Mr. Pickens Goes To Washington: "We Can't Drill Our Way Out"

Jul 22: The U.S. Senate Committee on Homeland Security and Governmental Affairs, Chaired by Senator Joe Liebeman (I-CT), held a hearing entitled, Energy Security: An American Imperative. The featured witness was Texas oil man, T. Boone Pickens, Founder and Principal , BP Capital, L.P., who is investing some $58 million in a massive nationwide energy education campaign, designed to educate voters and others in general public on the Pickens Energy Plan [See WIMS 7/8/08, 7/10/08].

The down home, straight-forward Texas style and Pickens' fascinating mastery of global energy statistics and markets captivated the Republican and Democratic Committee members, and should be "must see viewing" for all energy advocates and managers. The other witnesses testifying at the hearing included representatives from: Institute for the Analysis of Global Security; Smart Growth America; and the Advanced Structures and Composites Laboratory, University of Maine.

According to Pickens, "America is in a hole and it's getting deeper every day. We import 70% of our oil at a cost of $700 billion a year - four times the annual cost of the Iraq war. I've been an oil man all my life, but this is one emergency we can't drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil. On January 20, 2009, a new President gets sworn in. If we're organized, we can convince Congress to make major changes towards cleaner, cheaper and domestic energy resources."

The crux of the Pickens Plan is to ease energy pressures now, by constructing massive wind facilities, particularly in the Midwest plains states (Texas to North Dakota) and switching to Natural Gas Vehicles (NGV). He says it can be done in less than 10 years, will reduce imports by 38% and $300 billion per year, and will allow time -- 20-30 years -- for further developments of other energy sources. Pickens readily admits, that in addition to his plan, he's in favor of developing all "American" energy resources including the outer continental shelf, ANWR and "anything American." He said, "I only have one enemy -- that's foreign oil. By 2050 we have to be off of hydrocarbons. . . as our primary transportation fuel."

Pickens told the Committee, "And the price of oil will go up further. Over the next 10 years, you’re looking at exporting $10 trillion out of this country. It will be the greatest transfer of wealth from one country to other parts of the world in the history of mankind. It is a clear and growing threat to our national security, and our national economy. It has to be stopped. We are on the verge of losing our Super Power status. It’s time to quit the blame game, and look for solutions and leadership to solve the problem."

Pickens said the world produces 85 million barrels of oil a day, or more than 30 billion barrels of oil a year. He said he believes production has peaked, and the world’s current oil fields are declining at the rate of 8 percent a year. "The simple truth is we’re never going above 85 million barrels per day of oil production." The U.S. consumes 25 percent of the world’s oil, with only 4 percent of the world’s population. Pickens asks: "And what’s going to happen when you’re dealing with a supply plateau at 85 million barrels and increasing demand as the Chinese, Indians, and rest of the underdeveloped countries around the world continue to use more and more oil?"

The part of the Pickens Plan that Members found most interesting, even surprising, was his analysis of the natural gas markets. Pickens said, "We have approximately 80 years supply of natural gas available to us from sources in North America. Domestic natural gas reserves are twice that of petroleum. And new discoveries of natural gas and ongoing development of renewable biogas are continually adding to existing reserves., In fact, 98% of the natural gas consumed in the United States is produced in the US and Canada. On the economic side of natural gas, Pickens said, "One million cubic feet (MCF) of natural gas equals 8 gallons of gasoline. At $4 dollars a gallon for gasoline, that means an MCF of natural gas is worth $32 dollars. And natural gas is selling today around $12 dollars an MCF." He said, "I almost hate to tell you this but natural gas is cheap compared to other fuels."

He says, "If we take the natural gas we would be using for electrical generation to meet new demand and replacement of existing plants and move it to transportation, we can replace 38 percent of our foreign oil imports. And that, sports fans, is a real number." He indicates that using natural gas for transportation is not a new idea. While there are only 150,000 vehicles running on natural gas in the U.S., there are nearly 8 million automobiles worldwide and that number is growing rapidly. There are numerous manufacturers of natural gas vehicles for the world market, including Ford, Honda and General Motors. He said the technology is sound, proven and off-the-shelf. He said, "I know they [American auto companies] know how to make them. . . they're already doing it."

He says getting from here to there takes political will. "I know that we can do this because we’ve done it before. President Eisenhower led us to build an extraordinary interstate highway system. President Kennedy took us to the moon. And President Reagan led us to win the cold war." He said Congress needs to mandate that government transportation fleets be powered by natural gas vehicles. He said with that as a start, the automobile companies will respond and the private sector and local governments will follow with similar fleet conversions. He said individual consumers will simply have a choice among many options, i.e. gas, natural gas, bi-fuel, electric, hybrid, plug-in, etc. Pickens said the other major government action needed is to commit to a 10 year extension for the Production Tax Credit (PTC), which will cost of approximately $15 billion per year. But, he said compared to exporting $700 billion to foreign government for the price of oil, it a relatively modest investment.

The other benefit of his Plan is the rural economic development spin-off. Pickens says the investment in wind energy will stay in American and help poor rural economies by creating jobs.He said, "My company, Mesa Power, just put under contract with GE the largest single turbine order that has ever been given. The first phase of the Mesa Pampa Wind Project will be capable of generating 1,000 megawatts of electricity, enough for 300,000 average U.S. homes. When we complete the entire project, it will have the capacity to generate some 4000 megawatts and will have cost close to $10 billion. The project will provide 1,500 jobs and over $385 million in economic benefits to the community.

Access the hearing website for links to all testimony, opening statements and a webcast (click here). Access the NGVAmerica website for extensive information on natural gas vehicles (click here). Access the Pickens Plan website for complete information including videos and information on "pushing the plan" (click here). [*Energy]