Thanks Ray!
Glad to see that the banking
industry -- at least a few of them --- is starting to wake up. We keep
hoping there's a break in the energy research that gets financed, but
the "high cabal" -- as Churchill called loose-knit series of cartels
around the world that controls much of the financial power -- is
absolutely determined to keep the energy situation just like it is, and
centered on hydrocarbons and nuclear power plants. By controlling the
funding for the scientific community and what it is to be spent for,
they control science. By the environmentalists having to seek advice
from the same scientists, that gets them only the "standard advice", and
none of the rest.
That's the real reason for
the "hydrogen diversion" -- it's the wonderful plan that is supposed to
"trick" everybody. Hydrogen sounds good if you run it by real fast, and
it "soaks up" the research money that might go into other things. It
gets everybody thinking about how cleanly hydrogen burns, and ignoring
all the other problems (like where the source of the hydrogen comes
from, like a car that is a ticking bomb waiting to explode, or like the
crazy hazards of trying to handle hydrogen en masse through the entire
transport and energy system.)
The temporary "solution"
(once the present energy system effectively crashes and the economy is
grievously damaged) is likely to be a rising torrent of "Hey, let's turn
coal loose!" because the U.S. has lots of coal. There will also be a
tirade of "Let's turn the nuclear powerplants loose again!" With enough
economic disaster, Congress will rush through a bill or a series of
bills removing the limits on coal because of its "dirty combustion", and
going after nuclear powerplants again. It will mean sacrificing the
biosphere even further, but that will gain a few years, maybe.
For a preview of the expanded hydrocarbon usage, just look at China and
how dirty it has become in its cities, etc. where the people are
acquiring small transport, etc. And they're burning things "dirty".
The "brown cloud from Asia" is likely to become a rather permanent
fixture.
China's energy demands are
increasing by leaps and bounds, and "dirty" sources will continue being
used. There's already the guts of a whale of a war (or lots of them)
a'building in various places, as energy tightens globally. It will be
starting, probably, in about two years. In the interim, parts of the
"probing" etc. for future hostilities are already ongoing.
Considering all this mess,
and with something like a 2 to 3-year deadline looming at us and the
clock ticking, even if funding is received for the MEG and several other
legitimate COP>1.0 systems by various inventors and researchers, it's
getting dicey. Whether it could be done in the time needed is getting
to be a question, and more serious every day. Even if several other
COP>1.0 systems were simultaneously developed and readied for full
production and sales, and even with a massive production and marketing
effort it will take quite some time to make a really substantial dent on
the present monstrous power system and grid, and on the world usage of
hydrocarbons and nuclear plants.
Nonetheless, one must
continue as if things were going to hold together and the nation is
going to survive economically one way or the other. Taking that as a
given, we have a chance regardless of the tough "white water" and rapids
we are going to have to canoe through on the way. So we keep pounding
away with that in mind, reaching out toward those sharp young grad
students and post docs, who are the ones who are going to have to change
the present adamantly opposed scientific community.
We are doing what we can,
and we will continue without letup. I have a very simple philosophy,
rather like the old general in the movie, Lawrence of Arabia. At his
staff briefing, looking at the map of the situation and array of forces,
he struck the blackboard/map with his fist and exclaimed to his
Artillery General: "Pound them, Charlie! Pound them!" So pound them we
are, and pound them we will. After all, I'm an old artilleryman!
Here's three fact sheets
dealing with energy etc. that we prepared for future use at (hopefully)
higher decision levels, so I'm keeping them a little close instead
of spread over the internet. Will be preparing others as time permits.
At the high decision levels the world of government and big industry
runs on bulletized briefs and "fact sheets" these days, prepared by
their staffs. The real decision makers usually do not read technical
papers, and do not read references except in extraordinarily rare
cases. Instead, they formulate their actions on "Fact sheets" and other
such "nutshell" capsules that are prepared by their technical staffs.
So we thought it necessary to do a little preparation for some of those
"technical staffs".
Thanks for the info on the
oil industry banker's statement. At least some of the bankers are
beginning to "get it" and understand that all is not well with the
present energy mishmash and "splintering" (to use the standard power
industry euphemism) of our power grid and power capabilities.
Best wishes and hope things
go well with you in all your endeavors,
Tom B.
Col. Tom: If this banker to the petroleum is correct then the
financing of MEG could be closer than we had thought. Sorry for the
length, but considering who is speaking I recommend it to you.
Ray
[ENER] Matt
Simmons: We're in BIG trouble.
