghawar reserves, back when Americans did that job, and Simmons does not have credibility with them.>>Also he has generally not be just calling the Saudis out and out liars...>>he even appears on a panel WITH the Saudi reps ( CSIS event as I recall, posted many months back >>on GlobalPublicMedia.com) so has been polite with them face to face.....Whatever goodwill he had at that time, he has reversed. Simmons has gone on record as saying something that deeply offends the Saudi community, there are no cordial relations there now. At a recent reservoir conference in the Middle East, it would have been possible to have Simmons there, it would have been possible to have the Saudis there, but it would be impossible to have both present. The Saudis would pull out rather than appear in the same venue as Simmons.So the guy makes enemies, that much is clear. Does that make him smart, or not-so-smart? One is led to choose between a conspiracy theory and discounting Simmons. The former would be true if indeed the Saudis were deceiving the world and Simmons held the banner of truth. Myself I am inclined to think Simmons is a self-important consultant who has arrived at a scare story and wants to promote it for all the money and fame it it worth.Hope this helps -- C44
You know I've been following this guy for the last year and a half and I've read people who disagree with him. I've not until now read anyone try to discredit him. He has credibility all over the world. If this was just some guy shouting from the rooftops and didn't have impeccable credentials I doubt the IMF would have let him handle billions of the world's dollars in investing in energy production. I doubt the Vice President of the United States would have invited him to sit on Dick Cheneys energy council meetings with just a handful of other people. You say that people in the oil industry don't give him credibility. I've been reading Oil and Gas Journal, the American Society of Petroleum Geologists newsletter, hell I've been reading trade publications from the industry religiously and I've never read anyone who discredits him even when they disagree. If he had no credibility they wouldn't right articles about him in these trade publications.As for conspiracy theories, I generally don't buy conspiracy theories either, but we're talking about the Saudis. They've proven themselves to be more than capable of conspiracy. The world has been calling for an independent audit of their fields for more than a decade and they refuse. You saying you trust them more than the most respected energy investment banker in the world? Alsl, like I said before, he is far from alone in his suspicions about Saudi oil. If he were, the price of oil would probably still be around $30/barrel.
OK Stngr12, I am listening to what you say. Simmons has a good image in all those journals. Maybe it's me that has a problem, but I have heard some things which cause me to have doubts. And my sources are from professionals in the reservoir engineering field.One of those rumors which has not been said directly, is that Ghawar is a damaged field in the same way as another large one in Oman. That is not a fully true statement, I have been reading between the lines trying to figure out who is saying or implying things like this. Of course with rumors they have a life of their own. It would *dovetail* with anyone in the gloom-and-doom industry (not that I am insisting that is Simmons' position).It remains true that Simmons had enough stature to be considered for a major petroleum reserves conference. It also remains true that he is well outside the opinion of the majority of professionals, and that hostility exists between him and the Saudi Royal Family. I will endeavor to keep my eyes, ears, and mind open for further information.I would totally agree the world would be better served by more disclosure of information out of Saudi Arabia. They are egregrious offendors in that respect.Best wishes -- C44
I'm interested in what Simmons has to say, but since I have no industry experience or contacts in the industry I'm forced to consider him as "just another source."That said, if you say that he has an agenda (his energy consulting business) then it's just as fair to say that Lee Raymond and the Saudi Royal family have an agenda, too (not spooking the market into developing competing sources of energy).Simmons has at least attempted to offer some sort of evidence to support his claims. The same can't be said of the Saudis.By the way, did the people you spoke with say Ghawar is in fine shape? Do they not have any concerns with it depleting soon? Just curious.
