Tag Archives: T. Boone Pickens

Happy Birthday to the Pickens’ Plan

Pickens-Plan-LogoThis week marks the fifth anniversary of the announcement of the Pickens Plan. Mr. T. Boone Pickens has launched a video celebrating and summarizing all of the accomplishments of the Pickens Plan and an op-ed that he wrote which was published in the Dallas Morning News.

Congratulations on five successful years T.Boone! Here’s to five more.

Natural gas prices back near 10-year lows as production booms, supplies at record levels

NEW YORK — (Source) The price of natural gas dropped back near a 10-year low Wednesday after Exxon Mobil and other energy companies declined to cut production.

Exxon, America’s biggest natural gas producer, has led a push by major industry players into U.S. gas drilling over the past few years that has boosted production to the highest levels ever. Supplies in storage are well above average, and some experts estimate the nation has enough natural gas to meet its needs for a century.

Investors hoped that Exxon would follow smaller competitors like Chesapeake Energy and shut down some natural gas rigs. But when it released its quarterly and annual earnings results Tuesday, Exxon said it will not slow natural gas production.

“We remain bullish on the future of natural gas as an energy source,” Exxon investor relations chief David Rosenthal said.

The company has started to shift its focus to developing more oil in the U.S., but “we have not curtailed any gas production,” Rosenthal said.

On Wednesday the price of natural gas fell 10 cents, or 4 percent, to $2.40 per 1,000 cubic feet in New York. That follows an 8 percent drop on Tuesday. Natural hit a 10-year low on Jan. 19 at $2.32 per 1,000 cubic feet. The price rose briefly, after Chesapeake and other companies said they would cut natural gas production. It slid back as investors lost faith that the reductions would significantly impact supplies and mild winter weather persisted, keeping demand weak.

Washington Post: Natural gas prices back near 10-year lows as production booms, supplies at record levels

T. Boone Pickens Statement on President Obama’s State of the Union Address

“In his remarks in the State of the Union address, President Barack Obama again called for a national focus on developing a long-term energy plan for America. I agree we should use every available American resource. I applaud President Obama for highlighting natural gas and for calling on Congress to better promote its use.

“The expanded use of natural gas in America – in power generation and transportation – has enormous bipartisan support in the Congress and in the states. It is time to move from vague generalities to specifics on how we make this transition happen. I am confident that President Obama, as well as all the candidates for President, will lay out detailed plans on how they intend to achieve it.

“We cannot solve the OPEC dependency crisis without a focus on transportation. It is two-thirds of all oil use. Oil is not a major player in the production of electricity so creating more energy from natural gas, hydro, wind, solar or nuclear will not have a major impact on our dependence on OPEC for our oil. Finding a substitute for oil as a major transportation fuel will.

“We have massive amounts of natural gas reserves in the United States and we should immediately move to better utilize it. As a White House report on rebuilding our economy states, natural gas is the cleanest of the fossil fuels.

“America does not have a natural gas production problem – we are awash in natural gas. What we have is a demand problem and unless we bring both sides of the equation in balance, we will see this cleaner, cheaper, abundant, domestic resource exported in greater and greater quantities.

“I hope the President and the Congress will call on American ingenuity and creativity to utilize all of our domestic resources. America is blessed with having the cheapest energy in the world right now. It is that cheap energy – including coal, oil and natural gas – that will not only fuel our factories, cars, and trucks, but will fuel the resurgence of manufacturing in America, while creating solid, well-paying, and permanent jobs.”

Source: The Pickens’ Plan

Prudent Development of North America’s Abundent Natural Gas and Oil Resources

HRN supports the exploration and development of shale gas throughout North America and the world. Today’s technology makes the frac process both effecient and environmentally safe. And the technology continues to improve.

This is a report published by the National Petroleum Council on the prudent development of North America’s abundant natural gas and oil reserves. The key word here is “abundant”.North America can make effecient use of domestic resources to create a more self suffecient energy supply that creates jobs and provides increased economic benefits in North America.

National Petroleum Council slide presentation: “Prudent Development”.

