Matthew Simmons's Idiotic "Plan B"

Money doesn’t sleep and crack pipes smoke all night: Matthew Simmons is a big rig engine, plowing his baby batter of a greedy mind through the cold of a frigid landscape, cracking ice like an ice road trucker. His redlining mind barrels through in top gear, fuming metaphoric smoke from sulfuric ashes smoldered on his ravenous chops. He’s got a big plan for peak oil and he wants your dime - up to 1 quadrillion of them, to be exact.

Matt Simmons is jet-setting a preposterous plan of epic proportions; he’s garnering support to blow $50-$100 trillion. Not on renewable research, not on oil exploration, not on conversation or a Manhattan Project-like effort to adjust to peak oil; no he wants to rebuild the oil industry's infrastructure, globally, piece-for-piece. Did I hear a feint whisper of “Check, please?” before the china crashed?

This is the gospel according to corrosion.com:

The Oil & Gas Journal has reported in its recent edition that the US oil and gas industry will need to invest US$50-100 trillion to rebuild its ageing infrastructure within the next 7 years and stave off a serious drop in oil and gas production. That’s according to Matt Simmons, chairman of Simmons & Co.International, who spoke recently at the Offshore Technology Conference in Houston, Texas.In a worst-case scenario, Simmons said, oil and gas output could fall by 10-20% by 2013 if industry does not replace its rusting, corroded assets. Spare capacity has also run out because formerly cheap prices for oil and gas precluded upgrading and construction of new facilities.

And from a presentation:

Rebuilding any significantpart of the infrastructure will absorb most of high quality iron ore and other metals.

Before we even tackle the rationality of clawing through such presbyopic expenditures, let's first observe the problems at hand. First, we're going to need lots of steel; and since America no longer carries the world's preeminent steel industry (we're third, but the industry is a shell), it means we'll have to buy produced steel elsewhere (hello trade deficit; oh brother China, can you spare a pauper a dime?). Also, such exorbitant expenditures will entice industry to cheapskate, inducing government to foot the bill, sucking money out of our pockets and enduring future generations stratospheric debt; vital engineers will be excoriated across sectors; and with this much money, planning, construction and engineering being concentrated into oil - an effort Simmons states "we might find that winning World War II was an easier task than what we have ahead of us" - means those faltering pipes and crumbling roads are going to be put off for a while...

Drive at your own risk: we have an oil industry to rebuild!

Now consider the time and cost required to build some of the following...

Oil Refinery...

Time to construct: depends... 4, 6, 7 sometimes even 10 years.

Cost: billions a piece

Number in US alone: 132.

Offshore drilling rig

Time to construct: years, depending on size and depth qualification

Rental fee: six-figures a day, going up to $500,000-$600,000.

Oil pipeline

Miles of oil pipeline in US alone: 55,000 of crude oil trunk lines (8-24 inches in diameter), 30,000 to 40,000 of small gathering lines (2-6 inches in diameter).

Mad Matt's guesstimate of replacing global pipeline network: $15 trillion.

Now mind you, even if the world got this rolling next year, it would take decades to complete (something Simmons admits). Simmons is also notorious for claiming oil peaked in 2005 (not according to the EIA, dipshit), and that oil is headed for a crash landing of 60 mbpd by 2015. This means he abides by the 5%, 6.5% annual depletion-rate flavors favored by many doomers (he stated months back that the world's oil fields are declining at annual depletion-rates of 20%, and that only significant investment can bring that down to single digits).

Still, we're going to pretend Simmons is a real Roosevelt, we'll assume we can get this done in 20 years. So, taking last year's total liquids production of 86.17 mbpd, considering Simmons's rhetoric that oil is in decline, and applying a 5% annual depletion-rate to this, we find that... after 20 years, total global production is under 30 mbpd!

It's not half-empty empty, girl. We have a shiny new oil industry for the next fifty years!

So, under Matt Simmons, we managed to squander tens of trillions of ollars, excoriated engineers from practically every vital sector, neglected renewable energy and infrastructure projects, and wasted an asinine amount of steel - all to build a brand new, spanking oil industry that will last us for the next fifty years; even though America, with a current refinery capacity of 17.455 mbpd, wouldn't even need anywhere near that amount under Simmons's apocalyptic future!

