Thursday, January 16, 2014

Pickens Plan

40 Years in the Energy Desert

The following article about U.S. energy policy by T. Boone Pickens was published at RealClearPolitics.com on January 16, 2014.

When we were children we learned, from Exodus, about the Children of Israel wandering in the desert for 40 years. When we were children, 40 years seemed like, well, a lifetime.

I’m 85 and 40 years still seems like a lifetime.

But it has been over 40 years since President Richard Nixon addressed the nation on the need for a national energy policy. That was on Nov. 7, 1973, during the Arab oil embargo precipitated by war in the Mideast.

“By the end of this month, more than 2 million barrels a day of oil we expected to import into the United States will no longer be available,” the president said, speaking from the Oval Office. “Our supply of petroleum this winter will be at least 10 percent short of our anticipated demands, and it could fall short by as much as 17 percent.”

If ever there was a chance to develop and implement a wide ranging energy policy, that was the time. But the Watergate scandal intervened and, as has happened so many times since, a national energy policy got pushed — not just to a back burner, but completely off the stove.

Forty years and seven presidents later, we are no farther along with a cohesive energy policy than we were when Richard Nixon delivered that speech. In fact, we may be worse off. Energy leadership in our government is more fragmented today than ever.

Fast-forward to Jan. 24, 2012, when President Obama made energy a major point of his State of the Union address. “Imagine,” he said, “a future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world.”

That was nearly four years after I announced the Pickens Plan to get America off OPEC oil and onto our own resources. When the plan was announced, natural gas was still seen as a semi-precious resource, with the price of natural gas sold to electric companies that summer at a peak of $12.60 per thousand cubic feet. There was more demand in the energy sector and in the bio-chemical sector than we had reserves to meet.

I was then big into wind and solar as a way to generate electricity and free up natural gas for better uses. I liked wind and solar because the potential is huge and because they are priced on the margin — that is, you can charge the same amount it would cost an electrical generation company to use natural gas.

A year later, the Potential Gas Committee issued its biennial report and, for the first time, included what it called “unconventional” gas reserves. Those are what we now call “shale gas” reserves. The production of natural gas went through the roof and the price dropped through the floor. The development of horizontal drilling and fracturing techniques had unlocked oceans of natural gas under the continental United States.

According to the Energy Information Agency of the Department of Commerce, the price of natural gas to power companies in November 2008 was $6.66 per thousand cubic feet — nearly half the price it had been. Between the drop in natural gas prices and the recession, solar and wind development came to a screeching halt.

Many players in the oil and gas industry saw this as a terrific opportunity to keep us from returning to the situation that President Obama had described as being dependent on “unstable parts of the world” to meet our energy needs.

Domestic oil production has increased to the point where one of the responses to the oil embargo — a ban on exporting oil — is now seen as unnecessary and unwise. There are serious discussions of slowly feeding oil in the Strategic Petroleum Reserve into the world markets. Major retailers, express and telecommunications companies, and long-haul trucking companies are actively purchasing natural gas-powered trucks.

One manufacturer, Freightliner, calculates that a small trucking firm with 10 over-the-road trucks traveling 50,000 miles a year, would save almost $192,000 in fuel costs for each truck, every year.

To move that process forward, state after state is changing its tax rules and other regulations to bring natural gas in line with diesel. When I started the Pickens Plan, I made the mistake of looking to Washington to implement the modest changes that would alter the course of energy in the United States.

What I found was there was no person, department or agency in control of our energy policy at the federal level. The Departments of Energy, Defense and even State have a say in everything from carbon emissions to the Keystone XL pipeline. And they all take their cues from the White House.

With this in mind, American businesses and state governments have taken the map of our energy future into their own hands.

Read the article at RealClearPolitics HERE.

Pickens Plan

America’s 2013 Energy Report Card

Some good news!

This week the Energy Information Administration released final oil import numbers for 2013. Thanks to advances in domestic production and greater efficiency, Americans managed to decrease total oil imports by 360 million barrels to 3.5 billion barrels in 2013, down from a total of 3.9 billion barrels in 2012.

Guess what that means? We spent $50 billion less on imported oil in 2013 than we did in 2012. Last year’s total tab for imported oil was $384 billion. That’s right. Compare that to 2012 when we spent $434 billion on imported oil. We keep more of our energy dollars here at home instead of spending them overseas.

Now the bad news. Spending $384 billion on imported oil is nothing to brag about. To put that figure in perspective, $384 billion is roughly equivalent to the entire U.S. trade deficit. And it’s more than half our national defense budget (which, as we all know, is spent to a large degree on securing access to foreign oil).

