Remember the Pickens Plan?



Three years ago, with a flurry of national publicity, billionaire Texas oilman T. Boone Pickens outlined his vision of how to help wean the U.S. off imported oil. The crux of the plan was to build a massive, $1 trillion network of wind farms stretching from Texas to North Dakota, which would replace domestic natural gas used to generate electricity. The excess natural gas would then be used to power millions of American trucks and cars, thus freeing the U.S. from the shackles of OPEC oil.



Even some environmentalists swooned over the Pickens Plan, with Carl Pope, then executive director of the Sierra Club, saying, “To put it plainly, T. Boone Pickens is out to save America.”





Bloomberg

Within a year, however, the wind-power scheme was all but dead, and soon Pickens — and his multimillion-dollar ad campaign — had largely faded from the airwaves.

Now, however, Pickens and his plan are back, although the Texan’s new version is a good deal less green, considerably more dependent on controversial methods of extracting natural gas, and focused tightly on a single immediate goal: converting 8 million of the U.S.’s largest trucks, including its 18-wheel, tractor-trailer rigs, from diesel fuel to compressed natural gas.

In the past two weeks, Pickens and his plan have gotten a boost from none other than President Obama, who in a March 30 speech on energy security praised Pickens’ goal of expanding the use of natural gas in the nation’s transportation sector and called on members of Congress to support legislation that would increase the extraction and use of natural gas “in a safe, environmentally sound way.”

Last Thursday, at Pickens’ urging, a bipartisan group of 76 members of the House of Representatives introduced a bill that would provide tax credits of up to $64,000 per truck or vehicle to convert the nation’s large trucks and corporate and government fleets to compressed natural gas. Pickens predicted that the bill would receive more than 300 votes in the House and could pass as early as May, before moving to the U.S. Senate, where Senate Majority Leader Harry Reid has voiced support for Pickens’ new plan. The nation’s truckers are keeping a close eye on the legislation, saying much would depend on the size of the tax credit. Pickens repeatedly points out that recent events, including soaring oil prices and instability in the Middle East, have considerably strengthened his case for turning to natural gas as a way of breaking U.S. addiction to foreign oil.

It was probably inevitable that Pickens would not remain the darling of environmentalists.

With momentum building for the Pickens Plan, Part 2, the question is whether it is good for the nation’s energy security, good for the environment, or just good for T. Boone Pickens. Some transportation and energy experts say that the new Pickens plan indeed has merit and — with a significant caveat — is worthy of support. But other energy experts and environmentalists say it is a misguided attempt to impose a single “silver bullet” solution on the transportation sector and commits the U.S. to a long-term embrace of fossil fuels.

“It was a big disappointment when T. Boone Pickens walked away from the wind side of his plan,” said David Friedman, research director for the Clean Vehicles Program at the Union of Concerned Scientists. “He kept saying that this wasn’t about private interests, it was about the nation and the world. But to dump the part that actually had the greatest potential to cut global warming and pollution and help create new jobs in the U.S., in favor of the piece that really does most benefit his bottom line, was a disappointment.”

Although many environmentalists heaped accolades on Pickens when he announced his plan in 2008, it was probably inevitable he would not remain the darling of the environmental movement for long. At heart, Pickens is an oil and gas man whose fortune and business interests are grounded in fossil fuels. As a founder of Mesa Petroleum, he made billions in the oil business, starting in the 1950s. Today, he heads BP Capital, which invests in the oil, gas, and energy sectors.

In a recent meeting with reporters at Yale University, Pickens made it clear that he remains an enthusiastic booster of hydrocarbons, that he doesn’t foresee a transition to renewable energy anytime soon, that he isn’t convinced about human-caused global warming, and that he certainly doesn’t believe that hydrofracking — a controversial practice that extracts natural gas from shale — poses any serious environmental risks.

“You’re stuck with hydrocarbons — come on, get real,” Pickens, the 82-year-old Oklahoma native blessed with a silver tongue and a self-deprecatory, down-home charm, told the reporters. “I’ve been in meetings before where somebody says, ‘I want to cut out all coal-fired plants and go to wind.’ What are you talking about? I mean you’d run the price of electricity 10 times what it is [now]. Realistically you’ve got to use coal and you’ve got to use oil and, no, I don’t approach it from an environmental standpoint. But my record is good on the environment.”

At heart, his plan was not about going green, but about breaking our addiction to imported oil.

When I asked Pickens whether human activity is causing the planet to warm, he replied, “I’m not saying that we’ve gone that far, but I’m saying we have caused some problems… I think we screwed around with the thing. I don’t know what we’ve impacted, but I’ve seen enough that I believe that we have messed up some things.”

Pickens’ proposal has struck a sympathetic chord across the political spectrum, for reasons of both economic and national security. At heart, his plan was never about going green, it was about breaking our addiction to imported oil, and as far as Pickens is concerned, anything that helps end that addiction — natural gas, wind, solar, corn ethanol — is okay by him. “Anything American, I’m for,” Pickens told a large and enthusiastic crowd at Yale University Law School last month.