Some of you may
have heard of Matt Simmons, the oil industry's favorite banker. Mike
Ruppert of From the Wilderness interviewed Simmons in the wake of the
Big Blackout of 2003. The result is one of the most reasoned and
explicit warnings I've seen in a long time. Simmons, BTW, is a good
friend of George II and has regularly briefed the President and his top
advisers on energy issues since before the 00 elections.
My apologies for its length, but it's worth reading every word. Some of
the key points:
http://groups.yahoo.com/group/energ...s/message/40473
On natural gas supplies and the coming winter:
"The solution is to pray. Pray for mild weather and a mild winter. Pray
for no hurricanes and to stop the erosion of natural gas supplies. Under
the best of circumstances, if all prayers are answered there will be no
crisis for maybe two years. After that it's a certainty."
On global oil supplies:
"Over the last year, I have obtained and closely examined more than 100
very technical production reports from Saudi Arabia. What I glean from
examining the data is that it is very likely that Saudi Arabia, already
a debtor nation, has very likely gone over its Peak. If that is true,
then it is a certainty that planet earth has passed its peak of
production."
Since this site functions as a list serve, I think it meets the
requirements of the copyright notice.
PLE ASE DISTRIBUTE WIDELY VIA LIST SERVES. MAY NOT BE POSTED ON ANY WEB
SITE WITHOUT EXPRESS PERMISSION – See Copyright Notice
FTW Exclusive Interview
Behind the Blackout
A n Energy Investment Banker and Bush Energy Advisor Gives Unexpected
Answers on the Northeast Power Grid, Peak Oil and Gas, and Much More
© Copyright 2003, From The Wilderness Publications,
www.fromthewilderness.com. All Rights Reserved. This story may NOT
be posted on any Internet web site without express written permission.
Contact admin@copvcia.com. May be
circulated, distributed or transmitted for non-profit purposes only.
August 21, 2003, 2350 PDT, (FTW) -- Matthew Simmons is the CEO of the
world's largest Energy Investment Bank, Simmons & Company International.
It has a web site located at (http://www.simmonsco-intl.com/).
Its clients include Halliburton; Baker, Botts, LLP; Dynegy; Kerr-McGee;
and the World Bank. Since 1993, it has underwritten or financed 18
transactions valued at more than $350 million. Of those, six were valued
at more than $1 billion. Simmons is a member of the Council on Foreign
Relations and serves on the National Petroleum Council's Natural Gas
Task Force. He has a lot to say about the Northeast power grid blackout,
its causes, and what they imply for the future. He also has a lot to say
about Peak Oil and Gas.
Surprisingly, and with remarkable candor flowing from a sense of urgency
he communicates at every one of his presentations to global energy
experts, Simmons delivers a message that sounds more like a Democratic
"New Deal" plank than a Republican Party free-market love fest. He is an
arch foe of economists who insist that investment and technology will
solve what he and a growing number of energy industry experts call an
unsolvable and permanent decline in hydrocarbon energy resources.
Deregulation was the primary cause of the failure on Black Thursday,
August 14. But, as far as Matt Simmons is concerned, to stop there and
pretend everything is okay if only more infrastructure is built borders
on suicidal behavior.
Matt Simmons will be the first to tell you that what he says has nothing
to do with politics and everything to do with survival. He is a man of
seeming contradictions by virtue of his opposition to the environmental
movement on the one hand and his absolute dislike of energy deregulation
in the 1990s on the other. There are very few who have interacted with
him from any camp who doubt either his honesty or his sincerity. For
that reason alone, what this insider has to say about the Northeast
Power Grid collapse deserves our fullest attention. His words carry
weight in Washington and around the world. Black Thursday was, he says,
only the beginning.
----------
FTW interviewed Simmons via telephone from his home in Rockport, Maine,
on August 18, 2003
FTW: What's the most important thing you want the American people to
know about Black Thursday?
SIMMONS: This blackout ought to be an incredible jolt telling us about a
host of energy problems that are ultimately going to prevent any future
economic growth. It's like people have been ignoring annoying phone
calls and living in denial about a problem that won't go away. It's like
the ghost of Enron calling. The event itself was astonishing. Senior
people like Governor Pataki or the head of NERC [North American Electric
Reliability Council] were asking how this could happen. But the problem
was inevitable. The only thing we didn't know was when it would happen.
FTW: What did happen?
