PrintJanuary 14, 2010
Pickens' folly
Nesting comfortably atop a fortune estimated at $3 billion enhanced by the corporate raiding and greenmailing that characterized the Gordon Gekko, T. Boone Pickens hasn't lost the desire to flip the next marker in the lucrative field of energy investment.
Just last year, Pickens' rangy visage filled the television networks as he touted his giant Texas windmill farm as the solution to America's energy problems. Now it appears that his Texas farm is off the table, and Pickens' folly has been exposed:
"Natural-gas prices have fallen sharply since the summer of 2008, when Mr. Pickens announced the big wind farm (and)...Cheaper natural gas hurts wind farms, because cheaper gas makes gas-fired power plants a more attractive option for electricity generation. "You can't finance wind farms very well when natural gas is under $6" per million British thermal units, Mr. Pickens said. Natural-gas futures settled at $5.733 Wednesday afternoon on the New York Mercantile Exchange.
The effects of the credit crunch and the economic slowdown also slowed growth in the wider U.S. wind-power industry in 2009, after a record year for wind-power installations in 2008."
Pickens quietly halved his wind turbine order with GE and will divert the remaining turbines to Canada and Minnesota.
While Americans patiently listened to the billionaire's lectures about the necessity of freeing ourselves of dependence on foreign energy, it seems the natural gas industry actually did something about it :
"It's almost divine intervention," said Aubrey McClendon, chairman and chief executive of Chesapeake Energy, a major natural gas producer in the United States. "Right at the time oil prices are skyrocketing, we're struggling with the economy, we're concerned about global warming, and national security threats remain intense. We wake up and we've got this abundance of natural gas around us.
Gas production in the United States is up about 9 percent this year, a rate of increase not seen since a one-year jump in 1984 and matching rises more typical of the 1950s when gas drilling was booming. Most of that gain is coming from shale, particularly the Barnett Shale around Fort Worth, Texas, which has been under development for several years. The increase in gas production stands in sharp contrast to the trend in domestic oil production, which has been declining in fits and starts since 1970."
Despite Mr. Pickens' suggestion that Americans can't drill our way out of our need for foreign sources of oil, many conservatives feel that the Republican party platform for 2010 and 2012 should include a plank insisting that we Drill Here and Drill Now. There is just as much new technology in the oil industry as in the demonstrably successful natural gas industry. We need only streamline American access to our own resources by enacting tort reform to prevent the tree-humpers from derailing our drilling efforts with environmentally based nuisance suits.
How about we take a lesson from Pickens' Folly and wake up to the natural abundance of oil around us?
Ralph Alter blogs at Right on Target www.rightot.blogspot.com
