- The Washington Times - Monday, July 20, 2009

Texas oilman T. Boone Pickens is a surprising convert to alternative energy and an unlikely wind-power proselytizer, but he is ramping up his campaign to cure the nation’s energy dependence in the face of skeptics who say the effort is too ambitious.

Worried by the massive transfer of wealth to foreign and often unfriendly nations, the Texan last July proposed the Pickens Plan, a rapid national move to wind energy, with a decade’s detour to natural gas, which would serve as a clean “bridge fuel” until we reached the promised land of wind power.

He has been using his considerable influence and money from five decades in the oil industry to persuade Congress to pass legislation encouraging natural gas use, with ranking members in both chambers supporting him.

“Every time you lower that $500 billion we spend on oil, it’s good,” Mr. Pickens said. “People tell me we need to spend more on infrastructure. The infrastructure will come. We’re making that big bill cheaper. Do that, and you create jobs. ”

As he canvasses the country for support, Mr. Pickens has talked more about job creation since last fall’s financial meltdown. The 81-year-old runs quickly through his plan’s other pillars: creating incentives to use natural gas, developing natural gas as a bridge fuel, obtaining up to 22 percent of U.S. energy from wind, and improving the electrical grid.

However, critics say Mr. Pickens’ plans are more of a utopia than a promised land: desirable, eventually necessary, but too much, too soon.

“This [Obama] administration told us to throw fistfuls of dollars at an inefficient energy source with no [profit] margin,” said Stephen Schork, a commodities trader in Philadelphia. “And the dollars will be gone, and energy prices will go back to the stratosphere.”

Mr. Schork said that he is excited about natural gas but that too quick a move to alternative energy “will leave us tilting at windmills.”

“Whether wind or solar is economically viable remains to be seen,” Mr. Schork said. “I wasn’t a believer in the Bush administration’s ethanol push, but all options were open. This administration just seems against oil and gas.”

Blowing in the wind

Mr. Pickens is having trouble installing the transmission lines he needs to carry the power from his wind-farm complex in West Texas after a court denied him eminent domain to string the power lines across residential property.

“It’s been a transmission problem,” Mr. Pickens said. “The transmission lines we thought we’d have won’t be up till 2013.”

Mr. Pickens said he doesn’t “have a garage big enough” to store the turbine blades due to arrive at the site in 2013, meaning it makes economic sense to go ahead with the projects and hope for better luck with the power lines later.

The American Wind Energy Association (AWEA), an interest group in the District, gave the nation’s wind-energy developments a grade of B overall for 2008, but a C- for transmission-capacity growth. If wind-energy producers can’t get the power to markets, power companies can’t use it, and enthusiasm for new projects will fade.

Christine Real de Azua, spokeswoman for the AWEA, said the United States needs to develop a better interstate system of transmission lines.

“It’s still very balkanized and needs a stronger backbone to link everything,” she said. “And we need more money to make it easier for the private sector to raise capital.”

For wind energy on the whole, however, 2008 was a landmark year. While proponents hoped to bring 4,000 megawatts of new capacity online (about as much as a single nuclear plant, or the output of Mr. Pickens’ stalled wind complex), companies actually added 8,500 megawatts, according to the AWEA. The group admits the growth rate will fall in 2009 but will still exceed projections by 20 percent.

“It’s because of the overall economic downturn, making it difficult to raise capital, and the market - including alternative energy - just hasn’t been picking up either,” said Ms. Real de Azua.

Groups like hers are hoping the climate-change legislation, passed by the House and now before the Senate, includes short- and long-term renewable-energy standards to require increased investment, rather than “watered-down” provisions currently in the bill. That’s especially necessary after the financial downturn decimated the tax-credit alternative on which energy companies relied, using the windfall to fund their new turbines. Now those companies need more government grants.

“These stimulus funds, and the funds in the coming climate legislation, are seed money that will just help raise capital,” Ms. Real de Azua said. “And a long-term policy will also help. The policy can help what’s happening in the market.”

General Electric Co. executives agreed in testimony before the Senate Environment and Public Works Committee on Thursday.

