Matt Simmons on CNBC, sounding very, very worried

[GliderGuider]

On The Oil Drum:
CNBC: Matt Simmons and John Kilduff Discuss the GAO Report and the Ramifications of a Plateauing Oil Supply with Bob Pisani

I've never heard Simmons sound so worried. Probably he's been reading these:

http://www.theoildrum.com/node/2325
Saudi Arabian oil declines 8% in 2006

http://www.theoildrum.com/node/2331
A Nosedive Toward the Desert

http://www.theoildrum.com/node/2393
Water in the Gas Tank

I've felt since the beginning of the year that oil depletion is going to start biting this summer, and Simmons appears to support this assessment. Given that the oil production peak is here now, and that Robert Hirsch said in his well-documented report to DOE (PDF warning) that the world would need 20 years of pre-peak preparation to weather the transition with minimal disruption, it looks as though we'd better prepare ourselves for some major changes coming soon to a world near you.

[Extend a Hand]

1. K&R

so important.

[IDemo]

2. Was he playing nice with Aramco?

I was somewhat surprised, to say the least, when Matt said "they probably do" when asked if he believed the Saudis have all the oil they claim to have. One of the central themes in the peak oil discussion is the spurious increase in reserves figures by KSA and several other OPEC nations around 1990-91. If I remember correctly, KSA's numbers went from around 190B to 260B.

Some Americans may be clamoring for more war for oil by next Fall if it's as bad as it sounds.

[GliderGuider]

3. I think he just blew off that issue because it's unimportant at this point.

Reserve volumes are really only an important argument while production is still increasing. Peak Oil is a flow rate theory. Once the flow begins to slow it doesn't matter how much oil you have in the ground - the decline in the flow is the crucial factor for the civilization we've created. Matt also recognizes that KSA reserve numbers are seriously contaminated by secrecy and politics - arguing about them merely distracts us from the real issue and doesn't advance the discussion.

The point is that Saudi output is declining at a rate that can't be explained by their "voluntary cutbacks" and the conclusion of a "Saudi Peak" is further supported by the analysis of the seismic evidence of water infiltration in Ghawar. Between that, the 25% drop in Cantarell 's output last year and the fact that global Crude&Condensate output has been plateaued for two years, the signals are clear.

[IDemo]

5. I know it's ultimately about the flow rate, but the reserves do matter

If it's "proven reserves" we're talking about ("Estimated quantities of oil and gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions."), they, along with the rig count and other above-ground factors, define how well a producer can be expected to respond to increased demand.

Point being, as has been detailed at TOD and elsewhere, the state of Ghawar today belies the 262B barrel figure that Aramco and the USGS continue to cling to. That and the water cut numbers (anywhere from 30 to 55%, or??) take a serious bite out of the "proven" part.

We are at a stage, or were twenty years ago, where knowing the actual state of Ghawar and other fields far surpasses the importance to our security of knowing whether Iran may be exploring nukular weapons. I suspect that the cabal in charge does in fact have a very good idea, but wants to muddy the facts as long as possible in order to prevent a panic.

[GliderGuider]

4. Updated link - now includes video from T. Boone Pickens and Kunstler as well

http://www.theoildrum.com/node/2418

[ramapo]

6. Maybe Reagan will eventually get the rating he deserves

"Given that the oil production peak is here now, and that Robert Hirsch said in his well-documented report to DOE (PDF warning) that the world would need 20 years of pre-peak preparation to weather the transition with minimal disruption, it looks as though we'd better prepare ourselves for some major changes coming soon to a world near you."

Let's see...who was President 20 years ago? Oh surprise...RR was finishing up after spending seven years planting his delusional fantasies deep into American society and politics.

I will never forget the sick feeling I had when I realized that that fool was going to be elected, and by a landslide no less. That folks, was the beginning of the end. Soon we will see what a quarter century of ignorance and apathy has wrought.

[Strelnikov_]

7. Wish I could K&R replies

It was not Morning in America, it was America Sleepwalking into the Future.

[bighughdiehl]

8. Isn't Simmons ALWAYS worried?

He's been predicting a huge crisis for every single winter and summer for several years.
I do think we are at PO, but Simmons doesn't help credibility anymore....it's the same old same old from him. He is one of the guys that has consistently cried wolf for quite a while, even if this time it looks pretty likely that da wolf heeyah. Remember, he's close with Cheney-Bush too. I'm more inclined tolisten to the geologist types(a political, retired, no financial interest). This summer could begin the fun, though, I have seen data that makes me more inclined to believe it than in past years. Keep in mind, too, these people like Simmons are billionaires-thewy don't give a shit about you or our civilization-they will just retire to their bunkers in a couple years and try to profit in the meantime from the situation, even if they are correct and incidentally ringing the alarm bell for the rest of us.