It's not just Simmons talking about either Ghawar or SaudiArabia: "Hubbert's Peak has arrived in Saudi Arabia" isan even stronger statement than Simmons has (directly) made...The Bank of Montreal's analyst Don Coxe, working from their Chicagooffice, is the first mainstream number-cruncher to say that Gharwar'sdays are fated.Coxe uses the phrase "Hubbert's Peak" to describe the situation. Thisrefers to the seminal geologist M King Hubbert, who predicted theunavoidable decline of oilfields back in the 1950s."The combination of the news that there's no new Saudi Light coming onstream for the next seven years plus the 27% projected decline fromexisting fields means Hubbert's Peak has arrived in Saudi Arabia,"says Coxe, referring to data compiled by the International EnergyAssociation's (IEA) August 2004 monthly report.http://english.aljazeera.net/NR/exeres/08B97BCF-7BE6-4F1D-A846-7ACB9B0F8894.htm
Maybe a list of his clients will help ease your doubts about his credibility. Someone without cred problems probably wouldn't have a list like this that includes Haliburton, Shell, Dow Chemical, Oppenheimer, Fidelity Investment, General Electric, The World bank...3i Group plc ABB Lumus Global Inc. ABB Vetco Gray, Inc. Abbot Group PLC* AIM Capital Management Aker Maritime Alaska International Industries, Inc. Alberta Energy Company Ltd. Allegheny Teledyne Inc. Alliance Capital Management Corporation Amalgamated Scottish Oil Limited* Andrews Petroleum, Inc. Ansaldo spa Andrews Petroleum Applied Hydraulic Systems Inc. Ardsley Partners ASCo Group Limited Astrup Fearnley A/S Atco Ltd. Atlantia Corporation Baker Hughes Incorporated Baker & Botts, L.L.P. Balmoral Group Ltd.* Barrow, Hanley, Mewhinney & Strauss Berger Associates Berry Petroleum Black Warrior Wireline Corp. Blossomgrange Limited* Booker McConnell Engineering Limited Bouygues Offshore S.A. Brit Bit Limited* Brovig ASA* Brown & Root International, Inc. Buckner Rental Service Cal Dive International, Inc. Calumet Lubricants Co., L.P. Cambridge Investments Ltd. Camlow S.A.I.C. Canadian Fracmaster Ltd. Canadian Natural Resources Limited Carbo Ceramics, Inc. Cardinal Services, Inc. Cerrito Pipeline Management, Inc. CES/Way International, Inc. Champion Chemicals, Inc. Chase Bank Chesapeake Energy Corporation Chicago Bridge & Iron CIGNA Corporation Clyde Blowers Ltd* Coastal Chemical Company Incorporated Coastal Superior Solutions Incorporated Coastal Towing, Inc. Coastwide Energy Services, Inc. Compressor Systems, Inc. Concern Azneftechimmash CONEMSCO, Inc. Control Systems International Cook Inlet Energy Supply Limited Partnership Cooper Industries, Inc. Corpro Group Limited* Costain Group Limited Cowen Asset Management Crestar Energy Marketing Corp. Crystal Flash of Michigan, LP DAMCO Services, Inc. Daniel Industries, Inc. Dawson-Samberg Capital Management Deutsche Schachtbau-und Tiefbohrgeselleschaft MBH DHV International, Inc. Diamant Boart S.A. Dietsmann NV* Directional Wireline Services, Inc. Divcon International PTY LTD Dover Resources, Inc. The Dow Chemical Company Dresser Industries, Inc. Drilex Corporation Dual Drilling Company Dupré Companies Dynegy, Inc. Eagle Geophysical, Inc. Eastgate Management Edinburgh Petroleum Services Limited* E.I.U. El Paso Corp Elder Leasing Company Electric Submersible Pumps, Inc. Electromagnetic Instruments, Inc. Emerson & Cuming Composite Materials, Inc. Encore Acquisition Co. Energy Spectrum EnerSea Corporation Ensco International Incorporated Ensign Bickford Ensign Geophysics Limited EnSource Energy Service Inc. Entergy Corporation Equity Compression Services Corporation EVI, Inc. Falcon Drilling Company, Inc. Fiber Glass Systems, Inc. Fidelity Investment Management & Research First Energy Service Company First Reserve Corporation Fisk Corporation The Flexitallic Group Inc. Florida Power & Light Group FMC Corporation Founders Asset Management Franklin Electric Fred. Olsen Energy ASA Friess Associates Galveston-Houston Company Gammaloy Ltd. Garber Industries, Inc. GE Power Systems General Electric Company Geo Net Gathering, Inc. Global Industries Ltd. GlobalSantaFe Corporation GOEX International, Inc. Goetz Services Inc. Goulds Pumps, Inc. Grant Geophysical, Inc. Grant Prideco Great Lakes Chemical Corporation Greystone Petroleum Gruber & McBaine Capital Management Guardian Life Insurance Gulf Canada Resources Limited Gulf Island Fabrication, Inc. Gulf Publishing Company Halliburton Hamilton Robinson & Company, Inc. Hellman Jordan Management Hellums Services II, Inc./South Texas Disposal, Inc. Hensley Industries, Inc. The Hillman Company Horizon Offshore, Inc. Hornbeck Offshore Services, Inc. Hunting PLC Huntway Refining Company Husic Capital Management HV Marine Services, Inc. Hy Bergerat Monnoyeur S.A. Hydril Company Iberia Threading, Inc. ICO, Inc. Ingersoll-Rand Company Innovative Valve Technologies, Inc. Input/Output INTEC Engineering, Inc. Invesco Trust Company ITEQ, Inc. J. Ray McDermott, S.A. Janus Capital Jason Information Systems BV* John E. Chance & Associates, Inc. John H. Carter Co., Inc. J-W Operating Co. K/S Kvaerner Subsea Contracting A/S Kaneb Services, Inc. The Keplinger Companies Kerr-McGee Corporation Key Energy Group * Indicates Aberdeen client Keystone International, Inc. Kirby Corporation L G & E Energy Landmark Graphics Corporation Lantern Petroleum Corporation LCT, Inc. Legacy Exploration Legacy Resources Co. Leucadia National Corporation Lewis Energy Corp. Little