Matthew Simmons Peak Oil Article in Forbes
This just in: Forbes latest issue, 3/2/09, has an article with Matthew Simmons. Mr. Simmons has been one of the loudest INSIDER voices declaring that Peak Oil is real. The article is a good, quick read.
Here’s the link:
Simmons’ critics insist he doesn’t appreciate the power of new technology to tap previously unreachable deposits trapped in shale or under ultradeep water. "Technology is fabulous, but it does exactly the opposite of what people thought it was going to do–it accelerates decline rates," he says. "The simple analogy is you’re having a Slurpee-slugging contest. You have a normal vertical straw and someone comes along with a multilateral straw. You’re not getting more out, just getting it out faster."
This paradox is evident at Cantarell, Mexico’s largest field. For 15 years it produced 1.5 million bpd like clockwork. Then natural decline set in. State oil company Pemex drilled dozens of new wells and built a system to inject nitrogen gas. This boosted output to 2.1 million bpd in 2004. Then the collapse: Cantarell is down to 800,000 bpd.
Simmons fears overproduction today will bring total collapse tomorrow. A fourth of the world’s oil comes from the 20 biggest fields, 60% from the 800 biggest. In his 2005 book Twilight in the Desert, Simmons asserted that Saudi Arabia’s Ghawar field, the world’s biggest at 5 million bpd, was on the brink of collapse. "The world can’t afford to have Ghawar fail the way Cantarell has," says Simmons. The Saudi leadership despises him.
"I think they think it’s possible," says Simmons, "But I guarantee you it isn’t. Remember that Royal Dutch Shell also believed passionately five years ago that it had 16 billion barrels of proved reserves." It then took 4 billion of those barrels off its books and the responsible executives off its payroll.
To refer, as many economists do, to ‘the theory of peak oil’, is tantamount to saying that it is a hypothesis that oil is a non-renewable resource, and that the amount under the ground is therefore finite. Only somebody whose ‘thoughts’ are really desires masquerading as thoughts could possibly say such a thing.
The biggest worry is that such people have the ear of governments. One of my greatest regrets is that Julian Simon, who famously said that the only limit to economic growth was the limit of human ingenuity, has not lived to see the fatuity of his remarks.