Matt Simmons Says Gulf Clean Up Will Cost Over $1 Trillion, Sees BP At $1, Says "We Have Now Killed The GoM"

Tyler Durden's picture

Matt Simmons shares some startling revelations in his latest Bloomberg TV interview, in which he says none of the propaganda matters on TV 24/7 (photoshopped or not) as the ultimate clean up cost will likely be well over $1 trillion, and a result he is unconcerned about his BP short. He ultimately see the stock going down to $1. What Simmons alleges however is far more startling and audacious: that this is a joint cover up effort between the administration and BP, in which both entities keep throwing sand in the eyes of observers while distracting everyone from the matter at hand: "What we don’t know anything about is the open hole which is caused by
the drill bit when it tossed the blow-out preventer way out of the
hole…and 120,000/day minimum of toxic poison has now covered the floor of
the Gulf of Mexico. So what they’re talking about is the biggest
environmental cover-up ever. And they knew that that well, that riser,
would finally deplete. And then they could say it’s over." On blaming the catastrophe on Transocean: "For two days they kept saying it’s a rig fire. When the rig sank they
could no longer call it a rig fire. It’s a riser leak
Because if they
said the truth they would all go to jail.
" The conclusion: "Unfortunately, we now have killed the Gulf of Mexico."

On whether the well pressure should be a concern:

“No, it’s a total diversion - that’s the gas condensation that was trapped in the drilling riser which blew off the wellhead at 10:01 PM CT on April 20th, it's a mile-long compressed natural gas."

"What we don’t know anything about is the open hole which is caused by the drill bit when it tossed the blow-out preventer way out of the hole…and 120,000 minimum of toxic poison has now covered the floor of the Gulf of Mexico. So what they’re talking about is the biggest environmental cover-up ever. And they knew that that well, that riser, would finally deplete. And then they could say it’s over. And unfortunately, we now have killed the Gulf of Mexico.”

“Some 5-10 miles away is what the NOIA research vessels have now proved is a deep oil lake that is growing by the day and it’s very toxic oil and its gases are very lethal. Basically if we have a hurricane now, we would have to evacuate the Gulf Coast.”

On the financial implications for BP:
“When people find out the magnitude of the story, I don’t know if we can technically clean up the Gulf but it would cost at least a trillion dollars.”

Simmons on his reaction to the rig explosion: 

“First of all when I woke up, when my wife turned on the television at 7:00 AM on the 21st and I saw this shocking news, that one of the greatest deepwater rigs ever built by one of the great companies in the industry, Transocean, was in the middle of this terrible fire, and then they said this was a rig fire, this is fuel on the rig, I know that there was 700 gallons of diesel on the rig, I said ‘This is a lie, the Gulf of Mexico is on fire. Why are they saying this?’  For two days they kept saying it’s a rig fire. When the rig sank they could no longer call it a rig fire. It’s a riser leak…Because if they said the truth they would all go to jail.”

On whether the blame lies squarely with BP:

"I think Transocean need Congressional Medals of Hero for this…I am really disgusted. Other than John Hofmeister, the retired president of Shell America, he's the only other person in the industry who I've seen to speak out."

Simmons on why he is shorting BP stock:

“You bet I did. Because I thought BP was going to go under. I’ve been saying that for months and months and when I read that 20 of the 24 Wall Street analysts had a ‘buys,’ I said ‘ That’s ridiculous, I’m going to short them.’ I’ve never shorted a stock in my life before.

"I have patience. The stock will go to one."

“They promised to clean up the Gulf, is that right?  Do you know how much it will cost if they can technically do it? Well over a trillion dollars.”

On whether there is hope for a permanent solution now that the oil has stopped leaking:

“No, because that’s not the gusher. That was a little bit of condensation that would have ended anyways. There’s no way to fix the gusher because there’s no casing left in the hole other than doing a small diameter nuclear bomb…It's the only way. With no casing left in the hole, the odds of the relief well working are zero. What the relief wells do-- if they can find the casing, they then cut a 4 inch hole--and then they have something to capture the mud with. With no casing there, it's like pouring oatmeal down a fire hydrant…The casing is not there. It's scattered over the ocean floor. The government now has gamma ray images of the actual blow-out preventer, which is five stories high, weighs 325 tons and it has two sections of casing that pierced through five stories of metal."

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WaterWings's picture

From now on everybody junk up to say 16 or 17 because once the comment is gone we get a disjointed mess.

Careless Whisper's picture

looks like mister simmons hasn't covered his shorts yet.

WaterWings's picture

Junkers late to the party or what? I'm saying that we shouldn't junk over 19 so we can see the comment and maintain thread integrity since Tyler doesn't allow infinite junks. It would be cool to see 56 junks, or whatever. Instead, POOF!

dark pools of soros's picture

so we'll all have to junk the comments that pointed out the junked ones...  leave no trace...

thesapein's picture

But that defeats the whole purpose of having a junk option.

