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Page added on November 19, 2015
Takeover of Simmons ends 41-year run for ‘peak oil’ dealmaker
The takeover of Simmons & Co. by Piper Jaffray Cos. marks the end of an energy industry dealmaker founded by one of the leading champions of the “peak oil” theory, Matthew R. Simmons.
Simmons was best known for his claim that the Earth was running out of crude, promoting the idea that world oil reserves were peaking in a 2005 book called “Twilight in the Desert.” He died at 67 in August 2010, on the eve of the U.S. shale boom that sent the nation’s crude output to the highest level in four decades.
“The peak oil people were looking at a finite resource,” Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone. “Their opponents said this is an industry that’s endlessly innovative. The industry has won big.”
On a tour of Saudi Arabia’s oil industry in 2003, Simmons was inspired to estimate the world’s largest oil reserves, and from research that included poring through neglected engineering data, determined that the country was close to or nearing peak output, Peter Maass wrote in his book, “Crude World: The Violent Twilight of Oil.” Saudi Arabia pumped 10.57 MMbopd in July, the most in monthly data going back to 1989 compiled by Bloomberg.
Simmons was a frequent critic of BP Plc’s efforts to stanch its oil spill in the Gulf of Mexico, suggesting at one point that the best option would be to detonate a small nuclear bomb undersea to kill the well.
Houston-based Simmons, which offers research, institutional sales and investment banking in the energy industry, was founded in 1974. Piper Jaffray will pay $139 million, with $91 million in cash and the rest in restricted stock to take over the company, according to a statement Tuesday.
15 Comments on "Takeover of Simmons ends 41-year run for ‘peak oil’ dealmaker"
peterev on Thu, 19th Nov 2015 7:10 am
RIP Matt. I learned a lot from you by reading your book and reviewing your online slides.
If it is of any consequence, Exxon in their 2015 Outlook for Energy: A view to 2040, Slide 44 on page 15 shows Conventional Oil peaking in world production in 2005.
The high cost of producing non conventional oil is having negative effects on the world economies.
Davy on Thu, 19th Nov 2015 7:12 am
It is funny I still have multiple old Simmons power points (remember power points?) from his early days. I remember his warning that there was a danger of sucking the system dry is everyone went out to fill their gas tank in a crisis. Maybe some of you oil complex experts can comment on that one.
Simmons was a great personality to spread the word of the coming peak oil problems. Simmons problem was using the same style the mainstream media uses and that is sensationalism. The whole peak oil phenomenon since 05 has been one of slow and relentless depletion and economy/oil complex economic compression. It is only now that we are seeing a quickening of the pace of dysfunctional demand and supply relationship. Simmons saw a problem but he just fooled himself into thinking the problem at that time was worse than it was.
I will admit I was sensational back then. I took doom and prep to excessive levels that cost me some money. Although I almost got it right in 08. I was somewhat prepared for a 08 crisis if the powers to be would not have used an economic defibrillator to bring a dead economy to life. We were very close to a Minsky moment and a complete loss of confidence in 08. People are so naive to think the authorities can pull that off again. If Simmons would have lived another few years he may have become more sober and better understood.
Stabilizer on Thu, 19th Nov 2015 10:05 am
Matt was a genius in many ways. Unfortunately, not timing. His predictions always came true, but about 10 years after he predicted.
Peak oil is real, and Matt wasn’t incorrect. At any given price there is a peak. For years, Matt said we needed $150 oil to fund alternatives. He was a bit off on that, as we have discovered alternatives are cost effective at $40 oil. Matt failed to include that alternative energy, like oil, finds efficiencies over time.
Jerry McManus on Thu, 19th Nov 2015 11:32 am
“Endlessly innovative”
That, ladies and gentlemen, is precisely the reason why we, as in the entire species, are well and truly stuffed.
It is breathtaking just how much planet destroying, species exterminating, biosphere scorching hubris can be packed into two simple little words.