 

US natural gas in storage record high on only 3 Bcf – prices down

US natural gas in storage was up 3 Bcf to stand at a new record high of 3,843 Bcf (0.3% higher then 2009 record) as of Friday, November 12, 2010, according to the weekly report from the Energy Information Administration (“EIA”). Although the injection was lower than expected, markets still responded to storage levels breaching 2009 heights and as a result,  natural gas prices dipped down below $4. Inventories are now 13 Bcf higher than last year at this time and 327 Bcf (9%) above the 5-year average of 3,516 Bcf. At 3,843 Bcf, total working gas is above the 5-year historical range.

So we are now at the tipping point. As always and despite delays, winter arrives. Once winter season kicks in, consumption of natural gas in storage will be greater and faster then production can add into the system – regardless of current production levels (which are higher then historical levels). This is apparent with the single digit injection into the system. So we enter into a normal winter cycle for natural gas. Not quite.

As stated last year on HRN at this time, the trend to watch here is how the US has now set two consecutive storage records at the beginning of the winter heating season. Gas stockpiles may total 1.776 trillion cubic feet at the end of this winter heating season in March, up about 114 billion cubic feet from a year earlier, according to Energy Department estimates. Under average winter condititions this means that the winter heating season will end with a record amount of natural gas still in storage while producers continue to lower costs and increase production. To illustrate, lets say it takes 50 litres of gas to fill your tank. You let it run bone dry and put 50 litres in each week. But you dont drive as much, and when it comes to your weekly fill of 50 litres, your tanke is not bone dry. To emphasize, think if you then try to add 60 litres one week. You get the point.

US producers recognize this trend. In Canada, there has always been a surplus of natural gas and they have been a net exporter – to the US – of natural gas. However, with the US production levels reaching new highs, the US is also facing the probabilites of being a net exporter of natural gas (See HRN: US to provide clean low cost energy to China)

If you read any of the articles on the Horn River News you are aware that HRN is pro-natural gas as a cleaner alternative energy source to oil and coal. It is now clear that production from shale gas has proven the abundance of natural gas available in the US and Canada. Its a free market so if producers can not sell their gas in North America they sill seek markets overseas. Fair enough. But we continue to emphasize this is a opportunity lost that may have huge negative impact on North America down the road. By exporting lower carbon energy sources we are exporting an energy resource that will become increasingly important in a world pressured to lower carbon emissions (not to mention the economic benefits of domestic energy – compared to acquiring energy from “unfriendly” US sources. See Pickens’ Plan).

So as we see a trend to increasing natural gas supplies, Canada and the US can either increase domestic usage of this surplus or export it to the benefit of others. In Canada’a case their will always be a net surplus for export – perhaps referrably to the US – but in the US, this surplus can be easily put to good use, with extra supplies readily available from an established Canada-US distribution system. The bottom line is this resembles the same relationship Canada and the US had previous to the shale gas boom. But now with greater volumes of natural gas readily available, we simply need to increase consumption in transportation and power generation to offse some of the oil and coal used in these areas.

US to provide affordable clean energy to China

Its sounds a bit ironic that the US – largest consumer of energy in the world –  would be exporting affordable low carbon energy to China. That is exactly what a Houston-based subsiduary of Cheniere Energy Inc. is planning to do when it announced it is working on a deal to export liquefied natural gas (“LNG”) from Louisiana to one of China’s largest independently owned natural gas companies.

Cheniere bills itself as “North America’s LNG Gateway” and like other LNG facilities in North America, they were orginally intended to import LNG from natural gas suppliers like Quatar. However, with the boom in natural gas production due to shale gas these LNG facilities are looking to now export natural gas to China and other countries in Asia.

The financial model is quite compelling. Demand for natural gas in Asia is increasing and most Asian contracts are price-pegged to oil.  That means that natural gas bought in Louisiana for ~$4 can be sold in China for nearly three times as much or $12. Providing enough margin to cover the processing and shipping to Asia.

Exporting US natural gas is nothing new. Alaska has been exporting natural gas to Japan for years. And many Americans that read the recent story in the Wall Street Journal, may think its a positive economic opportunity to finally be selling and exporting gas rather then importing it when in fact it is a lost opportunity.

The US is still the largest consumer of energy in the world – more specifically – it is the largest consumer of oil in the world. And a good portion of this oil is imported from some countries in the Middle East that use the profits from oil sales to pay for political movements that oppose the US. As T. Boone Pickens once said about the Iraq war when he stated “we’re financing both sides”.

