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|July 31-August 6, 2008
Back to Letters
A viable energy plan at last
by Paul Danish
The most interesting idea so far for cutting the country’s addiction to imported oil comes from T. Boone Pickens, the oilman and corporate raider who made billions during the 1980s when he figured out that it was “cheaper to look for oil on the floor of the New York Stock Exchange than in the ground.”
Pickens’ plan, which he is pushing with a $58-million advertising campaign, is characteristically simple, clear, direct and audacious: Replace the 20 percent of U.S. electricity currently produced by burning natural gas with electricity generated by wind turbines. Then use the natural gas this would save — approximately 7 trillion cubic feet a year of it — to fuel cars and trucks.
Seven trillion cubic feet of natural gas contains the energy equivalent of about 1.4 billion barrels of oil. A back-of-the-envelope calculation suggests Pickens’ plan would result in a 20 percent drop in oil imports, a reduction of about 4 million barrels a day and a savings of around $180 billion a year.
What’s significant here is that Pickens has put forward a plausible plan for both reducing oil imports and for giving alternative energy — wind-generated electricity in this case — a role in doing so. This is important, because — thanks to the absence of suitable battery technology — advocates of wind- and solar-generated electricity as an alternative to increasing oil production haven’t been able to offer very satisfactory solutions for getting zephyrs and sunbeams into the transportation fuels mix. Pickens’ proposal is a plausible (if indirect) way of doing so.
But can this really work?
For this plan to work several big, expensive things have to happen, but there’s no reason why they can’t. (The good news is all of the necessary technology is already commercially available.)
First, entrepreneurs and utilities will have to install enough wind turbines to provide all the electricity currently generated by natural gas. Replacing natural gas derived electrons with wind-generated ones will require the fabrication and installation of 100,000 to 200,000 wind turbines. Pickens estimates that getting this array in place will cost $1 trillion. He also thinks that utilities and independent electricity suppliers will be willing to pay it, because of the money they’d save from not having to buy natural gas. Since most are already signing up to build wind farms, chances are he’s right.
Second, the nation’s electric power grid would have to be expanded and upgraded in order to get wind-generated power to market and to shift it around quickly in response to where the wind is and isn’t blowing at any given moment. Pickens estimates this would require a $200 billion investment, also to come from the private sector.
Third, the world’s auto companies would have to start mass-producing cars and trucks fueled by compressed natural gas (CNG). Fortunately, such vehicles are already in production, and some 8 million have been produced (albeit fewer than 150,000 of them are in the U.S.). CNG powered vehicles are essentially existing cars and trucks with a different fuel system, so they don’t cost much more to make than conventional vehicles, and production could be increased quickly if the demand for them materialized.
And, given the fact that domestic natural gas is considerably cheaper than imported crude (natural gas was selling at the equivalent of 61 cents a gallon gasoline in Salt Lake City a couple weeks ago, and about a third less than an equivalent gallon of gasoline in California) demand could well materialize.
Fourth, the country has to have sufficiently large natural-gas reserves to justify making a long-term commitment to using it as a transportation fuel, even taking into account that the Pickens Plan is only intends to shift gas now used for production or electricity to transportation. There’s not much point spending $1 trillion to make that shift if the country starts running short of natural gas in a few years.
Fortunately, oil companies are currently finding new reserves of domestic natural gas faster than we are using up old ones. How much faster? A story in Monday’s New York Times quotes a research associate with the Louisiana Geological Survey as suggesting that just two recent gas discoveries, one in northern Louisiana and Texas and one in Pennsylvania and New York State, could double U.S. gas reserves.
Fifth, service stations would have to install natural gas dispensers. That could be expensive, but at least the infrastructure for delivering the gas to most stations is already in place. It’s a pipe in the street. And Pickens also has a plan for covering the cost of building natural gas dispensing islands. Station owners could first contract to supply natural gas to commercial vehicle fleets, which means they would have a guaranteed customer base.
Pickens’ will cheerfully admit his plan isn’t perfect and welcomes suggested improvements, but at least he has a plan to cut oil imports. That’s more than can be said of the Federal Government and its dysfunctional Congress.
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