Simmons: On a large scale what happened was deregulation. Deregulation
destroyed excess capacity. Under deregulation, excess capacity was
labeled as "massive glut" and removed from the system to cut costs and
increase profits. Experience has taught us that weather is the chief
culprit in events like this. The system needs to be designed for a
100-year cyclical event of peak demand. If you don't prepare for this,
you are asking for a massive blackout. New plants generally aren't built
unless they are mandated, and free markets don't make investments that
give one percent returns. There was also no investment in new
transmission lines.
Underlying all this is the fact that we have no idea how to store
electricity. And every aspect of carrying capacity, from generators, to
transmission lines, to the lines to and inside your house, has a rated
capacity of x. When you exceed x, the lines melt. That's why we have
fuse boxes and why power grids shut down. So we have now created a
vicious cyclicality that progresses over time.
Another problem was that with deregulation, people thought that they
could borrow from their neighbor. New York thought it could borrow from
Vermont. Ohio thought that it could borrow from Michigan, etc. That
works, but only up to the point where everyone needs to borrow at once
and there's no place to go.
A second major reason is that decisions were made in the 1990s that all
new generating plants were to be gas fired. We've had a natural gas
summit this year and, as you know, I have been talking for some time
about the natural gas cliff we are experiencing. Many thought that this
winter would be deadly, and I have to say that it's just a miracle that
we have replenished our gas stocks going into the cold months. This
winter could have been a major disaster. We've seen a price collapse in
natural gas to the five to eight dollar range (per thousand cubic feet)
and the only reason that happened was throughout almost the entire
summer there were only a handful of days when the temperature rose above
eighty degrees anywhere. That was miraculous. It allowed us to prepare
for the winter but we shouldn't be optimistic. One good hurricane that
disrupts production, one blazing heat wave, one freezing winter after
that and we're out of solutions.
FTW: And natural gas too?
Simmons: Well, I know you understand it, but people need to understand
the concept of peaking and irreversible decline. It's a sharper issue
with gas, which doesn't follow a bell curve but tends to fall off a
cliff. There will always be oil and gas in the ground, even a million
years from now. The question is, will you be a microbe to go down and
eat the oil in small pockets at depths no one can afford or is able to
drill to? Will you spend hundreds of thousands to drill a gas well that
will run dry in a few months? All the big deposits have been found and
exploited. There aren't going to be any dramatic new discoveries and the
discovery trends have made this abundantly clear.
We are now in a box we should never have gotten into and it has very
serious implications. We also see the inevitable issues that follow a
major blackout: no water, no sewage, no gasoline. The gasoline issue is
very important. Our gasoline stocks are at near all time lows. With the
blackout, more than seven hundred thousand barrels per day of refinery
capacity were shut down. People were told to boil their water. So what
do they do, they go to their electric stove which isn't working. What
then?
FTW: Makes you wonder about France and the heat wave that has killed
5,000.
Simmons: The only reason Europe was spared a far worse blackout than
what hit the USA was that Europe barely uses air conditioning. In fact,
even though America uses a lot of air conditioning some areas have
become fairly efficient in the ways they use it. Quantitatively, we use
more energy because there are more of us. But air conditioning is a
relatively new experience in Ontario, Canada. Until recently Ontario had
been a net energy exporter. They have a population of just over 12
million. With air conditioning in the last five years, Ontario became a
net importer of electricity. Now, on just a normal hot summer day,
Ontario's peak power averages about 23,000 Gigawatts.
Texas, with a population of 25 million, set an all time record of 60,000
Gigawatts just a week before the blackout. The difference is that except
for one tiny line running into Arkansas, Texas is self-contained for
electricity. It's not tied to any other users. As we saw on Black
Thursday, Ottawa was part of a whole interlocking system that had no
place to go but down.
FTW: So how big a factor was the weather?
Simmons: It was THE factor in my opinion. To show much weather
determines power use, in the week of August 3rd, the US set an all-time
national record for electricity use of 90,000 Gigawatts. The
Mid-Atlantic States' use of power had jumped 29.5% over last year and
20% over just the previous four weeks. Why? The temperature had been as
hot as we experienced on Black Thursday. If you want to compare it to
vehicles and roadways, air conditioning is the interstate highway system
and the Internet is the equivalent of SUVs. Everything that happened on
August 14 started in the 17th hour. (5 PM at various local times).
That's when everything is running at once: industrial, residential, and
commercial. This is when demand peaks regardless of the weather. And we
know that in hour 17 on that day the US experienced all-time peak energy
use. That's when the system tripped out.