America Refining Lone Star Technologies, Inc. Lone Star Steel Company Luther King Capital Management MacGregor Energy Services* Marine Drilling Company Massachusetts Financial Services McDermott International, Inc. Merrill Lynch Asset Management Michael Curran & Associates Miller Anderson & Sherrerd, LLP Mitcham Industries, Inc. MODEC (U.S.A.), Inc. Motherwell Bridge Holdings Ltd. Nabors Industries, Inc. NATCO Group, Inc. National Coupling Co., Inc. National Gas & Oil Company National-Oilwell, Inc. Nautronix Limited Neuberger & Berman Pension Management Newpark Resources, Inc. Noble Corporation Norson Group Limited* Nortrans Offshore, Inc. Noskab Group PLC* Nowsco Well Service Ltd. NUMAR Corporation Oakbay BV (Varel)* Oceaneering International, Inc. Offshore Logistics, Inc. Oil Barges, Inc. Oil States International, Inc. Oiltools International* Omega Advisors, Inc. Omega Service Industries, Inc. Oppenheimer Management Orbit Valve International, Inc. Otto Candies, Inc. Paradigm Geophysical Ltd. Parker Drilling Company Pearson plc Peregrine Capital Management Peter Kiewit Sons', Inc. Petreco International Inc. Petrex S.A. Petro-Canada Petrofac Corporation Limited* Petroleum Geo-Services ASA PetroStar Corporation PGS Atlantic Power Limited* Phillip Services Corp. Phoenix Duff & Phelps Pikotek Pilgrim Baxter Pinnacle Natural Gas Plains All American Inc. Plains All American Pipeline L.P. Precision Tube Technologies, Inc. Premier Oilfield Services Limited* Pride Companies, L.P. Pride International, Inc. Prosafe ASA* PSL Group* PTI Group Inc. Pueblo Midstream Gas Corp. Puffer-Sweiven, Inc. QC Data International Inc. Quaker Chemical Corporation Quality Tubing, Inc. Ramco Energy plc Rigblast Group Limited* Roberds-Johnson Industries, Inc. Robertson Research International Limited* Robertson Stephens & Company Rowan Companies, Inc. Sandvik AB Sanifill, Inc. Santa Fe International Corp. SBC Warburg Dillon Read, Inc. SCF Partners Scientific Software—Intercomp, Inc. Sea Engineering Sea Mar, Inc. Sensor Highway Limited* Serv-Tech, Inc. Shell Technology Ventures B.V.* Silvertech International Limited* Simon Engineering plc Single Buoy Moorings, Inc. Skaugen PetroTrans AS Smedvig a.s Smith International, Inc. SOFEC, Inc. Sonat, Inc. Sondex p.l.c* Southland Drilling Company, Ltd. Southwestern Energy Sparrows Offshore* SPS-AFOS International Limited* Stewart & Stevenson Services, Inc. Stolt Comex Seaway S.A. Strong Capital Management Sun Group Energy Services Ltd. Superpesa-Cia de Transportes Maritimos Suter plc Swire Pacific Ltd. T. Rowe Price Associates Target Energy Group Limited* Techdrill International* Technip-Coflexip Teledyne, Inc. Tellepsen Corporation Ten Squared TEPPCO Partners, L.P. Terminal de Productos Especializados, S.A. de C.V. Texas Iron Works, Inc. The Wood Group Tidewater, Inc. Tobin Research, Inc. TODCO Tracer Industries, Inc. TransCoastal Marine Services, Inc. Transocean Sedco Forex Trico Marine Services, Inc. Triten Corporation Triton Engineering Services Company TRW, Inc. Tubular Corporation of America Turner Brothers Trucking, Inc. Union Pacific Resources Group Inc. Union Texas Petroleum Universal Compression Holdings, Inc. USX (Capital) Corp. UTI Energy Corporation UWG Group Limited* Valmet Corporation Van Kampen American Capital Varco International, Inc. Veritas DGC Inc. Vetco Gray International* Wadeco Oilfield Services Ltd. Warburg, Pincus Counsellors, Inc. Weatherford International Weir Group PLC Wellington Management Company Westcliff Capital Management Western Atlas International, Inc. W-H Energy Services Inc. White Oak Energy LLC Whiting Petroleum Corporation Willow Oil & Gas Exploration LLC Wilson Industries, Inc. Wing Corporation WMCO Equipment, Inc. WMCO Instruments, Inc. Workstrings LLC World Bank XTO Energy Inc. Zwieg-Dimenna Associates LLC
You are certainly applying logic to this issue. I appreciate that. Let me try to reply with some of my thoughts:>>did the people you spoke with say Ghawar is in fine shape? Do they not have any concerns with it depleting soon? Just curious.No, they did not make such a reassuring statement. There are always concerns about when it will deplete, if nothing else the Saudis consider this a legacy asset to benefit their children and descendants. The boogie I am trying to wrestle with, is an insinuation that Ghawar is similar to a field in Oman which has been damaged by mis-management. If indeed this is what Simmons is saying, then I allege he has incomplete informantion and should know better. But from this board I cannot identify if this rumor is behing Simmons' pessimism.>>That said, if you say that he has an agenda (his energy consulting business) then it's just as fair to say that Lee Raymond and the Saudi Royal family have an agenda, too (not spooking the market into developing competing sources of energy).Do you really think this is a fair comparison? A consultant who has no scare to sell, basically has nothing in comparison. Any owner of a massive supply of oil, on the other hand, has a whole lot of asset even IF alternative energy is developed.Where we probably disagree is the meaning of alternative energy. It seems you think it would *replace* oil energy, so much it would harm the interests of the oil business. What I think is, oil is going to be in shortage anyway we look at it, and therefore we CRAVE enough alternative energy to fill the gap. Under those circumstances one might not want to squelch non-oil alternatives. Besides, big oil could very well *want* to diversify themselves into the alternative energy as well. They will be looking for businesses good enough to replace whatever they cannot invest profitably in oil.Scalability is a key trait of any technology. I think we will find problems scaling most alternative energy forms, up to the size of oil today. I still think LNG is more scalable and available than coal or any of the alternatives I know of. It is a more known technology than clean coal, cheaper and less frightening (to most people) than nuclear energy, etc. But it lacks the gee-whiz factor of solar, wind, all the technologies which laymen *imagine* will revolutionize the world.Bet on evolution, bet against revolution, that's what I say.Best of luck -- C44