Friday, January 10, 2014

Conversations

Why I’m for Lifting the Ban on Crude Oil Exports

Forty years ago, the Arab Oil Embargo changed the way America thinks about energy. After finding ourselves at the mercy of a bunch of oil states, we panicked. The government put price controls in place, the Strategic Petroleum Reserve was launched, and all oil exports were banned.

Thanks to recent breakthroughs in technology, however, our country’s energy picture has taken a dramatic turn for the better. The U.S. now imports about half the oil it consumes - some 8 to 9 million barrels a day - and we export more than 3 million barrels of oil products, such as gasoline and diesel, every day.

Does it make sense for us to ban oil exports at the same time we’re shipping millions of barrels of oil products overseas? It might be time to revisit that policy.

Sunday, January 5, 2014

Pickens Plan

Los Angeles Times Chronicles Switch to Natural Gas

Boone Pickens has long touted the many advantages of using domestic natural gas as a transportation fuel. According to the Los Angeles Times, a host of U.S. companies now agree with the legendary energy investor.

Frito-Lay North America Inc., Proctor & Gamble Co. and United Parcel Service Inc. are among the companies expanding their natural gas fleets. Trucking companies such as Ryder System Inc. are increasing their number of natural gas vehicles as well, while energy firms are busily building up the infrastructure for natural gas in the U.S.

Home improvement chain Lowe’s Cos. got into natural gas in 2012, initially running natural gas trucks on a few routes in California, Texas and Florida, said Steve Palmer, the company’s vice president of transportation. In October 2013, the company launched its first dedicated natural gas fleet at a distribution center in Mount Vernon, Texas. There are plans underway to switch its trucks to natural gas at all 15 regional distribution centers by 2017.

Why have so many companies switched to natural gas-powered vehicles? It’s simple: price. “Over the last two years, its price at the pump has hovered from $1.50 to $2 per equivalent gallon below the price of diesel, according to the U.S. Energy Information Administration.”

“You’re at a tipping point now. Natural gas is 75% cheaper than oil. It’s cheap, clean, abundant and domestic,” Pickens said.

Read more HERE.

Thursday, December 19, 2013

Pickens Plan

We’re Getting There!

For the first time since the launch of the Pickens Plan in July 2008, oil imports accounted for less than 50 percent of the total U.S. monthly supply. Figures released this week indicate that only 47 percent of the oil used in the U.S. in November came from overseas.

Unfortunately, those 281 million barrels of imported oil cost on average more than $107 per barrel, which means our total tab for imported oil was in excess of $30 billion!

Specific figures on OPEC oil lag several months behind. The most recent stats indicate that in September 39 percent of our imported oil came from OPEC countries. So even as oil imports have declined, the distribution of import sources has remained about the same.

Monday, December 16, 2013

Pickens Plan

Energy Department Forecasts Natural Gas Boom

The federal government predicts that America’s natural gas production will continue to escalate for decades to come. “Natural gas production will grow steadily, jumping 56% from 2012 to 2040, according to an early release of an annual report by DOE’s Energy Information Administration,” writes Wendy Koch in USA Today.

Just as Boone Pickens predicted, America’s abundant energy resources are creating a completely different economic outlook for the U.S. Natural gas is on track to replace coal as the country’s leading source of electric power, and crude oil production will soon exceed the record level set in 1970.

“Advanced technologies for crude oil and natural gas production are continuing to increase domestic supply and reshape the U.S. energy economy as well as expand the potential for U.S. natural gas exports,” Adam Sieminski, EIA Administrator, said in releasing the Annual Energy Outlook 2014.

Read more HERE.

Saturday, December 7, 2013

Pickens Plan

China Acquires 25% Stake in Iraqi Oil Field

T. Boone Pickens has long stated that the country with the best energy policy is the People’s Republic of China. With 1 billion more citizens than the U.S., China and its leaders recognize the importance of putting a plan in place for its citizens - and its security. Chines state-owned companies are constantly scouring the globe to secure food supplies, raw materials, and energy.

Another example of this took place in late November when it was announced that PetroChina acquired a 25 percent stake in Iraq’s West Qurna-1 oilfield from a subsidiary of Exxon Mobil Corp.

West Qurna is one of Iraq’s largest oil fields and is believed to hold 43 million barrels of recoverable reserves, making it the second largest field in the world after Saudi Arabia’s Ghawar oil field. The WQ1 oilfield is located about 50 kilometers to the northwest of Basra and close to the north of Rumaila field where PetroChina is operating in Iraq.

