# Natural gas and the Pickens energy plan



## metric (21 July 2008)

much more at the link......

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The Pickens Energy Plan 
Posted: Fri, 18 Jul 2008 12:31:57 -0500
Chalk another one up to clean technology.

Legendary Texas oilman, billionaire and America's 117th richest person, T. Boon Pickens, has unveiled a $58 million public relations blitz focused on persuading Americans to reduce their dependence on foreign oil by turning increasingly to natural gas and wind.

Called The Pickens Plan, the project calls for an estimated $1 trillion government investment to displace electricity currently produced with natural gas with clean wind power.

Then, the resultant excess natural gas capacity would be used to power cars and trucks.

T. Boone, the plan's creator, says it would alleviate hundreds of billions of dollars currently spent on oil while creating thousands of U.S. jobs.

According to Pickens, ""I've drilled more dry holes and also found more oil than just about anyone in the industry. With all my experience, I've never been as worried about our energy security as I am now."

But don't get it twisted. Pickens isn't hugging trees just yet. It's all about the bottom line, and T. Boone is heavily vested in both the wind and natural gas industries.

In fact, he's spending $12 billion on what could prove to be the world's biggest wind farm””in Texas, of all places.

Another of his ventures, Clean Energy Fuels (NASDAQ: CLNE), builds and operates natural gas fueling stations for vehicles.

Said Pickens: "Don't get the idea that I've turned green, my business is making money, and I think this is going to make a lot of money."

Making Money with The Pickens Energy Plan


According to The Pickens Plan website:

America is in a hole and it's getting deeper every day. We import 70% of our oil at a cost of $700 billion a year - four times the annual cost of the Iraq war.

I've been an oil man all my life, but this is one emergency we can't drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil.

Breaking that addiction is shaping up to be a multi-billion dollar business, and the "Oracle of Oil" is placing his bet right now.

It's probably wise to follow his lead. In addition to Energy & Capital, Pickens was one of the few insiders calling for $100 oil when that price seemed unfathomable. And the realization of his most recent call for $150 oil seems imminent. 

Even if all the points of the plan don't come completely to fruition, the wind and natural gas industries are still poised for a boon. 

Just in July, T. Boone's natural gas provider Clean Energy Fuels has:

been awarded a five-year contract from the City of Akron to operate and maintain the fueling station for the city's 45 full-sized compressed natural gas buses

received two liquefied natural gas supply contract renewals from the City of Phoenix that will add $6.7 million to the company's bottom line

secured nearly half its supply of natural gas through June 2011 by entering into an extended definitive agreement with its supplier, Williams Four Corners

Clean Energy Fuels is probably a good place to be. More and more fleets, both governmental and corporate, are switching to natural gas vehicles everyday, for both economic and ecologic reasons. 

As this trend plays out, all those fleets are going to need natural gas fueling stations. And Clean Energy is the foremost player in that game.

Another lucrative way to play the emergence of natural gas vehicles would be to invest in the company making natural gas engines. This report has all those details.

The Windier Side of Energy

Pickens isn't just betting on natural gas. He also has ambitious plans to build the world's largest wind farm on the Texas panhandle””for a modest $12 billion.

Back in April. T. Boone made the first down payment on 500 wind turbines at a cost of $2 million dollars each. GE (NYSE: GE) was the lucky beneficiary of that transaction.

But that initial $1 billion (for the 500 turbines) hardly puts a dent in the now $12 billion price tag””the project was originally estimated to cost a mere $6 billion.

By 2012, about 2,700 turbines are slated to be erected on 200,000 acres of the Texas panhandle. That's four times bigger than the word's current largest wind farm.

When finished, 4,000 turbines will crank out enough electricity to power over one million homes.

But a billionaire-oilman-turned-wind-investor isn't the only indication of the momentum the wind sector possesses.

In 2007, wind received the most investment dollars of any clean technology with $50.2 billion, or 43% of all new green investment. It was also the leader in 2006 when it was responsible for 38% of new investment.

The wind industry also dominated asset finance in 2007, receiving about $38.9 billion or 46% of all new-build asset investment, which basically means steel in the ground in the form of either wind farms, solar power plants or biofuel production facilities.

To date, 94 gigawatts (GW) of wind capacity have been installed worldwide, with 20 GW coming online in 2007, led by the U.S., China and Spain.

Wind also received the most public investment in 2007, raising $11.3 billion. It should be noted, however, that $7.2 billion of that investment came just from the IPO of the world's leading wind installer and wind farm manager, Iberdrola Renovables (MCE: IBR).

The wind industry has also been a favorable environment for exits of venture- and private equity-funded companies, as well as for mergers and acquisitions. This has been evidenced by Energias de Portugal's $2.93 billion purchase of Horizon Wind and Scottish & Southern Electric's $3.2 billion purchase of Airtricity. 