HRN has continually pointed out that North America needs to leverage natural gas to its full benefit. Its abundant, affordable and cleaner then oil and coal. In the US, T. Boone Pickens has been tiredlessly lobbying to use more natural gas in the country’s transportation network, and less oil derived products like gasoline and diesel. His main point is that buying oil from the Middle East is a massive-cost to the American economy, and the US dependency (or as some may say “addiction”) to oil is not sustainable. Natural gas offers a domestic lower cost alternative. (President  Barack  Obama really needs to revisit the Pickens’ Plan)

The lower carbon advantage that natural gas offers should not be over looked. Though US and global economies have taken front page headlines, the issue of climate change is not going away. The lower carbon footprint of natural gas is not only better for the ecnvironmnet, but offers a potential competitive advantage to Canada and the United States if and when the international community agrees to a carbon tax. The end result is that those countries that can produce and distribute products and services in a lower carbon economy will have an advantage over higher carbon producers.

The bottom line here is that Canada and the US need to use more natural gas in transportation and power generation before they export the benefits and advantages of natural gas overseas. This does not mean stop the export plans that are underway. Its a free-economy. Just use more before its too late and the opportunity is lost.

Wall Street Journal: Firm Would Export U.S. Natural Gas to China

Natural gas prices remain deflated as storms pass by… maybe.

Its well known that natural gas is a seasonal trader. Demand for natural gas is higher in hot summer weather where consumers crank up their air conditioners and in the winter when consumers crank up their heaters to stay warm. Prices can be effected up or down depending on whether temperatures – especially in northeast US – are extreme or moderate.

The other weather wild card is the hurricane season.  Hurricane activity is highest in late summer when the difference between temperatures aloft and sea surface are the greatest. As tropical storms move across the Gulf of Mexico they grow in strength fed by the warm waters of the Gulf and often reach hurricane strength. Hurricanes often will not lose strength until they have come ashore and moved inland where the cooler temperatures of the land remove the fueling effects of the warm Gulf waters. As we know the impact of hurricanes on coastal communities are devastating. Amoung the loss of human life, homes, infrastructure, power, etc. is the potential disruption of natural gas supplies from the Gulf of Mexico – home to ~11% of US domestic natural gas production.

Case in point was in 2007 when Hurricane Katrina and Hurricance Rita. The combination of these two hurricanes had an extraordinary impact on the offshore oil and gas industry in the Gulf of Mexico. The Minerals Management Service (“MMS”) estimated that 3050 of the 4000 platforms in the Gulf and 22,000 of the 33,000 miles of pipelines were in the direct path of either
Hurricane Katrina or Hurricane Rita. Fortunately, there were no oil spills or loss of life but the impact was the shut in of 100% of oil production during both storms and ~95% of natural gas production shut in during Katrina.

Such a major forced shut in of natural gas production from the Gulf during a time of higher demand was a major contributor of sending natural gas $14.50. It is also where many energy speculators like natural gas advocate T. Boone Pickens made a fortune by betting on higher natural gas prices due to an active and disruptive hurricane season reports (predictions). Today, this is not a bet that T. Boone Pickens or any other gas trader would likely make as the hurricane season has been a non-event. (Thankfully. The Gulf has had enough disasters and could use all the breaks they can get).

Those on the buy side of natural gas are buyers simply because they believe natural gas is under-valued or perhaps they have been caught in a short squeeze and are covering (not many but a few).

There is of course always the possibility that a  hurricane does form. Today, the National Hurricane Center announced that Tropical Storm Fiona had formed east of the Leeward Islands. Initial projections show Fiona heading toward the East Coast.  However, even if Fiona did materialize it is uncertain if this hurricane would have the strength of Katrina, or if it did would a short term disruption of 95% of the natural gas production have the same impact on prices given the comparative lower industrial demand, and the increased production from shale gas basins across North America. Demand and production were much different in 2007.

But though increased onshore gas production from shale formations around North America have contributed to lower prices for most of 2010, the US Energy Information Administration recently reported that production from the 48 states decreased by 1.2% between May and June to ~64.3 billion cubic feet per day. This has been reflected in the lower then average weekly injections into the US natural gas supply in storage.

In the meantime, we remain in a period of higher supply and lower demand. And the opportunity, to take advantage of increased natural gas reserves as a lower carbon energy source making up for a larger part of the overall energy mix is still there.