Strngr12, I respect your earnestness but when your post requires 7 pages to print out, I submit you might be using cut-and-paste too much. I for one would best appreciate posts which are a couple pages at most.I started to count your list of names, when I got over 200 began thinking "this is crazy, I'm spending more time on this than the original guy spent making it". How significant do you think this list is? Do you think each paid Simmons, say $10,000 or more for his consulting? If they did he would be extremely busy and extremely rich. Maybe these names just paid $39 for a one-off letter, I cannot know from what you post.What do you think of us agreeing that Simmons is a minority opinion? I am getting tired out and would like more time to gather information. When I learn more, I may be more sympathetic to the views of Simmons.Regards -- C44
when I got over 200 began thinking "this is crazy, I'm spending more time on this than the original guy spent making it". How significant do you think this list is? Do you think each paid Simmons, say $10,000 or more for his consulting? If they did he would be extremely busy and extremely rich. Maybe these names just paid $39 for a one-off letter, I cannot know from what you post.It is my understanding (which I hope someone can confirm,I'll have to look up again what I saw somewhere) thatMr. Simmons is a billionaire...that's with a B not an M.That should settle at least part of your question :-)
The ramifications of Peak Oil are so serious, one of George W. Bush's energy advisors, billionaire investment banker Matthew Simmons, has acknowledged,http://planetforlife.com/news.html
Yes, he is a billionaire many times over. He is a billionaire because when the energy industry was in serious trouble in the early 80's and early 90's it was his expertise that allowed him to be the last remining energy investment bank for several years before the industry recovered and other jumped back into the act. Even with others into the act again, he is still running the largest energy investment bank in the world.
My last appeal to Simmon's credibility...Here is a link to the Department of Energy's Energy Information Administration's overview of Saudi Arabia.http://www.eia.doe.gov/emeu/cabs/saudi.htmlWhile they may not agree with him, you'll notice that he is the only independent analysts referred to in the report. The fact that the U.S. government agency responsible for maintaining the records and information on world energy sources chooses to acknowledge only one expert in the world in it's report would tend to say the guy is no hack.Quote:Aramco claims that the average total depletion for Saudi oil fields is 28%, with the giant Ghawar field having produced 48% of its proved reserves. Aramco also claims that, if anything, Saudi oil reserves are underestimated, not overestimated. Some outside analysts, notably Matthew Simmons of Houston-based Simmons and Company International, have disputed Aramco's optimistic assessments of Saudi oil reserves and future production, pointing to -- among other things -- more rapid depletion rates and a higher "water cut" than the Saudis claim. EIA forecasts that Saudi oil production capacity could reach 18.2 million bbl/d by 2020, and 22.5 million bbl/d by 2025, a prediction which the Saudis have said is "unrealistic." In recent months, Saudi Arabia reportedly has stepped up oil drilling and exploration activity, aiming to maintain a total of 60 rigs -- double the number as of December 2004.If you still want to believe he's just some hack, I don't know what else to tell you. Simmons feels the Saudi's are lying about their capacity. If he's right about it, we'll find out very VERY soon. Also, with regard to what the Saudi's motivation to lie is, OPEC allows a country to produce oil commensurate with stated reserves. What this means is that a countries total market share of OPEC produced oil is tied to it's stated reserves. To understand what this means to the Saudi economy here's another quote from the EIA's report.Quote:With oil export revenues making up around 90-95% of total Saudi export earnings, 70%-80% of state revenues, and around 40% of the country's gross domestic product (GDP), Saudi Arabia's economy remains, despite attempts at diversification, heavily dependent on oil (although investments in petrochemicals have increased the relative importance of the downstream petroleum sector in recent years).
Simmon's book "Twilight in the Desert" is supposed to come out on Tuesday. It is about Saudi oil reserves. Reading this should help one decide on the credibility of his arguments. Available from Amazon for around $17 plus any shipping.