More recently, investor interest in wind power has heated up due to a report from the U.S. Department of Energy claiming wind can provide 20% of all U.S. Electricity needs by 2030.

For that to happen, more than half a trillion dollars needs to be invested in new turbine manufacturing capacity and capital projects. Just in the first quarter of 2008, the U.S. Installed 1,400 MW of new wind capacity with a price tag of $3 billion. Expect that trend to continue and expand.

The way to profit from this part of Pickens Plan is to stake your claim now in a variety of turbine manufacturers, both foreign and domestic, and also in wind farm developers and owners.

These could be juggernaut wind companies like Vestas Wind Systems (COP: VWS) and Gamesa (MCE: GAM), or in large development firms like Fluor (NYSE: FLR).

Of course, there's also a handful of smaller companies that stand to make a fortune as the wind industry continues to mature. 

While it's nearly impossible to say which of those smaller companies are going to succeed as this story unfolds, we'll be providing daily and weekly commentary and recommendations on the matter in all of our publications:


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## Smurf1976 (22 July 2008)

The basic idea's fine as long as it's done in terms of diverting gas from existing uses for use as automotive fuel instead.

But it fails if it simply ends up being use more gas to replace oil and not cutting some other use. Gas is a non renewable fuel, and a significantly depleted on in North America, just like oil. It's a tragic waste to be using it for baseload electricity in my opinion and in due course I expect we'll see it become uneconomic for that use as it's revalued as a transport fuel.


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## Tysonboss1 (22 July 2008)

Smurf1976 said:


> Gas is a non renewable fuel, and a significantly depleted on in North America, just like oil.




SssssHHHHHHH,.......  we will just ship them any LNG they need.

There is an abundance of natural gas so I think using Natural gas as part of the transition to renewables is a great idea, it may be the fuel that will get us over the line for the next 50years of so till we can built the alternative generaters.


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## rederob (23 July 2008)

Tysonboss1 said:


> SssssHHHHHHH,.......  we will just ship them any LNG they need.
> 
> There is an abundance of natural gas so I think using Natural gas as part of the transition to renewables is a great idea, it may be the fuel that will get us over the line for the next 50years of so till we can built the alternative generaters.



I'll have to revisit the "peak gas" debate.
From memory there wasn't too many years lag-time between oil and then gas peaking.
And as smurf points out, if gas simply replaces oil in transport, plus adds to many and varied other uses, then the slippery downslope gets steeper quicker.


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## Smurf1976 (23 July 2008)

Tysonboss1 said:


> SssssHHHHHHH,.......  we will just ship them any LNG they need.
> 
> There is an abundance of natural gas so I think using Natural gas as part of the transition to renewables is a great idea, it may be the fuel that will get us over the line for the next 50years of so till we can built the alternative generaters.



If we used gas to replace coal-fired electricity (but not other uses of coal) and oil then the whole lot would be gone in roughly 20 years assuming a 2% annual demand growth rate. And that assumes Russia and the Middle East which dominate reserves are happy to sell it cheaply and don't form a gas version of OPEC.

Locally, it's a little known reality that Australia doesn't actually have enough gas to replace coal-fired electricity even for a relatively short period (the lifespan of a gas-fired power station). Take out WA, NT and QLD where virtually all the gas is set to be exported an there's not much left to actually run the country on it. Note the privately owned new coal-fired power plants planned for WA since gas there has already become rather expensive (well before the recent supply problems).

Various studies indicate a likely peak in Australian gas production is roughly 20 years away with the vast majority of that gas being exported. UK, US, NZ have all peaked quite a while ago.


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## Tysonboss1 (24 July 2008)

Smurf1976 said:


> If we used gas to replace coal-fired electricity (but not other uses of coal) and oil then the whole lot would be gone in roughly 20 years assuming a 2% annual demand growth rate. And that assumes Russia and the Middle East which dominate reserves are happy to sell it cheaply and don't form a gas version of OPEC.
> 
> Locally, it's a little known reality that Australia doesn't actually have enough gas to replace coal-fired electricity even for a relatively short period (the lifespan of a gas-fired power station). Take out WA, NT and QLD where virtually all the gas is set to be exported an there's not much left to actually run the country on it. Note the privately owned new coal-fired power plants planned for WA since gas there has already become rather expensive (well before the recent supply problems).
> 
> Various studies indicate a likely peak in Australian gas production is roughly 20 years away with the vast majority of that gas being exported. UK, US, NZ have all peaked quite a while ago.




Who is saying we should stop coal fired power,... not me,.

Does the gas reserves you calculate on include csm


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