June 2009

Cover Story

The last crusade

Legendary oilman T. Boone Pickens is on a quest to convert how America propels its economy

FAST FORWARD

  • Of the total energy used in the U.S., 84% of it comes from fossil fuels.
  • Pickens sees natural gas as the heart of The Plan-followed by wind power.
  • Farmers can earn between $5,000 and $15,000 per windmill, per year.
  • A home fueling device lets people fill up at home from their natural gas line.
 
By Keith Schmitz

The issue of energy, what it costs, what it is going to take to find more of it, and what it is doing to the planet is a hot topic. So hot that there are a million voices clamoring with solutions about how America can change its energy consumption habits and wean itself off foreign oil.

Some have sounded the warning against the status quo around the climate change issue, but up until now, no one has laid out a blueprint that has gotten much notice on how to get to self-sufficiency. However, when you have a personal fortune of $4 billion like 80-year-old oilman T. Boone Pickens, chances are folks are going to listen to you.

last1

In July 2008, Pickens announced his Pickens Plan that teams up natural gas and wind power. Pickens believes he has the money, expertise, and arm-twisting ability to get it done. As Pickens put it to Charlie Rose on "60 Minutes," "my father told me 'a man with a plan can beat a genius with no plan.' "

As long as the U.S. controlled the source for oil, the public put little thought into where their next fill-up was coming from as they pulled into their full-service gas station. Then in the 1970s, the country learned of a new four-letter acronym-OPEC, the Organization of the Petroleum Exporting Countries.

In the organization, the oil-producing countries found muscle and they flexed it, reducing output at will for political reasons and recently out of concern that the world is reaching peak production.

Whether or not we are at that point is a topic of debate, but the dynamic growth of third world countries has certainly created a demand, which until the recent economic downturn had driven up the cost of oil to the point where gasoline in the U.S. climbed to over $4 a gallon.

Energy plays a major role in the U.S. economy. For a country with an estimated gross domestic product for 2008 of $14.3 trillion dollars, Pickens puts the amount of imported oil at $700 billion, though the U.S. Department of Energy sets the figure at $327.8 billion. Of the total energy used in this country, 84% of it comes from fossil fuels, for transport, industrial, and domestic use. The balance comes from primarily hydroelectric and nuclear power stations.

Having been in the oil business for the past 60 years, Pickens is well acquainted with the U.S. energy market, and he has gotten behind The Plan with a media blitz that rivals a national presidential campaign. In fact, his commercials, part of the $58 million campaign funded out his own pocket, were audaciously running simultaneously with Senators John McCain and (now President) Barack Obama's spots on all media.

Fueling The Plan itself goes beyond Pickens' money and involves canny grassroots and "netroots" organizing. Everywhere he appears, he urges people to go to his site to become part of his New Energy Army. Pickens has appeared in virtually every broadcast and print medium. He recently was on "The Daily Show" appealing to Jon Stewart's youthful audience to join his movement and garnered wild applause.

Supporters and critics of The Plan come from unlikely places. Senator Harry Reid (D-NV) told "CBS News," "Here is a man who was my mortal enemy. He's my pal now." Carl Pope came on board at the onset, proclaiming in The Huffington Post, "To put it plainly, T. Boone Pickens is out to save America."

Some conservationists slam The Plan for its reliance on natural gas, replacing one fossil fuel for another. Many conservatives are uncomfortable with the role government plays in the proposal.

Recent financial conditions have lessened the impetus for The Plan. Much of the economic propulsion to consider a switch over to natural gas and wind power has been the steep rise in the cost of energy. Recently, the price of gas slid below $2 per gallon in the U.S. Not only has the drop made alternatives less attractive, but also the failing economy, which led to the decline, is affecting Pickens.
Tightening credit has led Pickens to scale back on his multi-billion dollar Pampas Wind Project. Half the investors asked to withdraw their money.

However, if Pickens has one quality it is tenacity. As he told Tom Brokaw on "Meet the Press" about his wind project, "I had planned on 30% equity, 70% debt, and I can't get any, any, any money for that at this point. But it doesn't mean that's the end of it. It's been postponed is all it is."

In addition, Pickens also knows how to make connections, which he has with the Obama administration. White House Chief of Staff Rahm Emanuel in an interview posted on the Pickens Plan web site expressed his agreement with The Plan.

No matter what the outcome of America's energy future, with Pickens' experience in making money and finding oil, his billions in personal fortune and the millions in his Energy Army, his influence on this issue cannot be ignored, and he is sharpening national attention on the energy issue.

ABOUT THE AUTHOR

Keith Schmitz (Schmitz1@ameritech.net) is a business-to-business and technology writer based in Milwaukee, Wis. He writes on a range of topics including electronics, HVAC applications, use of lean/Six Sigma/TRIZ techniques, and hydraulics. He works in supply chain and material handling, manufacturing, mining, construction, and medical industries. AutomationDirect (www.automationdirect.com) contributed this article to InTech.

Mining the nation's sweet spot for energy

Experts say the bleak expanse of west Texas is the nation's wind energy sweet spot, with a near-constant wind speed of 17 mph, underused transmission lines, wide-open spaces, and friendly landowners.

On many Texas farms, windmills jut out among the grazing livestock. Farmers in some places can earn between $5,000 and $15,000 per windmill per year, funded by a company called Airtricity out of Dublin, Ireland.