FTW: So we have two basic camps saying that the problems are generating
capacity and transmission lines, without addressing feedstock issues.
What about the advocates for deregulation who argued that there would be
more generating capacity as a result?
Simmons: History answers that one. Following the 1965 blackout when NERC
was created there was a mandate that publicly owned and regulated power
providers had to build new plants. Every five years, ten per cent was
added to the generating base. As deregulation was implemented in the
1990s, it was argued that it would open up vast quantities of energy in
neighboring states. In the first five years of the decade, only four per
cent capacity was added over the entire period. In the second five
years, only two per cent was added.
In the summer of 1999, we had thirty consecutive power events which
unleashed the single biggest construction boom in history which built
220 thousand megawatts of new plants at a capitalization cost of six to
seven hundred thousand dollars per megawatt. Ninety-eight per cent of
those plants were gas fired.
It was decided to use solely natural gas plants for several reasons.
Coal fired plants took five to seven years to build. They are very dirty
environmentally and the permit process is difficult. We have built on
all the available hydroelectric sites we can build on. Nuclear is
unpopular and expensive. Oil fired plants are remnants of the days when
oil was cheap. Those days are not coming back because Peak Oil is with
us now. Besides that, oil fired power plants are about the least
efficient use of a barrel of oil that I can imagine. That left natural
gas and the economists mistakenly presumed there would be large
supplies. But natural gas plants were built with no supplies. Synthetic
contracts were used, Enron-style, to sell gas futures when the gas
didn't necessarily exist.
FTW: Assuming that there was enough feed stock to run the new plants how
much building are we talking about?
Simmons: Each state would need to build forty to fifty per cent excess
capacity. A forty per cent cushion merely provides the chance to
withstand a day of high summer heat and the chance to grow by about 3%
per year for three years.
FTW: Yet even if we re-regulate there are still going to be problems
with feed stock to power the plants. How serious is that?
Simmons: Someone's going to be left holding the bag big time. If natural
gas consumption surges in ten days of excessive heat then it would
require almost a complete shutdown of industrial consumption to
compensate and protect the grid. As I have been reporting for years now,
there isn't going to be enough gas to run those plants, let alone new
ones.
FTW: You mean shut down the economy for ten days to keep people from
cooking?
Simmons: Yes.
FTW: Everyone keeps saying that A NWR (The Arctic National Wildlife
Reserve) is the answer if we drill there. Is it?
Simmons: ANWR is not "The Answer." However, it makes great sense to
develop. Drilling there should not have a negative impact on the coastal
plains of the Arctic. With great luck, it could create between 300,000
and possibly up to 1.5 million barrels of oil a day and lots of natural
gas that could last a decade or two. But this does not become the sole
answer. On the other hand, if ANWR is kept off limits, it becomes no
answer.
FTW: What about imports of natural gas from overseas? Russia and
Indonesia have huge reserves; Canada, as the Canadians are painfully
aware, is almost depleted when it comes to natural gas.
Simmons: Indonesia's gas fields are very old. Its Natuna gas fields, a
source of stranded gas that gets discussed all the time has 95% CO2 and
apparently costs about $40 billion to develop a mere 1 bcf/day of dry
gas. Russia has four old fields that make up over 80% of their gas
supply and they all are in decline. Canada's decline problems are as
serious as the US.
FTW: Windmills? Solar?
Simmons: There's no way they can replace even a portion of hydrocarbon
energy.
FTW: Reducing consumption?
Simmons: Reducing consumption has to happen, but many of the favorite
conservation concepts make little overall difference. The big
conservation changes end up being steps, like a ban on using electricity
to either heat water or melt metals and instead, always using the
"burner tip of natural gas". The latter is vastly more efficient, the
energy savings are enormous and we need lower ceilings and smaller
rooms. We need mass transit, and to eliminate traffic congestion.
Finally, we need a way to keep people from using air-conditioning when
the weather gets really muggy and hot at same time. The strain this puts
on our grid is too overwhelming.
We also must begin to use our current discretionary power during the
nighttime. All of theses steps are hard to implement but they make a
difference.
FTW: What is the solution?
Simmons: I don't think there is one… The solution is to pray. Pray for
mild weather and a mild winter. Pray for no hurricanes and to stop the
erosion of natural gas supplies. Under the best of circumstances, if all
prayers are answered there will be no crisis for maybe two years. After
that it's a certainty.
FTW: On that cheery note let's take a look at oil supplies.