Read more HERE.

Friday, December 6, 2013

Pickens Plan

Utility Abuse Shortchanges Consumers

The following op-ed by T. Boone Pickens ran in the Statesman-Journal on Friday, December 6:

Since adoption of the Public Utility Holding Company Act in 1935, a compact has existed between utility companies and the citizens they serve: The company gets a monopoly within their area, and, in return, must provide service to everyone at government-approved prices that allow the company to recoup capital and operating costs and also earn an agreed-upon profit.

This basic arrangement for government-sanctioned monopolies has been applied for decades to cable television, electricity, home telephone service and natural gas companies. Customers – or “ratepayers” – are guaranteed access to services at a regulated price, and monopoly companies are guaranteed a profit.

Regulated monopolies are not ideal – robust competition is much better for consumers – but with government oversight to keep companies “in their lane,” such arrangements have served consumers reasonably well. Problems can arise, however, when monopoly companies veer outside their lane and expand into other, already-competitive industries, ultimately undermining the very competition that benefits consumers. You see, these companies have a big edge over businesses that don’t enjoy the luxury of a guaranteed profit. With that kind of uneven playing field, competition and consumers’ choices rapidly dwindle and disappear, and the monopoly company is soon the only choice left.

Unfortunately, Northwest Natural (NWN) – the natural gas utility – is petitioning the Public Utility Commission to allow the company to expand its monopoly beyond delivery of natural gas to homes and businesses to the operation of compressed natural gas (CNG) vehicle fueling stations – a prospect Oregonians should view with great skepticism.

While NWN’s guaranteed profit creates an obvious income advantage, it also means NWN doesn’t face risk the way other companies do. For most companies, investment decisions are critical to success or failure. But NWN is protected from risk by the safety net of its ratepayers.

Setting aside the guaranteed profit, NWN’s natural gas monopoly impedes competition in other ways. NWN buys natural gas from suppliers at low wholesale prices but companies operating CNG fueling stations in Oregon are required to buy natural gas from NWN at retail prices. This requirement ensures NWN will profit from every CNG station in the state – including “competing” stations – while also guaranteeing the monopoly the ability to undercut competitors’ prices at the pump.

Thursday, December 5, 2013

Pickens Plan

U.S. Merchant Fleet Switching to Natural Gas

America’s shale gas revolution is transforming the way our country powers itself. Now that transformation is re-shaping the shipping industry. The global fleet of 42 LNG-powered ships will almost triple in 2014, and it’s expected to increase 42-fold to almost 1,800 vessels by 2020.

This sort of shift is attracting interest from numerous stakeholders, including shipping companies, energy companies, and engine manufacturers.

“We truly believe the age of gas is here,” said Mike Hosford, GE’s general manager for unconventional resources, based in Houston. “The industry needs bigger players to step in and start helping to build out the infrastructure.”

New Jersey-based TOTE Inc. has ordered the biggest vessels to date, two container ships for delivery in 2015 and 2016.

“Within the next five to 10 years, LNG will become the main fuel source for all marine transportation,” said TOTE CEO Anthony Chiarello, who says he gets at least half a dozen calls a week from other owners asking about the fuel. “It’s going to catch on. When those ships are actually plying the seas and people are then able to calculate the emissions impact and the possible cost savings, they can do all that math and say, ‘This is really a good decision.’”

Read more HERE.

Wednesday, December 4, 2013

Pickens Plan

Ford Now Manufacturing CNG-Ready F150s

Momentum continues to build for natural gas-powered vehicles as a convenient fueling choice.

According to AutoBlog, the nation’s leading truck manufacturer, Ford Motor Company, began production of the 2014 F-150 with the ability to run on compressed natural gas, making Ford the only manufacturer with an available CNG/LPG-capable half-ton pickup.

Ford is now building the CNG F-150 at its Kansas City, MO, factory with a 3.7-liter, V6 engine with a factory-installed, gaseous-fuel prep package that can run on either natural gas or gasoline. When it comes equipped with a bi-fuel CNG/LPG engine package, the F-150 can travel more than 750 miles on the combined gasoline and CNG tanks.

Read more HERE.

Monday, November 18, 2013

Pickens Plan

October’s Energy Report Card

When it comes to America’s Energy Report Card, October was a mixed bag.

The big news is that the United States produced more of its own oil here at home than we imported from other countries. That’s not good news. That’s great news. The last time this occurred was during Bill Clinton’s first term in office back in February 1995.

