Should We Pick the Pickens Plan?

Yesterday, legendary oilman T. Boone Pickens unveiled his plan to wean America off of its foreign oil addiction. The guy doesn't need any additional PR -- Pickens is getting coverage from mainstream news outlets to YouTube and Facebook -- but the plan is worth perusing.

The Pickens Plan basically has two prongs:

  • Build $1 trillion worth of wind facilities in gusty Middle America, plus another $200 billion in transmission infrastructure, in order to provide 20% of our annual electricity needs.
  • Take all the natural gas presently used to fire power plants that would be offset by this wind power and use it as a transportation fuel instead.

Obviously this isn't a solution for the long term, because it shifts our dependence from one depleting hydrocarbon resource to another. But as a bridge to more sustainable arrangements, the idea holds some appeal.

Government research indicates that wind power is cost-competitive with new coal-fired plants. Throw in environmental and legislative concerns, and it's pretty clear why proposed coal plants are getting scrapped, while planned wind facilities equal somewhere around 13 times the current U.S. installed base. Developers are throwing up turbines as fast as General Electric (NYSE: GE  ) and Siemens (NYSE: SI  ) can build them.

Also, in terms of natural gas versus oil, there are both security and economic benefits to cutting down on those ocean voyages from West Africa and the Middle East -- bad for Frontline (NYSE: FRO  ) , but good for Joe Driver. We've also recently unlocked a tremendous amount of potential natural gas supply in North America, thanks to shale Sherlocks like Chesapeake Energy (NYSE: CHK  ) and XTO Energy (NYSE: XTO  ) , and supply is coming online much faster than deepwater oil projects in the Gulf of Mexico.

There are plenty of potential problems with this plan, many of which have been addressed elsewhere. First of all, while I'm sure transmission titan ITC Holdings (NYSE: ITC  ) would love to string up new power lines stretching from the Midwest to both coasts, I'm equally sure this centralization wouldn't be a great arrangement from the perspective of either energy efficiency or security. Second, the current lead time for wind turbines from the leading manufacturers stretches out several years. While bearings baron Kaydon (NYSE: KDN  ) should be able to manage its growth in this area, scaling up turbine manufacturing fast enough to achieve Pickens' vision will be a major challenge.

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Fool contributor Toby Shute would like to hear your own plan, but doesn't have a position in any company mentioned. The Motley Fool's disclosure policy isn't sure how to solve our nation's energy needs, either.


Read/Post Comments (7) | Recommend This Article (13)

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  • Report this Comment On July 09, 2008, at 9:51 PM, crabjoe wrote:

    Picken's plan sounds good but is it worth the cost?

    Being Picken's is a businessman, I'm wondering if he's just trying to pad his pockets, instead of OPEC.

    Also, how much will wind energy cost to the end user? I'm guessing electrical costs will go up do to the maintenance of these turbines, electrical storage (batteries, capacitors) and transmission. From what I understand the current cost of electric averages 8 cent/kwh. If it goes up to 10 cents, that's a huge jump, so all we're doing is shifting the transportation cost to the home/business electric bill.

    Now, here's my idea...

    Being that he's saying it can take up to 10 years, why not just go Nuclear? It surely can't take 10 years to build a Nuclear plant, and Nuclear plants can be built in every state. They also don't have to worry about no wind days.

    Going straight to Nuclear will reduce the cost of transmission lines. That's a cost savings too. Nuclear power is cheap too. Over time, it's cheaper then burning coal or gas.

    Plus, with Nuclear, we could mate a Hydrogen cracking refinery, especially if they're built along the coast. Sea water is CHEAP. And if we did build Nuclear/Hydrogen setups, we could transition to Hydrogen as the primary transportation fuel.

    Fact is, if we wanted, we could transition to Hydrogen vehicles within a few years. The reason is because the infrastructure for refueling is already here.

    Hydrogen can be made from NG and NG lines are probably within in a few miles from 75% of the homes in the US. Here's the best part... There is already home cracking units that can convert NG to Hydrogen.

    Folks... We're all in need of cheap energy, lets take a couple months to think this over then we need to push the next President to make it happen as Kennedy did with the Mission to the Moon.

