Pickens Says Energy Boom Defies ‘Incompetent’ Washington

04 04, 2013 by Bloomberg

America is on a path to energy independence without any help from Washington, according to billionaire investor T. Boone Pickens.

Pickens said lawmakers and U.S. officials, whom he called “incompetent,” could still help cut transportation costs and spur use of domestically produced energy with tax breaks to build a fueling network for natural-gas vehicles. He also recommended selling much of the crude oil in the Strategic Petroleum Reserve and approving the Keystone XL pipeline.

“We have the cheapest energy in the world,” Pickens said yesterday in an interview with Bloomberg Government in Washington. “In a way, it’s all happening anyway.”

“Honestly, we have more than I thought,” he said, referring to U.S. crude and natural-gas reserves.

Pickens, who in the fourth quarter added oil and gas producers Newfield Exploration Co. (NFX), Marathon Oil Corp. (MRO) and Occidental Petroleum Corp. (OXY) to energy holdings of his Dallas- based BP Capital Management LP, has pressed Congress since 2008 to support tax credits to spur use of natural-gas powered vehicles. When he unveiled the plan, Pickens said its goal was to boost domestic energy and supplant oil from the Middle East.

While Congress failed to pass the proposal, U.S. oil and natural-gas production soared, buoyed by sharply increased use of hydraulic-fracturing and horizontal-drilling techniques to free gas trapped in shale rock. That has put the U.S. on the path to producing enough energy to cover its needs for the first time in almost 20 years.

Crude Production

U.S. crude-oil output in the fourth quarter this year will exceed imports for the first time since 1995, as booming fields in North Dakota and Texas put the nation on track to surpass a record set a quarter-century ago, the U.S. Energy Information Administration said last month. Meanwhile, domestic natural-gas output is forecast by Bloomberg New Energy Finance to increase 25 percent by 2020.

Pickens said the production of these fuels could be enhanced by decisions from policy makers in Washington.

First, U.S. trucking companies could be induced to shift to natural-gas powered vehicles if more fueling stations were set up. The tax-credit proposal, which he called the ‘‘Pickens Plan,” may prod that along more quickly, he said. Under the plan, commensurate fees would be levied to pay for the measure.

Clean Energy Fuels Corp. (CLNE), the natural-gas filling-station company started by Pickens, owned, operated or supplied 348 natural-gas fueling stops at the end of last year.

New Fuel

Because Saudi Arabia, the world’s biggest oil producer, can cut output to keep prices at preferred levels, “you are going to have to introduce another fuel into the market” to lower costs, he said.

Second, the government could sell more than half the oil in the nation’s strategic reserve, which could lower prices at the pump without harming security, he said.

The U.S. reserve, held in salt caverns near the Gulf of Mexico, holds as much as 727 million barrels of crude. It was established to counter supply disruptions after the Arab oil embargo of 1973-1974.

“Do we really need the SPR?” Pickens asked.

Third, President Barack Obama should approve TransCanada Corp. (TRP)’s plan to build a pipeline from Canada’s oil-sands fields to Gulf coast refineries, he said. The company’s application is still under review by the State Department.

Whether or not policy makers in Washington would take these steps is an open question: The capital contains the “largest accumulation of incompetent people that I know of any place in the world,” Pickens said.