But the bad news is we still imported 300 million barrels of petroleum in October at an average price of $109 per barrel. That means roughly $32.7 billion that could have been put to use here in our economy - creating jobs, spurring growth, and financing research and design - was shipped overseas. All told we are on track to spend $400 billion on imported oil in 2013.

And the biggest chunk of that goes to OPEC countries. The most recent figures on our OPEC imports date back to August when we imported 121 million barrels of petroleum from OPEC at a coast of $13.5 billion.

Isn’t it time America got the energy plan it deserves?

Saturday, November 16, 2013

Pickens Plan

President’s Weekly Address Focuses on Energy

In his weekly address Saturday morning, President Obama singled out how the nation’s economy has been strengthened and bolstered by the increased production of energy here in the U.S.

We produce more natural gas than anyone – and nearly everyone’s energy bill is lower because of it.  And just this week, we learned that for the first time in nearly two decades, the United States of America now produces more of our own oil here at home than we buy from other countries.

President Obama also pointed out the strategic importance of these developments.

That’s a big deal. That’s a tremendous step towards American energy independence.

The President summed up his speech by pointing out the many benefits of continuing to develop America’s abundant energy resources:

More good jobs. Cheaper and cleaner sources of energy. A secure energy future. Thanks to the grit and resilience of American businesses and the American people, that’s where we’re heading.

Watch the President’s Weekly Address HERE.

Friday, November 15, 2013

Pickens Plan

Natural Gas Fulfills the Promise of Energy Independence

Today’s Houston Chronicle features an op-ed that echoes key elements of the Pickens Plan by extolling the opportunities presented by the shale gas revolution:

The modern natural gas boom has given the United States a chance to achieve genuine energy independence and seriously cut down on carbon emissions.

The Chronicle gives an excellent overview of the drivers propelling America’s new energy economy:

Over the last decade, energy entrepreneurs have made major advances in two well-established resource development technologies - horizontal drilling and hydraulic fracturing, or “fracking.” These techniques have enabled a surge in domestic natural gas production, particularly in underground shale formations that had previously been too difficult to develop. Between 2008 and 2012 alone, American gas production jumped 600 percent.

T. Boone Pickens has repeatedly pointed out that America’s vast energy reserves coupled with breakthroughs in new technology can power the nation’s economy out of the Great Recession. One of the best testaments to this prediction has been the strength of the Texas economy in general and Houston in particular, a story The Chronicle knows well:

Texas is the leading producer of natural gas in the United States, accounting for 28 percent of total national production. And here in Houston, the growing supply of low-cost gas has fueled massive economic gains. Dow Chemical just announced a billion-dollar expansion plan expected to create thousands of new positions. And the Port of Houston has benefited from $80 billion in new regional investments in the petrochemical industry.

Read more HERE.

Thursday, November 14, 2013

Pickens Plan

U.S. Crude Production Exceeds Imports in October

New technology has fueled a domestic oil boom of such great proportions that the Energy Information Administration now reports that the U.S. is producing more crude oil than it is importing.

EIA, the Energy Department’s nonpartisan statistical arm, said U.S. crude oil production averaged 7.7 million barrels per day in October while 7.6 million barrels per day were imported. In addition, EIA said total net petroleum imports, which includes products like gasoline and diesel, were at the lowest point since February 1991.

According to the Energy Information Association, the U.S. is on track toward meeting all of its energy needs from domestic sources by 2035.

EIA spokesman Jonathan Cogan said the uptick in U.S. production “has been primarily driven by development of crude oil resources in shale and other tight rock formations, especially in North Dakota and Texas.”

Read more HERE.

Wednesday, November 13, 2013

Pickens Plan

Price at the Pump Drops as Domestic Production Surges

The Wall Street Journal is reporting that gas prices are at a 33-month low “amid a boom in domestic drilling.”

Tuesday’s national average price of $3.18 a gallon—26 cents below a year ago—was the lowest since Feb. 22, 2011, when it was $3.17, according to AAA, which tracks daily gas prices. The automobile club predicted that the national average could fall close to $3 a gallon by year’s end because of abundant supplies, declining seasonal demand and lower crude-oil prices.

Moreover, consumers in several states are seeing prices drop below the all-important $3.00 mark.

Drivers in six states were paying an average of less than $3 Tuesday, including Texas, Louisiana and Missouri, the state with the cheapest gasoline, just $2.81. Drivers in 11 other states were enjoying prices of $3.10 or less, including Iowa, Indiana, Minnesota and Ohio.

From a national standpoint, the average price per gallon hasn’t fallen below $3 a gallon since December 2010, according to the Journal.

Read more (subscriber content) HERE.

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