In all seriousness... is the oil industry's infrastructure aging? Yes. Is this a concern? Sure; but to the extent Simmons claims? Not even close.

According to the IEA:

Repair of the oil-production facilities built in the 1970s is part of the $6 trillion that needs to be spent by 2030 to meet global oil and gas needs.

Now some critics say the IEA is too stodgy, too out of touch to be reliable. Maybe. But considering Simmons's record of the past few years (I know you debunker aces already have this stuff down, but the mentally-stunted Billy Madisons of the peak oil community are a little behind their special ed. peers, and they need a few "tough love" donkey kicks to their rosey heads to - let's say... - speed them up):

$120-$190 barrel of oil was suppose to hit in 2005.

OPEC currently has no spare capacity.

He stated months back that "the boom of summer 2008 that sent oil and gas prices skyrocketing was the only truly great situation the industry ever had." (the seventies didn't count(?) - oh, and he oddly enough stated the 2008 industry boom wasn't likely to return anytime soon)

Back in 2003, predicted looming gas shortages by 2005; failed to predict shale gas's impact, or the current gas glut; still believes we're going to gas Purgatory.

Throws a conniption about Ghawar's 28% water cut (didn't anyone tell him oil fields typically don't peter out until they cross 50%?).

An oil price crunch is going to hit in a few months (link).

Was featured in the documentary "the Power of Community: How Cuba Survived Peak Oil." (this of course was beautifully debunked by JD)

Even Robert Rapier - a peak oiler, an Oil Drum writer, a fan of Matthew Simmons and somebody I do respect - questioned Simmons's technical expertise in this piece:

I would say that most technical people are familiar with fuzzy logic, so I figured that Simmons was just not a technical guy.

[...]

So, the point is that I am learning to take Simmons with a grain of salt when he is discussing technical subjects. He may be an ace investment banker - and he has certainly made a lot of money - but he has given me no reason to put stock in predictions like this from him: (Rapier goes on to discuss several subjects)

So anywho, what exactly does Mr. Simmons like to say?

“Data always beats theories. 'Look at data three times and then come to a conclusion,' versus 'coming to a conclusion and searching for some data.' The former will win every time.”

Indeed, Mr. Simmons. Twighight in the desert, my ass.

- Brewskie

Mr. Simmons's Mental Capacity Goes Up in Smoke

This ultimately will be a somewhat quick debunker post on the man (a trademark, "heart attack brick burger-like meat stack" is in the pipeline for him=)). I was reading a vaguely noticeable article on "why gas won't go to $4 a gallon this summer (as if anybody couldn't see that)," when this bit was eyeballed (link):

Houston consultant Matthew Simmons sees higher prices ahead as well. OPEC's supply capacity is strained, he said, and the recession has halted refinery expansions, pipeline improvements and offshore-drilling projects. "There's no extra crude in OPEC's pocket," he said. "We have no cushion."

There you have it, folks: "we're screwed;" all coming from the mouth of the man who driveled last winter "we don't have any evidences of a glut," or who's messianic certainty of natural gas Armageddon prevented him from forecasting shale gas's significance, or the gas glut we have now.

Of course for normal people - those who don't flake out their brains from "phalanxing" insidious chemicals from layers of makeup plastered onto one's face (like Wacko Jacko) - who have been paying attention to the news, they have gained clarity of a situation a 1st grader could comprehend: you're wrong, old fart.

Here's the real money shot:

And we fist-pounders demandingly ask: "Where's the beef?"

I hate to run rehashed material into the ground - yah gotta run idiots' heads into roughshod soil like wheel barrels to perk any activity in their frontal lobes! - but Saudi Arabia is or will be adding spare capacity(here, here... poke here), plus has exhibited avarice avity for its vaunted offshore potential; Iran's not shabby with "Great Lakes" oil discoveries (same can't be said for political freedom), then or now; and Iraq, if it can hold its shit together, has a Kobe Bryant-like oil future, with plenty more oil to be found.

Mr. Simmons is a colossal businessman who started his company from scratch; yet he banked an ego the size of his fortune on oil and gas Armageddon. This man has gotten practically nothing right this decade with his dooms day scenario forecast; yet his "fleet" of peak oil Lassie clones slobber their rough collie smiles to every phonon he emits. "Oh no, OPEC has no cushion. We're soo fucked!!"