First, it is a sad, sad statement about our own EIA that their2020 and 2025 "projections" are so stratospheric thateven the Saudis have to dislaim them as 'unrealistic'And we make fun of the international bodies whileour tax dollars funs such EIA nonsense..?Second,If you still want to believe he's just some hack, I don't know what else to tell you. Simmons feels the Saudi's are lying about their capacity. If he's right about it, we'll find out very VERY soon.If you mean sharp decline, by "find out about it" then "very soon" might mean tomorrow but it could also mean in 24 or 36+ months...Ifyou mean more and more evidence (e.g. more sour on the market,more promises, not kept, of higher output next quarter etc) then yesit could be quite soon. But I would not take the lack of a suddendrop "very very soon" to mean Simmons is definitely wrong...they mightbe able to avoid a sudden collapse and hide decline, at least partially, for a while longer...If something large enough happens that they can't hide it, well, asSimmons likes to say, "Katy, bar the door!"Also, with regard to what the Saudi's motivation to lie is, OPEC allows a country to produce oil commensurate with stated reserves. What this means is that a countries total market share of OPEC produced oil is tied to it's stated reserves.As it happens I posted a good artile with a very useful chartsummarizing the numbers, by Campbell, on the Oil forums, seehttp://boards.fool.com/Message.asp?mid=22404573(in particular see graphic,http://peakoil.net/images/cap_172331.giffromhttp://peakoil.net/CC4April2005OilGas.html
>>Yes, he is a billionaire many times overI tried to verify that, thinking a billionaire many times over must surely quality for Forbes' "FORBES 400 RICHEST AMERICANS" since the cutoff to be on that list is about $750 million net worth. http://www.forbes.com/400richest/I looked for him and he is not there. I trust Forbes' accuracy on matters like this. To me this is yet another example of something that smells fishy about these claims. Not extremely important, but I am getting fatigued about being inundated with info and not all of it adds up.On the "Energy and Utilites" board post #10072 quotes Simmons on something where I sincerely believe he is working from inferior knowledge. http://boards.fool.com/Message.asp?mid=22254147Post #10076 contains my reply. I know how much it must annoy and frustrate everybody when I claim I have access to knowledge others don't -- I would feel that way myself and try to do it as little as possible. But I will do it this time: Simmons makes a bold and confrontational claim on the Ghawar field being the same in principle as Oman's Yibal field. I say he is wrong, that his stand reveals the weakness of at least some of his knowledge. That's all I will say on that subject for now.You guys are not making him out to speak for the majority opinion are you? I asked earlier if we could agree that he is a minority opinion and got no reply. Instead you seem to be convinced he walks on water.This discussion is getting to be a little too flamelike for me. Twelve months or so will give us a reasonably objective answer as to how much correctness there is in what he sees. Let us wait and see. Or better yet let us discuss other topics relevant to this board.Best of luck -- C44
But I will do it this time: Simmons makes a bold and confrontational claim on the Ghawar field being the same in principle as Oman's Yibal fieldWhere does he make this claim? I've seen videosof Simmons (globalPublicMedia.com) and he mentionsthat as something to worry about ...which is VERYdifferent from stating one is SURE that Ghawar IS exactly like that. Let's not set up straw men..Secondly, your quetion about minority opinion hasno answer, and the question is not well defined, unlessyou clear up which group you are talking about. Officialgovernment mouthpieces (you know, like the EIA which evenSaudi Arabia laughs as the "unrealistically" high assumptions abuot 2020 production?) or current geologists(who may fear for their jobs) or retired geologists? etcThird, it would be good if someone could get to thebottom of what Simmons' Net Worth is. As you have,I am sure, noted, my original post said I hope someonecan check up on the refernce I had online, to verity itor not verify it. A tangential question, but, still,worth resolving..if he is not a billionaire we shouldtell article writers to stop saying that. The matteris not yet settled and can be explored, tangentialthough it is, hopefully we can resolve it.On Yibal, again, I'd like to see a link directly with a verbatim quote from Simmons himself, directly..No one said he walks on water...not I, not anyoneelse here. A straw man. People said he is well regardedand another poster backed that up well with how eventop institutions mention his name and take hisopinions seriously (not the same as agreeing with him,but an indication he is well regarded).I hope the above aids all of us in our questfor more light than heat be shed on these matters...