T. Boone Pickens loads up on natural gas stocks

According to Reuters, T. Boone Pickens’ hedge fund BP Capital has loaded up on a number of notable natural gas drillers. Fund managers are required to report holdings within 45 days after the quarter ends.

BP Capital added shares of several onshore natural gas drilling companies to its portfolio that it didn’t have in its first quarter holdings including:

190,454 shares of Devon Energy Corp;
599,788 shares of Quicksilver Resources Inc;
189,507 shares each in Encana Corp; and,
189,507 shares Southwestern Energy Co.

Does T. Boone know something that the rest of us dont? No. Prices cycle, and though natural gas prices remain low due to US natural gas in storage increasing on a weekly basis, milder weather, and a non-event hurricane season, at some point one has to understand that the time to buy an investment is when it is low. Its that simple.

Reuters: T. Boone Pickens loads up on onshore gas stocks

T. Boone Pickens updates energy plan for US energy indendence and security

Yesterday, Mr. T. Boone Pickens updated his “Pickens’ Plan” white board presentation. He first presented this presentation on July 8, 2008 with one goal in mind – to reduce US dependence on foreign oil. You can view the update on hit site here.

Mr. Pickens continues to try to hammer home to Americans that they use 21 million barrels of oil a day — about a quarter of what is being produced worldwide — with 13 million barrels a day coming from foreign sources – and 5 million barrels a day comes from the Middle East and OPEC.

“That’s my target. I want to get rid of this, because I think we’re importing oil from the enemy. We’re paying for both sides of the war when we’re buying OPEC oil. This is not smart.” – T. Boone Pickens

If the average American was aware and understood the financial consequences of their addicition to oil, most would make changes. Unfortunately, too many Americans think there is an endless supply available, and rarely stop to think of the economic, financial and human cost to buying hundreds of billions of dollars from those countries that are in conflict with the US.

Furthermore, America is in a real bind here. With the BP oil disaster public opinion of offshore drilling has fallen; Certain US politicians dont want oil from the Alberta oil sands (note: Canada – not the middle east – is the largest supplier of oil to the US by a long shot. Another fact that the average American does not comprehend); and Certain groups are opposed to shale gas drilling; They dont want nuclear power plants. So where’s the energy going to come from to drive the US economy and maintain a decent standard of living?

The US needs to get a serious energy plan in place and should do so in a join effort with the rest of North America creating a secure continental energy program. If you have not already… click here and watch T.Boone Pickens.

Website: The Pickens’ Plan;  Website: The BlueBridge Plan

Energy Independance Day in the USA

T.Boone Pickens – the Texas billionaire who has championed natural gas and wind power as a way to wean the US off of foreign oil, has again declaired US Independance Day to mark Energy Indepenance Day.

In a letter to his online followers which he referrs to as “The Pickens Army” or just “Army” he writes;

Army:

The U.S. House and Senate are heading home next week for the Independence Day holiday. That’s good. They need to hear from the folks back home and there’s nothing like a 4th of July picnic to talk about what’s on your mind.

I hope you will attend an Independence Day celebration and I hope your Member of Congress or Senator will be there.

We need to use next week to help our elected leaders understand how seriously we take our need to achieve the independence from OPEC oil that we’ve so long been promised by Washington.

You can also click here to send a message to your representatives via email.

We believe we are close to getting something done in Congress that would deal with the final portions of the Pickens Plan – using domestic natural gas as a substitute transportation fuel for imported diesel, particularly in fleets and heavy duty trucks. We need to finish that job by getting the language in the NAT GAS Act passed by Congress..

Let’s make this Independence Day 2010 as important as the first one in 1776!

-Boone

Mr. Pickens continues to push support for the NAT GAS Act of 2009,  legislation that covers many key elements for promoting the increased use of natural gas within the US transportation network, including;

  • It extends the tax credit for natural gas used as a transportation fuel.
  • It provides a tax credit for 80 percent of the additional cost when purchasing a dedicated natural gas vehicle.
  • It extends the tax credit for the installation of natural gas refueling pumps.
  • It creates incentives for the major manufacturers to sell natural gas vehicles (which they already produce for overseas markets) in the United States.

Unfortunately, Canada has no substantial plans that mirror the NAT GAS Act in the US.