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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 like theoildrum.com

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.

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Other remembrances from colleagues and friends

Matt’s impact on the petroleum industry stemmed from his incisive analyses of underlying fundamentals and his willingness to be an effective iconoclast when dictated by his conclusions. As a result, we didn’t always agree, but he sure challenged us to think, and often rethink, our views and expectations of the future. In sum, Matt epitomized “energized thinking outside the box.” Tom Petrie, a vice-chairman of Bank of America/Merrill Lynch

I think there were several important aspects to Matt‘s personality that made him stand out and endeared him to his friends. He was dynamic, diligent and outgoing. He focused on both the big picture as well as the details and was not afraid to speak his mind when he thought the issues were significant. Those who criticized his conclusions missed the global issues he was addressing: maturing oil resources, an over-extended industry, runaway energy demand, and the absence of a “Plan B”. Those issues remain and we are still looking for “Plan B”. Sadad al Husseini, consultant, retired executive vice president of E&P for Saudi Aramco

With the sad and premature death of Matt Simmons, we have lost an important analyst who played a prominent and successful part in raising awareness of the critical issue of so-called Peak Oil. His experience as an investment banker helped him penetrate the barriers of lax reporting to establish the true position. He drew the media’s attention to this critical turning point for Mankind, and he will be sorely missed. Colin Campbell, retired petroleum geologist, founder of ASPO

Matt was a gentleman, a patriot, a talented analyst, a nice man, and a good friend. His contributions to informing the public about the impending dangers of the decline in world oil production are legion. The country and the world owe him a debt of gratitude. Bob Hirsch, senior energy advisor at MISI

Matt’s passion for better understanding all energy issues was stimulating and inspiring to all who had the privilege of knowing and working with him from the time he came to Houston. We will miss him intensely. Henry Groppe, cofounder oil industry consultants Groppe, Long & Littell

As an environmentalist, I found Matt Simmons to be a delightful surprise: a wealthy Republican who talked openly and intelligently about limits to growth! He refused to be held back by friends, colleagues, and perhaps even by clients in the oil and banking businesses who no doubt wished he’d just shut up and go back to making money. He went where curiosity and evidence led him, and that meant probing the inscrutable monolith of the oil industry–Saudi Arabia. I don’t know of anyone else who would have had the courage and respect within the industry to accomplish what he did. Richard Heinberg, senior fellow, Post Carbon Institute

I first met Matt in 1989 when he presented an analysis of the state of the drilling industry and what it would take to get it back to profitability. His presentation featured the insightful analysis, backed up with superb graphs, that we have all become used to. Because I have a hobby of checking out predictions, I followed the drilling business with unusual interest over the next few years. And Matt’s analysis was correct on what it took to slowly evolve back to profitability. I learned a lot from Matt’s analyses of the productive capability of oil and natural gas fields through the years. You might not always have agreed with what he said, but if you ignored what he said, you did so at your own peril. Vince Matthews, State Geologist of Colorado

I first met Matt around 1982 at his Investment firm. Roice Nelson, a founder of Landmark Graphics, was there to introduce me to Matt, but it never got that far. Matt came charging into his “trophy room” with all its glass mementos to the millions of shares of hundreds of companies his company had invested in, shaking both our hands while launching into a blistering dialogue on the “rusting” of the offshore oil industry worldwide. Matt had just calculated, on the literal back of an envelope that he produced on the spot, that within 20 years industrial accidents from rusting old rigs would “explode”. I reflexively thought of Matt when I first heard of the Deepwater Horizon” explosion this spring. Though it was “brand new”, I knew Matt would come out railing. We will sorely miss Matt’s always frank, often politically incorrect, prodding of what he considered “the established group think” of the oil industry. Roger N. Anderson, Con Edison Senior Scholar, Columbia University.

Matt touched my life in a profound way. Within weeks of reading Twilight in the Desert, I was flying to Denver to hear him speak at the ASPO-USA conference. With book and camera at the ready, I pounced on him as he left the podium and he graciously honored me with both a picture and an autograph. Our paths have crossed numerous times since then but I will be most grateful for our last visit this past spring when I had the good fortune to sit with him for several hours and talk about our energy future and to personally thank him for making my life richer and deeper. Matt, we will miss you. Debbie Cook, former City Council Member and Mayor of Huntington Beach (CA)

Matt saw Peak Oil as heralding the end of an era. It was something that struck him with alarm and something which he knew we needed (as a society and as individuals) to prepare for so that it would not sweep away our way of life. He did not have the satisfaction of knowing that his calls to a new preparedness were being answered because he was taken too soon, but he did sound a “certain trumpet” in respect to what he saw ahead. Therefore, his passing could be an occasion when experts and the public alike might take a moment to reconsider Peak Oil as a global force for imminent change. Charles T. Maxwell; senior energy analyst, Weeden & Co.

Editorial Notes: EB contributor Ann Peluso writes from rural Maine:
We owe so much to Matt. Some of us may wake up eventually believing that we owe him not only our lives, which we have made an effort to protect through this crisis because of his timely reports, but the lives of our families as well. He did this for us and our families. He already knew what he needed to know for himself and his own family. He could have taken it all and run instead of risking ridicule and stress. Matt's family has asked that in lieu of flowers, to send donations to his foundation, the Ocean Energy Institute [from Portland Press Herald online Aug 9]. We can keep his work going and keep ourselves going as well, dragging us all along kicking and screaming and whining like small frightened children for our own protection and survival.
-BA

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