I admit to hyperbole when I used the phrase "walks on water". Will try to lessen hyperbole in the future. Sincerely I was concerned that perhaps I had been so strident, that other posters felt pressured into adopting a more extreme position of their own views, as a reaction. Like you I am interested in shedding more light than heat on the subject.>>your quetion about minority opinion has no answer, and the question is not well definedI would like your input on how to define it. My idea of "minority opinion" is that Simmons expresses ideas which are unusual compared to the majority of people who should know -- i.e. reservoir engineers. I could be wrong but I had pegged Simmons as a consultant who would gain in direct proportion to his fear mongering.Don't beat me up on this, but what does an oil investment banker do anyway? I have never learned how this business gets its money, it's time I fill in my gaps here.>>Where does he make this claim? ...and>>On Yibal, again, I'd like to see a link directly with a verbatim quote from Simmons himself, directly..Did you look at the link from the "Energy and Utilities" board, post #10072 and it did not satisfy you? It is not a verbatim quote but is a statement from a source which admires him:+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++http://boards.fool.com/Message.asp?mid=22254147http://www.energybulletin.net/1474.html'In a February 2004 symposium at the Center for Strategic and International Studies in Washington, DC, energy investment banker Matt Simmons confronted two Saudi Aramco officials with the suggestion that the advanced recovery techniques used at Ghawar, which produces approximately 4.5 million bbl/d, have created an illusionary “fountain of youth” for the field.'+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++Use of the word "confronted" does not suggest cordial relations. You cannot get around the fact Simmons wants to say their "emperor has no clothes" -- with a culture like the Arab one, that would be an intolerable loss of face. Do I need to say more? And independently I have spoken with a petroleum engineer who suggested including Simmons on a seminar on Middle East oil production, which was held in the Middle East with a lot of Arabs attending. He would have been a "minority opinion" in that context -- a group of professionals who are at the center of actually producing this oil and gas. The reply was swift and insistent: if Simmons was present, the entire Saudi contingent would boycott. Hate to say this but I believe this shows you are mistaken in your post #101 where you said...>>Also he has generally not be just calling the Saudisout and out liars...he even appears >>on a panel WITH the Saudi reps ( CSIS event as I recall, posted many months back >>on GlobalPublicMedia.com) so has been politewith them face to face.....I don't have the transcript of what was said, but I believe my source is reporting fairly and the transcript surely must exist somewhere.Anyhow there surely are other topics in "Energy Discussions and Investing" which need to be fired up for the health of this board. This thread will peter out someday and other readers will be turned off if there isn't more interesting stuff to talk about. You have my regrets that this thread seems to have been about discrediting Simmons, but I have felt it necessary to inhibit what seems like swallowing his scary story hook, line, and sinker. Anyone care to say (in a new thread) why they think clean coal will work better than nuclear or LNG for getting our BTUS over the next few decades? My position will be the contrary one, but I will be polite and factual while being contrary -- nothing that looks like an ad homeneim can I forsee on that topic.
Well, away from Simmons, there are plenty of others that echo his concerns. The problem isn't even wether or not they can increase production. It's wether or not they can increase production enough to offset decline in the rest of the world. Here are some other opinions.Kjell Aleklett is a professor in physicsat the Uppsala University and the president of the Association for the Study of Peak Oil&Gas (ASPO).If you study the production from existing oilfields, experts around the world agree that the decline is between 3 and 5 percent. This means that all the oilfields that today produce 84 million barrels per day, mbpd, will next year at this time produce 80.6 mbpd and in year 2030, 30 mbpd. In the World Energy Outlook 2004 the IEA predicts that we will need 121 mbpd in 2030. In other words, we need to find more then 90 mbpd in new production. “The world needs 10 new Saudi Arabia's.” Someone might call me a Doomsayer, but if so I'm accompanied by Sadad Al Husseini, as this is a citation from him. He was until recently vice director of Saudi Aramco, the largest oil company in the world.Chris Skrebowski, of the Energy Institute in London, which monitors all major oil discoveries and developments."Norway, Venezuela, the UK and Indonesia and many others are all declining production. I expect Denmark, Malaysia, China, Mexico and Brunei to peak within three years...I estimate that we have, at best, 32 months before [the crisis] hits.Colin Campbell, former vice-president of Fina and chief geologist of the oil giant Amoco."Oil will not run out for many years," said Colin Campbell, former vice-president of Fina and chief geologist of the oil giant Amoco. "The information governments give is grossly unreliable. Oil companies report less than they discover for pragmatic reasons, but Opec countries have overestimated what they think their reserves are."He said many Middle Eastern Opec countries, including Iraq, Saudi Arabia and Kuwait, had all significantly lifted their estimated reserves in the late 1980s to benefit from larger quotas, but they had not discovered new fields or changed their estimates since then.Professor Kenneth S. Deffeyes, Professor Emeritus of Geology, Princeton University.I used to work with Mr. Hubbert at Shell Oil, and my own independent research places the peak of world oil production late this year or early in 2006. Even a prompt and successful drilling operation in the Arctic refuge would not start pumping oil into the pipeline before 2008 or 2009.We've ben stuck in this thread on wether Ghawar is in decline and wether Simmons has credibility. That's really aside from teh question. The question isn't wether Saudi Arabia has the spare capacity they claim, but wether world oil production can keep pace with projected demand.