“It would take a 12 percent renewable electricity standard by 2012, with reasonable percentages to be satisfied by energy efficiency measures, to enable U.S. wind deployments to continue on the current growth trajectory,” said GE Vice Chairman John Krenicki. “Such a standard would also help drive dollars to small companies and developers waiting for stimulus checks to begin rolling out, and help sustain a domestic industry that cannot wait for longer-term carbon legislation to come into effect.”

GE manufactures wind turbines for wind farms in North America, Europe and China.

Natural gas fuels Pickens’ hopes

While wind projects have been hampered by a lack of transmission capacity, Mr. Pickens is ecstatic about natural-gas discoveries in the past year. He noted that known domestic natural-gas reserves have risen from 200 trillion to 2,000 trillion cubic feet, thanks to new methods of fracturing the shale that traps the gas, and horizontal drilling that allows companies to tap more trapped reserves with each well.

“These new reserves are unbelievable - that discovery is the biggest break this country has got in my lifetime,” Mr. Pickens said. “Don’t worry about the wells; private industry will bring them in. Natural gas is cleaner. It’s cheaper. It’s 130 octane; you can clean it up with a simple separator, and it’s ready to go. Oil needs a refinery.”

Experts say the new discoveries like the Haynesville Shale in Louisiana and developed fields such as Barnett in Texas, Woodford in Oklahoma, Marcellus in Appalachia and Fayette in Arkansas were thought too expensive to access until the new methods were developed.

Shale’s structure holds natural gas well but doesn’t allow fluids to flow through it easily, explained Don Goddard, a professor of research at the Center for Energy Studies at Louisiana State University. However, new methods allow drillers to get to the gas by pumping a mixture of gel and water, called slick water, into the shale.

As energy giant Exxon Mobil Corp. begins to explore the massive Horn River Basin field in Alberta, Canada, Mr. Goddard said smaller producers can outperform larger competitors even when prices are as low as they are now. Some experts expect natural gas to drop below $3 per thousand cubic feet, a long way from its peak at $13 in 2005.

“To hold their leases, companies must drill and produce oil, so they’ll keep open a certain number of wells,” Mr. Goddard said. “But where a big company might only produce at $5, a smaller one could drill and profit at $4, and another could at $3.50. Reserves are so large, it’s only the price that’s holding them back.”

Natural gas currently trades at about $3.35 on the New York Stock Exchange. Given market conditions, gas prices appear likely to remain low, according to Mr. Schork.

“With the new discoveries, there’s a lot of supply, but still not a lot of demand,” Mr. Schork said. “In the ‘90s, there was a lot of natural-gas price volatility with the dot-com recession. But the technologies generated to get nonconventional extraction coupled with conventional reserves led to a glut.”

Mr. Schork said there is sufficient liquefied natural-gas storage capacity in the U.S. to allow the country to also purchase cheap ship-borne fuel from producers like Qatar. The low prices won’t spur development, but he still thinks natural gas could serve as a “fabulous” bridge fuel to alternative energy.

Mr. Pickens agrees and sees America’s fleet of 6.5 million 18-wheelers as the perfect place to put his natural-gas plan to work.

“Natural gas is the only one resource we have in America that will make an 18-wheeler go,” Mr. Pickens said. “From the transition to natural gas in semis, there’ll be 350,000 new 18-wheelers, creating 420,000 jobs.”

Mr. Pickens’ plan for natural-gas vehicles seems to be rolling along more smoothly than his plan for wind energy.

Sen. Harry Reid, Nevada Democrat, called himself “an absolute convert” to Mr. Pickens’ plan and said he expects the Senate to pass legislation giving tax credits of up to $80,000 to consumers buying natural gas vehicles. Earlier this month, Freightliner rolled out the first semitruck designed to run on natural gas. The company estimates the truck will save the typical driver $6,000 a year in fuel costs. It’s the archetype of what Mr. Pickens wants the nation’s truck fleet to become.

Between the new trucks and the new legislation, which appears set to pass after the August recess, his plan seems to have gained enough momentum to keep going.

“There’s no negotiation about oil prices unless you have another resource,” Mr. Pickens said. “People are starting to pay attention, and D.C. is, too. The legislation needs to be worked to the full.”

“I’m working my [posterior] off. It’s because of my age. I can’t sit around when nothing is happening.”

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