Prediction #2 (of 3) from Oil Expert Matt Simmons: World to Soon Realize Oil Production Peaked
Posted: July 10, 2007
A number of energy analysts deride them as “peak freaks.”
Nevertheless, a steadily growing number of people believe that the world will soon hit a “peak” in terms of its ability to produce crude and condensate, with no amount of new technology able to further raise the level of global crude and condensate production.
If the notion of “peak oil” were ever to become conventional thinking, it could send a chill through financial markets. On the flip side, it could also hasten the development of alternatives to crude oil – everything from coal and tar sands to biofuels and plug-in hybrid vehicles.
Matthew R. Simmons, head of Simmons & Company International, a Houston-based energy investment bank, doesn’t just believe that peak oil has already happened. He told EnergyTechStocks.com that in another year or so the world will wake up and say – in Simmons’ words – “Oh, damn. We peaked in May 2005.”
Simmons believes the world hit peak oil back in May 2005 because that’s when production at the world’s second biggest oil field – the Cantarell complex in Mexico – started a precipitous decline, which several observers have since attributed largely to mismanagement by Mexico’s state oil enterprise.
Despite Cantarell’s size and importance, the significance of its decline hasn’t fully registered yet in the financial community, according to Simmons. He believes that will change in another year or so, when he forecasts that global crude and condensate production will have come down about two to three million barrels a day compared with a little over one million presently.
Even some previously optimistic forecasters are starting to sound more like Simmons. A report by the U.S. oil industry for the federal Energy Department in Washington has warned about political and other impediments to supply growth, and the International Energy Agency in Paris has just warned of a supply “crunch” after 2010 due to rapidly rising demand and slower-than-expected production gains. |