And here I will agree with Strngr12. It seems very few things will prevent the demand curve, from pulling well ahead of the supply curve at today's prices. I would not be surprised to see a plateau of seriously higher prices in the future.Best wishes -- C44
Hi,I did see the CSIS transcripts (key parts anyway) and I didsee the video of Matt Simmons interviewed by Julian Darley e.g. at http://www.globalpublicmedia.com/interviews/116He was moderate in his comments...in one video (I can't recallif its this one or another one, but I am sure he said thisin one) he even bent over backwards to say that in the pastthe Saudis really handled oil better than just about any other countryso he wants to temper his remarks with that, but (but nowwe need more transparency and there are real questions about...etc etc)Yes I saw your link, and yes it would be better to seewhat Matt Simmons himself says. The word "confront" aside(which an admirer might put in just to cheer on what the admirer sees as Simmons role....)..but even that quote..."technology...has created an illusory fountain of youth"is very different from saying "I predict that whathappened to Yibal will exactly, and imminently, happento Ghawar" which is what your first post on this, soundedas if you were claiming Simmons said.We all seem to agree that Simmons and even the Saudis arenot the key thing...but as for "minority" I think we can saythis: those of us who have followed news items fairly closelyin the past 12-24 months have seens a sharp change in statementsby IEA, et al top officials, from 1,000 away from Simmonsto a position which, while different, is much closer to his.So at least in the momentum, it's on his side. By 1,000 milesaway I mean they used to say things like there is no problemat all we have extra capacity up the whazoo etc. Then in late2003 or was in 2004 they started to change tone...by later in 2004 they changed tone quite a bit...by today peak oil is in the headlinesand no longer laughed at, as it was VERY recently...by todaythey admit problems in supply, and even limits to Saudiproduction...bottom line if you carefully read over hte last 18-24months there has been a fundamental change in tone fromthe "majory/establishment" gang, and it's towards Campbell, towardsSimmons etc...even if not the same as them today, if you comparetheir words today to what they said 2 years ago, it isa difference of night and day.On broader issues: the problem is most of us only knowa small part of the puzzle. Many folks who are awareof global warming are not aware about, and oftendon't want to believe, about peak oil...manywho understand peak oil don't want to believeor even research that global warming is far far moresevere than one would gather from "skimming just the surface"of news reports...just as is the case with peak oil...so Ican give urls of info I and others posted but for nowplease let's NOT digress to debate that...but: coaland methane hydrates are a suicidally dangerous path.Nuclear I can give many reasons why it is not helpful,is dangrous etc, but lest you judge me as too pure,I'll even say, it might has SOME role but notas a solution...merely as a stop-gap temporary measure.Same with NG: not as a solution, but as a stop-gaptemporary measure. Recall I finally did post thereferenc, from the Oil and Gas Journal, with one keyanalysis expecting NG may peak by 2019...that's in 14 years, folks...and ramping up LNG will take a big chunk of those 14 yearsout, so then how many years will we have? precious few...only we'll be even more dependent on fossil fuels, ifour economy keeps demanding more energy each year,than the previous, then by definition in 2019 the totalenergy will be that much higher...we need not just renewablesbut conservation..but not just conservation, but also strucutral changes...withoutstructural changes, folks from Republic advisor Simmonsto environmetnalists have pointed out, that withoutstrucutral changes, much (not all, but much) of thegains of efficiency improvement are eaten up by usingthe extra (unused) energy for additional growth...soinstead of doing the same work for less energy you endup doing more work for the same energy, then "Even more work" for more energy...so your energy use still growth fromeach year to the next..that will be here until we havestructural changes...but in the meantime yes efficiencyand conservation and renewables will all help..look atPORTX for the former two, largely, and NALFX andGreen Century for the latter. See GASFX for the temporaryNG help...
Absolutely. What's important here is that Peak OIl "theory" was completely ignored as recently as 5 or ten years ago. Now it's covered in every major publication and analysts who subscribe to the "theory" are now getting phone calls from President Bush. Simmons is an advisor to Bush.Incidently, I put "theory" in quotes because it is not a theory. Oil will peak. The only thing that is a theory about it is when.It is also important to note that ALL fossil fuels will peak this century and probably in the first half of it. Oil will just be the first and there are many who believe that NG is not far behind, though the data on how much NG there actually is is much sketchier. Wether the fact that the data on NG is not as complete as it is on oil is scary or reassuring I guess depends on wether you are an optimist or a pessimist. Either way I think the thing to do is hope for the best but prepare for the worst. This means that either way we need to develop incentives to move away from fossil fuels and to conserve what is left. As long as we keep building cul-de-sac suburbs farther and farther away from city centers this will become increasingly hard to do.
Why methane hydrates are an even more dangerousrussian roulette than coal as far as the future of planetearth:Ticking Time Bombhttp://www.commondreams.org/views04/1215-24.htm John Atcheson, a geologist, has held a variety of policy positions in several federal government agencies.© 2004 Baltimore Sun
Yes, I'm well aware that methane burps can cause runaway, catastrophic global warming episodes of the kind that can cause planetary mass extinctions. It was methane burps that probably caused the ETM event 600 million years ago that killed off up to 90% of terrestrial species.I'm also aware that if we get into some serious energy "Mad Max" scenarios we will not go quietly and that, if possible, we will drill every last bit of oil, NG, coal AND methane hydrates that we can. It's our nature. Hopefully, and this is a big "HOPEFULLY" we will learn to exploit this resource without causeing a global methane burp episode. Thanksfully, the same technology needed to prevent a major collapse of a methane hydrate deposit, something that has to be done to make it even possible to extract the resource, is the same technology that needs to be developed to prevent methane burps because a collapse of a methane hydrate deposit IS a methane burp.