WaterWings's picture

Group censorship. No better than HuffingtonGlue.

thesapein's picture

You want everything anybody says to be equally valid? Some ideas are like weeds. Some are fruitful. Who is to decide? We all do. Just for ourselves? Depends on how self centered we are.

WaterWings's picture

I just don't like that they get disappeared and then thread gets screwy. Junk away - and I want to see the total junks - not just 19 then gone.

jkruffin's picture

Wonder how hard it would be to find out who is long BP?  LOL

dark pools of soros's picture

most likely all pensions will be forced to buy BP hand over fist...

Ragnarok's picture

From a drilling/mineral stand point, a lot of what he just said makes absolutly no sense.  However I do believe the oil is still leaking.



HEHEHE's picture

Explain how it does not make sense? 

Ragnarok's picture

If they had already tripped the pipe and had run casing for that section of the well and were cementing at the time of the blow out, then why would there be a drill bit (drill bits are attached to drill pipe not casing) in the well that supposedly destroyed the BOPs shear rams on the way out?


Secondly, how could presure build up from condnesate, which is a stable mineral at those pressures, inside a riser which is torn to shreds? If any of the condensate turned to gas it would simply bubble to the surface.  Remeber the gas was turning to condensate when it hit the sea water and cooled, clogging the top hats.

truont's picture

Consider this:  The 6-inch diameter riser pipe could not possibly expel the amount of oil estimated to be in the Gulf of Mexico.  Therefore, there must be another leak...

Dylan Ratigan Show, MSNBC, July 15, 2010:

BP claims oil is no longer flowing into the Gulf.

That supposes of course that the only hole in the ground is the 6-inch diameter hole that you see there capped.

Matt Simmons argues you can’t spill 300 to 400 million gallons of oil into the Gulf of Mexico out of a 6-inch wide pipe.

Not to mention explode a 5 story building which is how big a bop is and not end up with more than a small hole.

Ragnarok's picture

There is so much misinformation out there.


The riser is what carries the drilling fluid and cuttings to the surface from the TOP of the well bore and was certainly not 6 inches, try more like 20 or 30 something for a well that deep.  A well is drilled in several sections each with a progressively smaller diameter (think telescope). After a section is drilled the pipe must be tripped (taken out of the hole) and casing run down the hole, then cemented before the next section can be drilled or before production completion can be performed.  It was during one of the cement jobs at depth when the had a blow out (cement didn't set properly, time or composition could have been factors). 

Augustus's picture

The BOP did not explode.  It is right where is is supposed to be.  It was leaking, but that is certainly not what Simmons is implying.

Augustus's picture

the hole is filled with mud.  They trip the drill pipe out of the hole to run the casing.  Casing is open on the bottom and fills with the mud, surrounded by the mud.  Pump the cement job down the inside of the casing, through the shoe / hole in the bottom, up the back side of the casing.  Wait on Cement,   Test Cement.  Now they run the drill pipe back into the hole to the point where they want to start the seawater displacement.  they pump the seawater beginning at 8,000 ft, 3000 ft below mudline.  When the seawater goes in, the mud comes out of the casing from that point up to the top.  Displacing the mud lowers the weight and the well blows.  There is still the drill string in the casing, through the riser, BOP and wellhead, when the well blows and the BOP is shut.  Drill pipe is in about 30' sections that are screwed together.  those joining points are thicker to compensate for the threads and the weakness they may cause.  It could be that there was a thicker coupling in the BOP.  Or it could be that there was some casing moved up the hole a few feet that is also in the BOP.

ToNYC's picture

Noah Vail street cred zero; Matt Simmons large and in charge.

flagg707's picture

@Noah:  Well, I think "full of shit" is a bit overdone.  He said from day one that this was a major leak, when BP and the Coast Guard were saying it was only 1,000 barrels and day, then only 5,000 barrels a day.  He was right, they were not giving accurate information.

Simmons said that the casing was ejected up the bore hole.  BP said that was impossible.  Then gamma ray imaging done at the insistence of the US Government showed a section of casing that had been ejected.  He was right, BP was not giving accurate information.

Maybe he is wrong about the particulars or the magnitude of this supposed "oil lake" and I hope he is.  But his track record is better than BP's so far.

(edited to fix a typo)

Augustus's picture

No.  His record is NOT better than BP's.

Flow rate from simmons?

Well pressures from Simmons?

Well location from Simmons?

Those are pretty major and he is not even on the same planet.