He said his plan to help jump-start the nation’s wind energy industry fell victim to a simple economic truth: with the growing exploitation of natural gas reserves trapped in underground shale formations, natural gas prices have fallen to the point where wind power is not economically competitive, especially considering the cost of connecting wind farms to the national electricity grid. In 2009, Pickens put on hold his own plans to create a giant wind farm in West Texas, and he is now in the process of selling roughly 250 turbines from his proposed project to other North American wind farms.

Pickens has now shifted his hopes of ending America’s dependence on foreign oil — at least in the next several decades — to the country’s abundant natural gas supplies. His arithmetic is simple. He argues that if a concerted effort is made to shift America’s 8 million tractor-trailers and large trucks from diesel to cheaper compressed natural gas (CNG), the U.S. can largely end its dependence on OPEC oil within a decade. (He refers to OPEC as “the enemy,” since Saudi Arabia and other OPEC countries have channeled money to Islamic fundamentalists.) By converting government and business fleet vehicles, and even some cars, to natural gas, Pickens says the country can begin to reduce oil imports from non-OPEC countries. “If we miss this opportunity,” he told the Yale audience, “all of us will go down in history as the dumbest crowd that ever came around.”

The House bill introduced last week would cost the U.S. treasury roughly $3 billion to $4 billion in tax credits for converting millions of trucks to natural gas, Pickens said, contending that the shift to CNG trucks and a national CNG fueling infrastructure would be a powerful engine of job creation. Pickens also is urging Obama to issue an executive order mandating that in the future all new federal vehicles run on domestic energy supplies, which Pickens says would further speed the transition to natural gas vehicles.



Vaclav Smil, an energy expert at the University of Manitoba, said he supported Pickens’ plan and the government tax credits. “Should have done it ages ago,” Smil said in an email interview.

The problem is that much of the natural gas Pickens is counting on would come from fracking.

Tyson Slocum, director of the energy program at the nonprofit government watchdog group, Public Citizen, said that even though Pickens is promoting an energy program that would be “enormously beneficial to his fortune,” the plan to convert the nation’s heavy trucks to compressed natural gas has some merit. Large tractor-trailers are too heavy to be powered by electric engines, and natural gas does burn more cleanly than diesel fuel, Slocum said.

The problem, said Slocum, is that much of the natural gas Pickens is counting on to power the U.S. trucking industry will come from the hydro-fracturing, or fracking, of shales — a process in which a mixture of water, sand, and chemicals is forced at high pressure deep underground to free natural gas trapped in shale formations. An increasing number of reports by the media and state regulators indicate that fracking, if poorly done, can contaminate water supplies.

Slocum said the only way the government should support the conversion of heavy trucks to compressed natural gas is if the U.S. Environmental Protection Agency begins to strictly regulate fracking under the Clean Water Act; fracking was exempted from the act under legislation passed in 2005 during the administration of George W. Bush. Federal oversight is particularly important, Slocum said, because state environmental agencies are overwhelmed trying to monitor pollution emanating from the fracking boom sweeping much of the U.S.

“I think natural gas has huge advantages if extracted in clean ways, and that is going to entail federal regulation,” Slocum said. “The national security issue of importing 65 percent of our oil is significant. But so are issues of drinking water contamination in a large number of states.”

In his Yale speech, Pickens said that water pollution from fracking is “not an issue” because the shale deposits are far below aquifers. “I do not know of any problems with freshwater aquifers being damaged by hydrofracking,” Pickens said.

Other transportation experts chiefly object to Pickens’ latest plan because it uses government policies to promote a specific technology, rather than leveling the marketplace to enable a host of potentially effective transportation and energy technologies to emerge.

“In general, I do not look fondly upon these technology winner-picking adventures that have been, and continue to be, a hallmark of America’s failed energy policy,” John M. DeCicco, of the University of Michigan’s School of Natural Resources and Environment, said. “The U.S. transportation energy market is way too huge to create a business case for anything through taxpayer subsidies.” Citing the synthetic fuel initiative of the Carter administration and other U.S. policies, DeCicco added, “How many times does the country have to get it wrong before realizing that such approaches don’t work?”

Friedman of the Union Concerned Scientists agrees with DeCicco that trying to pick a “flavor of the month” in transportation fuels, such as compressed natural gas, is unwise. The better course, he said, is to use natural gas to generate electricity, since new combined-cycle gas turbines at power plants are more than twice as efficient at converting natural gas to energy as a truck or car engine running on compressed natural gas. That electricity could then be used for electric vehicles or to power fuel cells for hydrogen cars.

The fundamental problem, Friedman said, is that Pickens’ plan ultimately represents a “stranded investment,” pumping many billions of dollars into a compressed natural gas technology that will eventually be phased out in favor of more sustainable, long-term transportation alternatives: electric vehicles, hydrogen vehicles, biofuel- or algae-powered vehicles, or a new technology altogether. For now, he said, a better approach would be to pass tax credits that would reward the trucking industry for reducing emissions, either through designing more efficient trailers, developing hybrid trucks, or improving the efficiency of diesel engines.

Pickens has heard these criticisms before, and as far as the former wildcatter is concerned, it’s time to quit talking and start acting. “With the Mideast in turmoil, you go to sleep at night and you don’t know what you’re going to get in the morning,” he said. “The solution is to get on your own resources.”