Kiss the little children goodnight, for they may not have a tomorrow.
energyskeptic on Thu, 19th Nov 2015 11:45 am
If the shale oil and gas industry is roughly $300 billion in debt (according to Bloomberg energy news), financed like the mortgage bubble, could that also mean that the EROI was negative, since companies were drilling with borrowed money since they weren’t making any profits? The intersection of money and energy confuses me, I think Gail the Actuary is right that most people will see collapse as financial rather than due to energy
Davy on Thu, 19th Nov 2015 12:40 pm
Jerry, the kids are who I feel pain for. I see them and think to myself what there life will be like in 20 years. I say 20 years being optimistic it is likely 10 years.
Pennsyguy on Thu, 19th Nov 2015 12:42 pm
Good question Energy Skeptic!
I haven’t seen any good numbers on shale gas/oil EROI. I doubt if the oil is over 10:1. Plus, is Light-Tight Oil as useful at the refinery as conventional? An oil company can make lots of cash on a barrel of oil, but if the EROI is low, it’s a drain on society.
Boat on Thu, 19th Nov 2015 12:50 pm
peterev
If it is of any consequence, Exxon in their 2015 Outlook for Energy: A view to 2040, Slide 44 on page 15 shows Conventional Oil peaking in world production in 2005.
Don’t discount the arrival of another peak of conventional oil. Liyba just opened up a port. If they became more at peace they could easily add 1.3 mbpd. Nigeria is reported to make deals that would add 1mbpd. Iraq oil exports are growing and then what will happen in Iran. Conventional oil is not a problem of depletion. It is a recovery from geopolitical events.
GregT on Thu, 19th Nov 2015 2:17 pm
“Conventional oil is not a problem of depletion.”
Still having problems with basic arithmetic Boat, as well as basic english?
This should help, but probably way over you’re head. It is, after all, at about the grade five level.
THE MOST IMPORTANT VIDEO YOU’LL EVER SEE!
https://www.youtube.com/watch?v=eOykY2SMbZ0
Not to worry. Most people, like you, aren’t very smart.
“The greatest shortcoming of the human race is our inability to understand the exponential function.” ― Albert A. Bartlett
Revi on Thu, 19th Nov 2015 7:54 pm
I think Simmons had a pretty good handle on what was going on, but the noise has drowned his voice out by now, and the people who bought his company don’t want to hear the message either.
makati1 on Thu, 19th Nov 2015 8:14 pm
Sometimes being the messenger gets you killed if the king doesn’t like the message.
Real petroleum did peak in 2005. What changed the numbers was moonshine, tar, and biofuels counted as oil energy. If you tear up the asphalt roads and refine them, you could add another few billion barrels of ‘oil’ to the reserves.
We are already way down the slippery slope toward the day when oil of any kind (except animal and vegetable oils) is history. When? 10years? 5? 1? Tomorrow? After all, it is not the amount of oil still in the ground, but the ability to get it out and into a usable form in the consumer’s hand and the ability of that consumer to afford to buy it. THAT is what will go first, not the last barrel of petroleum. That is the weakest link in the chain.
rockman on Thu, 19th Nov 2015 10:06 pm
skeptic – Try not to confuse economics with EROEI. I can’t go into detail now but a well could be a big money loser and still have a nice EROEI. And no operator will intentionally drill a well with an anticioated EROEI of less than 5 or 6. Most folks grossly overestimate how much fossil fuel it takes to drill a well. IOW inadequate economics will kill a potential project long before a low EROEI would.
Joe D on Fri, 20th Nov 2015 1:04 pm
Mark Shenk, Bloomberg correspondent.
http://www.c-span.org/video/?320325-6/washington-journal-oil-gas-production-us
Matt Simmons – thinker, Mark Shenk – cheerleader.
The human species – a tragedy of stupidity.
Kenz300 on Fri, 20th Nov 2015 2:52 pm
Fossil fuels are the past……..alternative energy sources are safer, cleaner and cheaper…….time to move on…..
Renewables to Overtake Coal as World’s Largest Power Source, Says IEA
https://ecowatch.com/2015/11/10/renewables-to-overtake-coal/
HARM on Fri, 20th Nov 2015 3:41 pm
“The peak oil people were looking at a finite resource… Their opponents said this is an industry that’s endlessly innovative. The industry has won big.”
So the oil industry has managed to turn a finite resource into an infinite one? Wow!! This is huge news –stop the presses! We need to award a Nobel Prize to OPEC, API, etc. for repealing the law of scarcity and entropy!