Jim_Rockford's picture

And don't forget GOM depth!  23,000ft according to Simmons.

e_goldstein's picture

well, Simmons hasn't:

1) helped overthrow a legitimately elected government

2) committed genocide

3) caused a possible life ending event in the Gulf of Oil.

so, yeah, I'd have to say that Simmons record is better than BP's. 

Cammy Le Flage's picture

How do we know he has not done this?  That is all Big Oil does frankly? 

First There Is A Mountain's picture

So there ain't no oil on your beach, Archie?? I guess that means there was no disaster either? Problem solved <dusts hands>.

But just in case we weren't all imagining startling footage of pelicans suffocating under a viscous coat of Quaker State, can you tell us exactly what did happen? Think millions of gallons of Correxit sprayed liberally into the gusher may have done something to conceal the true nature of this disaster, er, small environmental hiccup? Kinda like Vietnam was just a police action.

Inspector Asset's picture

I suppose the clean up company plans to book a trillion is sales.

Who could be the clean up company. Oh, that would be Halburton.

Where would this country be without Halburton.

God bless Halburton

FEDbuster's picture

and Kevin Costner's miricle machine that will spin the oil from the water faster than BP and the WH can spin their lies.

Boilermaker's picture

Great, put a drop of poison in a pitcher of ice tea and drink up.

Cognitive Dissonance's picture

Would you care to share your estimate? I'm curious how you would come to this conclusion. Just some basic numbers is all I'm asking for. Thanks.

edit: Looks like Noah will disappear from junks pretty soon so I'm adding his post below so people will understand what we were responding to.

by Noah Vail
on Wed, 07/21/2010 - 16:16


denari, you are exactly right. Plus, they have captured most of the leaked oil. But, as you can see, there are a lot oil haters out there who WANT to believe that this is a catastrophe when it isn't. I've run an estimate and based on what they've spent so far, this will not cost BP more than $20 billion and probably more like $15.

  • flag as junk (13) 
  • dark pools of soros's picture

    his estimate shows BP paying for clean up with their own dying shares...  so yes.. $20.. then $15...  it is a moving number.. 

    YourAverageDebtSlave's picture

    I  was reading the  comments on the dollar estimates and was wondering how much oil are we talking about.  While I can't comment on the dollars, it was helpful for me to get an idea of how much oil we were talking about so here it goes (I did the computations in Word and Excel so I'm not sure why the weird coding langauge before my numbers):

    NY Times on June 10th had experts estimating 25k-30k of oil spewing a day.  I haven’t followed closely so I’ll use the June 10th figure to see how much has spilled.  Blast happened on April 20th.   That’s 50 days between the two dates.  From the experts estimates that’s anywhere between 1.25 million to 1.5 million barrels.  According to there’s 42 gallons of oil in a barrel. We all know what a gallon of milk looks like.  So that’s anywhere from 52.5 million to 63million gallons of oil according to experts or 1.26 million gallons a day.  And I’m sure my June 10th date is inaccurate. According to the EPA and Encyclopedia Britannica there are 643 quadrillion gallons of water in the Gulf.  This oil by my lowballed estimates is 000000008% of the Gulf's total volume.  Now is that over $20 billion dollars worth of damages.  I have no idea, but shit...that's a lot of gallons of oil.  But then again the Gulf is a lot more of gallons of water.

    SRV - ES339's picture

    CD... shame on you for finding such a sleazy way around the rules.

    So, you are a Goldman mole after all... lol!!!!!

    jeb3's picture

    Hahahahahahaha.  You're a funny guy, you

    HEHEHE's picture

    Actually that is not the case.  They've used a dispersant to try and make the oil soluble with the sea-water.   Essentially they are conducting a science experiment in the Gulf of Mexico.

    Boilermaker's picture

    I believe the contention is that the vast majority of the spill is actually below the surface.

    thesapein's picture

    edit: nm, wrong post, lost track, sorry.

    Augustus's picture

    The vast majority of the spill that was not methane has evaporated.

    thesapein's picture

    Yeah, never got that. There was never a good reason, and lots of reasons to want to gather it all up. Can we get the chemical that can pull it all back together so we can clean this mess up?

    Dapper Dan's picture

    Please define "most" as in "they captured most of the oil".

    Thanks dapper.

    flagg707's picture

    Captured "most" of the oil?  Are you high?  Please provide data to back up that assertion.

    YourAverageDebtSlave's picture

    I wanna smoke whatever he's got.  See my comment above.  Anywhere between 1.25 million to 1.5 million barrels had hit the Gulf as of June 10th according to experts estimates.

    BP came out 2 weeks later stating they had captured 348k (and knowing BP's numbers probably more like 200k).

    Unless something has magically happened in the last 30 days, I don't see how his assertion has any merit.

    First There Is A Mountain's picture

    Remind us again which Big Oil Corp pays you to troll this board??