Mr. Simmons never-the-less persists into his wintry charge of peak oil doom like ravenous Napoleon charged pig-head first into Russia. With such callous disregard to facts, it's no wonder Mr. Simmons played an influencing part with another indefatigable turd:

- Brewskie

The King's Latest Presentation

I was scoping out the Oil Drum and found a link to Matthew Simmons's latest slide-show presentation, Two Energy Oxymorons: 1. Energy Independence 2. Energy Security. I didn't have much time to check it out, but here's a few things I found while skimming through it:

• Oil defiantly peaked in 2005 (some things never change; I think his reputation peaked in 2005).

• Shale gas won't save us; gas production still going down.

• UN dead wrong: world population will soar past 2050 expectations (Freddy Hutter pointed this out earlier).

• We're screwed! Oil production is going to fall off of a cliff, so is gas, the world's population is going to soar past anything meager oil production is going to sustain. Therefore... it's completely imperative to divert mountainous supplies of cash and resources to rebuild the oil industry's infrastructure! (Yeseriee, the King of Peak's twisted and contradictory logic is becoming eerily more Wacko Jacko.)

That's just a few tid bits. I'll try to scope through it more when I get the time.

- Brewskie

The King of Peak Grows a 2nd Tongue

You can always count on Matthew Simmons for consistency like a Chinese toy factory. His product might be cheap, the electronics even cheaper, but like China itself, he's constipated with loads of cheap plastic and labor: you can always count on him to crap out predictions comprised of toxicity.

Simmons' mouth has been blazin' the bandwidth with this latest gem:

"We are three, six, maybe nine months away from a price shock. We are not talking about three to five years away -- it will be much sooner."

He also adds "the underlying rate of decline of the world's aging oilfields is as much as 20 percent a year and only high levels of investment can reduce that to single digits." Twenty-percent!? Whooaa. I said it in previous post: peakers have a serious obsession with seeing oil drop to 60 mbpd by 2015; since the 2005 peak hasn't panned out, they've upped their annual decline-rate from 6.5% to ensure prophecy.

All of this coming from a sage who said last December that "we don't have any evidences of a glut," along with, "no way did demand plunge." Say, Mr. Simmons, what happened to the $120-$190 a barrel of oil you predicted for 2005? What ever materialized of the natural gas crisis you and Mike Ruppert envisioned would excoriate America by 2005? Were we experiencing 9% gas growth at one point last year? Mr. Simmons... you've been awfully quiet on the gas situation. Why?

Anyway, the "King of Peak" was recently welcomed as the herald keynote speaker at the Alliance Expo & Annual Meeting. Oil and gas employees welcomed the messiah, his valued forecast of oil wells spitting out volcanic gushes of liquid gold profits, his welcomed narration of enslaved masses hauling wheel barrels full of fortunes to the pump - both of these likely to return soon. This was his gleeful forecast according to the article:

The keynote speaker at the Alliance Expo & Annual Meeting offered a sobering revelation to the oil and gas industry employees seated in front of him: the boom of summer 2008 that sent oil and gas prices skyrocketing was the only truly great situation the industry ever had, and it’s not likely to return any time soon.

#%$!?!? Not any time soon!?!? Mr. Simmons, that's heart-breaking! That's a huge disappointment coming from such a seasoned sage as yourself. You cried last fall that last year's oil decline was a total fake-out; you warned us that oil's death grasp is only taking a breather and will return soon; you've been telling us armageddon is only 6 to 9 months away. Now you're telling the oil and gas industry its 2008 glory days are not coming back anytime soon? Mr. Simmons, you're not just a doomer - you're a two-tongue doomer! Shame on you. Your mind has become as shoddily configured as Wacko Jacko's face-plate.

As fair warning, Mr. Simmons, peak oil prophecy requires a sharp mind, something that gets badly diluted in old age; Ken Deffeyes recently tallied on his 9th failed peak oil prophecy. When the fleets of nanobots are running amok through our air, weaving carbon into who knows what, I imagine you'll be crappin' your depends in the old folks' home, giving ominous warnings about "peak carbon."

- Brewskie