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The Fading Twilight of Oil

Part 1 of exclusive interview with Twilight in the Desert author and energy investment banker Matthew Simmons.

By Bill Moore

Houston investment banker Matthew Simmons is somewhat surprised and obviously pleased that his 2005 'Twilight in the Desert' has now surpassed 100,00 copies in print -- making it a best seller of sorts -- and that it is now available in German, Chinese, Japanese and Korean.

But what really pleases him is that despite early and inaccurate accusations that his book criticizes Saudi Aramco for mismanaging Saudi Arabia's giant oil fields, his research efforts have won the praise of the very people who assumed they were the target of his pen.

That praise, however, hasn't tempered his conviction that the world as we know it is about to change irrevocably as the demand for petroleum outpaces supply.

In this exclusive interview, Simmons talks about the changes he's observed in the oil and gas industry since the release of 'Twilight' in May, 2005.

"Oil prices have gone from $60 to $100," he replied. "if they had gone from $60 to $10, there would be a lot of people saying, 'That idiot from Houston, obviously he was wrong...

"A lot of people attribute the price rise to hedge funds and fear factors... No, the market is really tight."

But for Simmons, it's not been the steady climb of the price of oil over the last three years, that has been the most important change for him personally. He told me that it was the education that he got researching the book, wading through the 200-plus petroleum engineering papers with the help of industry professionals that served as the basis of his book.

What surprises him the most is how he's taken such a keen interest in the technical minutiae of petroleum engineering after spending most of his career as an investment banker to the oil industry having little interest in how oil and gas actually were produced.

"I knew that porosity and permeability were two different properties that were highly important to create reservoir rocks so you can actually flow oil, but I could never remember which was which and what each one was," he explained to me. "That was the degree of my knowledge five years ago. By the time the book came out, I had the good fortune to spend an undo amount of time reading through carefully and writing in the margins of technical reports on field-specific projects to then find a group of people who in my opinion, are the best of the best reservoir engineers that were teaching people. And they collectively, a group of less than ten people, helped me sort of better understand some of the stuff I wasn't quite properly describing or saying.

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