Simmons: Currently, oil supply issues are as serious as the electrical
grid. Last month the IEA (International Energy Agency) updated their
database. They had for years been talking about a coming huge surge in
non-OPEC supply, excluding the FSU (Former Soviet Union). It hasn't
happened. We have the highest oil prices in 20 years and even great
technological advances have not had a measurable impact on discovery or
production.
FTW:I have recently noted the speed with which the Chad-Cameroon
pipeline was built and switched on. Chad only has estimated reserves of
around 900 million barrels (World consumption is I billion barrels every
12 days). I see a sense of urgency there.
Simmons: It's amazing. What's that pipeline going to pump, fifty
thousand barrels per day? That figure may go up, but it's
inconsequential in the long run. It's a sign of how strapped world
supplies really are and that we may be finding out that we are already
over the peak.
FTW: What about Iraq and Saudi Arabia ? We have been following Iraq
closely and all the sabotage, infrastructure damage and the pipeline
bombings are actually reducing Iraqi capacity. That leaves Saudi Arabia
with 25% of known reserves.
Simmons: I have for years described two camps: the economists who told
us that technology would always produce new supply and the pessimists or
Cassandras who told us that peak was coming in maybe fifteen or twenty
years. We may be finding out that we went over the peak in 2000. That
makes both camps wrong.
Over the last year, I have obtained and closely examined more than 100
very technical production reports from Saudi Arabia. What I glean from
examining the data is that it is very likely that Saudi Arabia, already
a debtor nation, has very likely gone over its Peak. If that is true,
then it is a certainty that planet earth has passed its peak of
production.
What that means, in the starkest possible terms, is that we are no
longer going to be able to grow. It's like with a human being who passes
a certain age in life. Getting older does not mean the same thing as
death. It means progressively diminishing capacity, a rapid decline,
followed by a long tail.
FTW: What about people like Alan Greenspan and popular writers who tell
us that there is no basic problem with energy supplies? Others offer us
hydrogen, which is laughed out of hand by people who have looked at its
feasibility and efficiency.
Simmons: Basically they just don't get it. Some of them have gotten
lazy. They were so carried away by the arguments of the economists that
they stopped doing their homework. Month by month, and year by year,
events are proving them systematically and thoroughly incorrect. They
just don't get it. Right now, there is a deluge of stories on the
wonders of hydrogen. This is another area of great confusion. Hydrogen
is not a primary source of energy. For a Hydrogen Era to occur you need
an abundance of natural gas, or you need to create a great deal of new
power plants using coal and nuclear power.
What I find so ironic about our very serious energy problems is that
they started in Santa Barbara in 1969. This was where the best work was
being done to create a new technological evolution in our ability to
recover energy from deepwater sources. Then we had a tragic spill. This
gave birth to the environmental movement. It began the war between
modern energy and environmental "anarchists". They have worked overtime
to shut down our access to areas that might have diversified our energy
supply.
Had we been able to develop these areas, then we would have more options
now to ensure a continuation of the economic prosperity we take so much
for granted. And there is no better friend of the environment that
economic prosperity.
FTW: But peak oil is peak oil, is it not? Aren't we just talking about
something that would have delayed the inevitable for a few years? It
would take a couple of years to drill and pipe out of A NWR but there's
only a two year (total US) supply of gas there at best, and even less
oil. Then what? A t the A SPO conference in Paris, I think it was you or
another expert who disclosed that four out of five very expensive deep
water holes were coming up dry?
Simmons: Peaking of oil and gas will occur, if it has not already
happened, and we will never know when the event has happened until we
see it "in our rear view mirrors."
FTW: Is it time for Peak Oil and Gas to become part of the public policy
debate?
Simmons: It is past time. As I have said, the experts and politicians
have no Plan B to fall back on. If energy peaks, particularly while 5 of
the world's 6.5 billion people have little or no use of modern energy,
it will be a tremendous jolt to our economic well-being and to our heath
-- greater than anyone could ever imagine.
---------
After I ended the interview, I recalled something that I had read
recently in a book called "Contraction and Convergence - The Global
Solution to Climate Change." (www.gci.org.uk).
It was a startling revelation that since 1950 there has been a near
perfect correlation between the growth in world GDP and the emission of
greenhouse gases (i.e. - the consumption of hydrocarbon energy).
In an economic system that is predicated first and foremost on perpetual
growth, Matt Simmons' statement that we are no longer ever going to grow
took on a whole new meaning.
-- Mike Ruppert
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