Simmons & Co International, the energy investment bank founded by author and peak oilist Matt Simmons, has announced that Simmons himself is retiring as chairman emeritus there.
This move is perhaps not surprising, as Simmons’ own views have diverged markedly from the bank’s in recent weeks. In fact last month, the bank issued a statement pointing out that its views were not the same as Simmons’:
Recent tragic events in the Gulf of Mexico have led to a period of collective introspection for the industry as well as a surplus of opinions. And sadly, the forensic evidence associated with this tragedy is far from complete and will likely take several months to assemble in order to formulate a more complete and informed narrative.
Several of the recent statements on the part of Mr. Simmons relating to the Macondo blowout and the implications for the industry and the individual companies involved in this incident are discordant with the views of Simmons & Company International.
And how. Just last week, Simmons & Co raised its recommendation on BP shares from neutral to overweight. Like some other equity analysts, Simmons & Co believe that investors overreacted to BP’s possible risk, making its shares an opportunity; albeit a somewhat risky one.
But this move came after Matt Simmons had for several weeks been voicing the view that the Macondo well casing itself is damaged — something that, if correct, would be a real ‘oilmageddon’.
He also told Fortune magazine last week that BP had about a month before it filed for Chapter 11.
Simmons began in May to talk about his belief that the leaks visible on spillcam are only a small part of the real flow:
He also told Bloomberg on Tuesday that a huge pool of oil is building up deep below the seabed, that covers 40 per cent of the Gulf of Mexico.
If Matt Simmons is right, of course, the effects for BP and indeed for the entire deepwater industry would probably be profound indeed. The deepwater production that is continuing in the Gulf now, for example, (the moratorium only affects drilling for new wells) would likely be halted.
Another of Simmons’ assertions is that only a nuclear explosion will stop the flow.
The ‘nuking it’ idea has been floating around for weeks now, boosted by reports that several leaking Soviet Union gas wells were stopped with nuclear detonations in the 1960s to 1980s.
However the New York Times in early June reported that the administration said it was out of the question – not just for the extra risk it entailed. Other experts concurred.
A senior Los Alamos scientist, speaking on the condition of anonymity because his comments were unauthorized, ridiculed the idea of using a nuclear blast to solve the crisis in the gulf.
“It’s not going to happen,” he said. “Technically, it would be exploring new ground in the midst of a disaster — and you might make it worse.”
The point, it seems, is that nuclear detonations in deepsea conditions simply aren’t well understood.
An Oil Drum reader gave a long and interesting list of reasons why nuking it wouldn’t work:
The summary is, nuclear explosives are (a) not nearly as predictable in their effects as conventional explosives, simply because we have far, far less experience with them than conventional HE, and (b) the radiation from nuclear explosives presents a unique hazard that is not at all an issue with conventional explosives. With respect to the latter, we now know much more about bioaccumulation of radioisotopes up the food chain than we did when we were testing nukes in the atmosphere/ocean.
The full comment goes into more detail. The long and short is that while nuclear explosions look unfeasible for many reasons, there’s a chance conventional explosives might work:
We understand them much better than nuclear explosives, they can be deployed repeatedly if need be, they provide finely controllable energy release, and if they go wrong, they at least do not add radioactivity to the ongoing disaster mix.
Still doesn’t seem particularly reassuring, though.
Back to Simmons. His book, ‘Twilight in the Desert’, about Saudi oil supply, is a peak oil classic and is considered by many to be part of the wider energy canon.
However the bank also wanted to distance itself from his scepticism on shale gas, saying:
Separate and apart from the Macondo blowout, Mr. Simmons’ views and opinions regarding the productivity of the North American unconventional natural gas and oil resource plays are in direct contradiction to the conclusions Simmons & Company International has reached from the in-depth and lengthy research we have conducted on the subject. Our view is that were it not for unconventional gas, the North American natural gas resource base, which is presently witnessing compelling productivity, may otherwise have entered into a period of sustained decline.
Simmons has other projects; he is going to focus his efforts on Ocean Energy Institute, which is focused on building offshore wind projects.
“In the three years since I founded Ocean Energy, my passion for renewable energy R&D and investment has continued to grow and this venture requires my full attention.”
We wrote earlier this year about Simmons’ compelling statements on water and energy, which leads into his case for offshore wind.