If as a species, we are not immature insane imbeciles (I grantthat this is a controversial issue, but let's assumefor the sake of argument, for the moment, that we are not) thenwe should not "bet" the future of the entire planet on anew technology working. Would you let me use an expeirmentaltechnology protect your head from the bullet I'm shooting at it?I don't think so. This is far worse, playing Russian Roulettewith the entire planet and the lives of billions...Yes, theyare "working on" this and that technology, but no, we shouldnot risk the entire planet and bet the future of the planet'sability to sustain life on such technologies.But gee whiz, how do we prevent mad max and all that? Thereare plenty of other ways, starting with using much less energy.An old joke goes like this: A beautiful young co-edwho is very close to failing a class goesto her professor's office...and with sweet big eyesbreathes that "....I'll do ANYTHING to pass this course"The professor asks her, "...anything..?""Oh yes, professor, anything..."The professor goes and closes the door to his office...and locksit..Back in his chair he leans forward and asks her onemore time..."so, you say you'll do ANYTHING to pass this course..?"Once more she whispers oh so cutely and eagerly "oh yes, yes, I'd do ANYTHING to pass this course"The professor smiles and snaps back: "Then study!"end of joke.................So here we are "oh so depsrate" and "oh we are sooooo worriedabout the future...enough energy....avoiding globaldisaster with global warming...I'll do anything, justanything professor" but then "study"? No...Then "useless energy"? No...Like the young coes studying(serious conservation, efficincy, re structuring, renewables,and yes using LESS energy than last year, not more energyeach year thant he previous) is off the agenda for uslike a spoiled co-ed,We want the cheap quick easy wayout... like some technology that (cross your fingers Sally)might maybe save our sorry rear ends from amass-mega-genocide of a methane burp...we'rewilling to risk out entire planet but we're NOTwilling to take the above prudent steps? What abunch of spoiled brats we must be.."I'll do ANYTHING" but we don't really mean it...It's not just that disgusting...it's worse...we'renot just a lazy student, we are risking mass destructionof most of human and other animal life on the planet.I'm sick and tired of hearing about 'oh but weNEED the energy and we MUST do something' and thenplaying russian roulette with other people's lives..if we mean it, if it's important, let's get off ourbutts and do the less-sexy ("study for the test") answers,and prudent steps reducing our energy demand (which is TWICE that of Europe's per capita, so we can cut it in half,for starters, and then Europe not being perfect we cango well beyond that) on top of renewables and more...Imag
It was methane burps that probably caused the ETM event 600 million years ago that killed off up to 90% of terrestrial species.600 million?http://en.wikipedia.org/wiki/Extinction_eventYou might mean another one? In any case the one 250 milllion years ago, is definitely implicated with methae burps, so called.....and that was 95%of marine species dying...http://www.monbiot.com/archives/2003/07/01/shadow-of-extinction/
Yeah, well our current response to the threat of global warming and an impending energy crisis should tell you we'd rather just have sex with the teacher.
Yeah, well our current response to the threat of global warming and an impending energy crisis should tell you we'd rather just have sex with the teacher.given the dangers of global warming as is, methane hydrates etc, make that, "would rather just have sex with the teacher, geta horrible disease, and then either suffer painfully fromthe disease or actually die:-(Seriously, if you're commenting on the present, we are in agreement.If you were approving of it, my point was we shouldnot use the (bad) excuse of the 'need' to justify the present course...Imag
Re the debate (such as it was) here on Matt Simmonshttp://www.evworld.com/view.cfm?section=article&archive=1&storyid=846&first=4523&end=4522Oh and as a postcript, in followup to the debates about MattSimmons..After his remarks, EV World asked Mr. Pickens if he agrees with Houston-based investment banker Matthew Simmons that Saudi Arabia's oil fields may be on the verge of decline and he replied that he did agree with him.also from that article (on another and in factmore central issue...) see below:"The majors, they talk about plenty of oil and that they can produce more, but if you look at ExxonMobile, ChevronTexaco, BP (British Petroleum), all the production (is) going down every year. They don't replace and they don't add to production, but they say there's plenty of oil around."Now why would they say that? One of the chief economists with one of the major oil companies... I was at a conference where he was... we were talking and I asked, why do they say that? And he said, can you imagine what would happen if one of these major oil company's CEO's got up and made a speech and he said, 'We're running out of oil'? I said there'd be panic and he said, 'That's right. They're not going to make the statement. They're going to say there's plenty of oil around'"
Yeah, read that today and was going to post it myself. T. Boone Pickens is a legend in the business. You cannot read about oil and energy as much and as often as I do without coming away from it with the realization that the people who are frightened about the future of oil are not cooks or outsiders. These people who are warning us now about what we mat face are industry insiders. They are petroleum geologists, oil company execs, OPEC execs, energy investment bankers, geophysicists...
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