Until now, the Horse Hollow Wind Energy Center in Texas holds the record as the largest wind farm with a generating capacity of 585 megawatts. But of course T. Boone Pickens is looking to top that with his Pampas Wind Project, funded through his Mesa Power Company.

He plans to make an initial $2 billion purchase of 667 GE wind turbines, part of a four-phase project that will eventually approach a $12 billion investment to produce 4,000 megawatts. In the entire country, a total of 5,200 megawatts of new wind power came online last year.

Of course, GE, the world's second largest wind turbine manufacturer, is happy with the push from Pickens. GE's chair and Chief Executive Jeffery Immelt proclaimed, "We're excited to partner with an energy visionary like T. Boone Pickens to bring our wind technology to the marketplace."

What are the odds that wind power can play a significant role in the U.S. energy picture? Currently wind provides just 1% of this country's electricity. The U.S. Department of Energy estimates by 2030 as much as 20% of the nation's electricity could be wind-produced, thus reducing CO2 emissions by 825 tons annually. Pickens wants to reach that goal faster-in 10 years-to replace the natural gas power plants in use now.

Not only must we make the electrical grid bigger, but also better. Al Gore has pointed out the grid is obsolete and based on 1950s technology. According to Kurt Yeager of the Galvin Electricity Initiative, using wind power and throwing in solar at the same time needs a smart grid system so that when one power source is dormant, the other is available. "The sun doesn't always shine, the wind doesn't always blow.

"The ability to accommodate that kind of intermittency is not possible, unless we have large quantities of backup power or storage."

But of course, much of the utilization of wind power is dependent right now on federal tax credits and based on the price of other forms of energy. Along with putting up the money to increase wind-generating power, Pickens is also seeking to generate political power through his connections and his grassroots "Energy Army."

 

Pumping up on CNG

The prominent role natural gas plays in the Pickens Plan as a replacement for gasoline in internal combustion engine-powered vehicles is a pet project for T. Boone Pickens dating back to the late 1980s.

However, before this country tells the Saudi royal family thanks but no thanks for their oil, the U.S. has a long way to go before more than just a handful of drivers fuel up on compressed natural gas (CNG). In the U.S., there are 250 million registered gas-burning vehicles-almost one per person. By contrast, just 150,000 vehicles currently use natural gas.

Chances are few people have actually laid eyes on a CNG powered car let alone own one, and that one would only be the Honda Civic GX. Driving one of those cars means hunting for one of the just 1,200 natural gas stations nationwide, versus the 100,000 gas stations across the country.

Through his Clean Energy Fuels Company, Pickens intends to literally prime the pump by building an additional 35 to 40 stations. To further facilitate putting a natural gas car into the country's garages, Pickens bought a company that sells a home fueling device called Phill, which lets people fill up at home from their natural gas line at an additional $3,500 for the machine and another $500 to $1,000 to install.

Critics maintain Pickens' idea is just replacing one fossil fuel with another, and the focus should be on developing hybrids now and electric powered vehicles over the long run. Pickens counters the real place for CNG is in heavy-haul trucks, "and that you can't run an 18-wheeler on a battery." He continues, "There are only three fuels that will move an 18-wheeler: diesel, gasoline, and natural gas. We don't have diesel and gasoline, but we do have natural gas. A battery won't move an 18-wheeler. So I want to see all of the trucks, all new trucks, not retro-fit trucks, but all new trucks go to natural gas."

Yet in other places, natural gas powered vehicles are catching on with drivers. Italy and Canada boast the most CNG-friendly infrastructures.

The developing world seems to be the most interested. The number of natural gas cars will triple in Thailand in the next four years. Pakistan, Brazil, and Argentina each have 1.5 million CNG powered vehicles on the streets.

Moreover, when the natural gas stations proliferate, so do the number of natural gas powered cars, as in Utah. Right now, there are 6,000 proud owners of natural gas vehicles in the state, with several hundred joining their ranks every month.

 

The basics of the Pickens Plan

Pickens in his opening statement on the Pickens Plan said, "America is blessed with the world's greatest wind power corridor and abundant reserves of clean natural gas.

"The Pickens Plan will utilize these tremendous resources to build a bridge to the future, a blueprint to reduce foreign oil dependence by harnessing domestic energy alternatives and buying time for us to develop even greater new technologies."

The Pickens Plan lays out how we can cut oil imports in half.

1. Replace petroleum with natural gas in road vehicles.

Pickens believes the amount of natural gas already available in this country would reduce imported petroleum to 38% of the total oil used in the U.S. To accomplish this part of the plan, a significant portion of the cars used in this country and other vehicles would have to switch over to natural gas.

Pickens sees natural gas as the heart of The Plan, touting it as being cleaner than gasoline, letting out 30% fewer emissions and more readily available, with 98% of the natural gas used in the U.S. coming from North America.

2. Replace the natural gas used in power plants with wind power.

Part of the natural gas supply would come from replacing its use in generating electricity with windmills, funded by private investors. A forest of wind turbines would provide electrical power to the Midwest, South, and Western parts of the country.

3. Build new infrastructure to distribute wind generated power.

All electricity users would pay for power transmission lines to connect the windmills to the power grid at a cost of between $64 billion and $128 billion. Pickens compares building these new power lines to President Dwight Eisenhower's call for a national highway system in the 1950s based on Cold War defense needs.

To make this plan happen, Pickens has to depend on the stars aligning in the areas of technology, business, economics, and public opinion.

 

RESOURCES