  • Report this Comment On July 10, 2008, at 1:40 PM, bobhetzel wrote:

    So many innacuracies in the message from crabjoe, so I'll take them one at a time.

    1) Nuclear power isn't cheap. It's highly subsidized to even get close to competitive. Then there's the waste issue that's getting more expensive by the day whether a solution for it is found or not. Also it does take a lot more to build a nuclear plant than to put a wind turbine up. 10 years from design to completion for a nuke plant is at the low end.

    2) There just aren't "no wind" days when you have a grid of electricity (i.e. you have them always running somewhere) and the turbines are big so they turn slowly on even a little bit of wind. The reality is that there's on average a lot more wind in North America than people think and it's quite different up 100 feet in the air than it is at ground level.

    3) There a need to have the energy stored in batteries if it goes right into the grid and you're not trying for 100% wind power as your only source of electricity. 4) There are no unaccounted for costs when we say wind power is competitive. As technology improves the costs will get even lower. Everything coal has increased costs on the horizon so saying wind power will cost more is just uninformed. Or you're a shill for the coal/nuclear industry.

    5) Hydrogen power on the cheap is nothing more than a fantasy. Also, most current plans call for cracking oil to produce it not water--basically big oil is pushing that as a way to keep their customers from switching.

  • Report this Comment On July 21, 2008, at 3:40 PM, JBTruth wrote:

    It has tiring to hear the same reason used for not drilling and/or building that oil/gas/nuclear "will take 10 years so why bother". That same do-nothing attitude is while 1/2 the US is obese- that is, waiting for a 'magic' Pill to cure your problem.

    Face the truth: ALL, I repeat ALL of the energy suggestions (fossil fuel, coal, nuclear, solar, wind, hydrogen, biomass, fuel cell, etc) now being offered will take 10 years to make a significant impact.

    It's time our own Gov't quit kissing the a$$ of the environ-mentally ill and start doing EVERYTHING to get the US out from under this massive transfer of wealth.

    Drill offshore, in the Rockies, ANWR, start permitting Nukes; use the proceeds from O&G royalties under Fed Lands to offer add'l tax credits to the alternative.

    It's time we stop sending our own money to countries who hate us for energy when we have not used up the sources we have under our feet!

  • Report this Comment On September 01, 2008, at 10:27 PM, spike76 wrote:

    T. Boone says we need a bridge to alternative energy and suggests converting our cars to natural gas. Says its cheap and clean, yes but does he say anything about safety of a 25 gallon pressurized container under your car??? Can you imagine the results of getting into a nasty accident with a 25 gallon pressurized "bomb" under your car??? Not to mention, fuel efficiency of natural gas versa's gasoline is about 12 percent less. This guy is nuts, and I'm "sure" trying to line his own pockets. We do need to seek alternative energy in the way of "all" sources: nuclear, geothermal, wind, and solar, but in the meantime, we need to start tapping our own oil reserve on and off shore, build new refineries in the meantime. This would create a large amount of employement right here in the U.S.A.

  • Report this Comment On November 12, 2008, at 4:48 PM, zeccotookmymoney wrote:

    First of all the pickens plan is trash and I'm surprised about the amount of people that support it. So far, pickens wasted $54 million in TV ads when he could have built over 600 wind turbines and leased the power to the power utilities at a profit. They in turn would use less oil and start us on the path of less oil.

    Let's face it. Someone with $54 million in working capital building wind farms is a great green startup company. Who would be so unwise not to do this? We all know who now.

    Natural gas (NG) @ $3, is being marketed at 40% cheaper than gas @ $5. Well, gas is now just a little above $2 and falling. Moreover, should NG go main stream, the price would skyrocket in direct proportion to demand. This little omission is call deception in marketing. Moreover, pickens isn't interested in helping people get NG converters to start the revolution. He says he doesn't have the money. I guess he only has money to put in ads. NG is widely used in Europe and it's safe so far. NG is also cheaper than gas in Europe where I lived.

    If pickens was indeed serious, he would have invested that $54 million to spark the NG revolution by subsidizing 250,000 converter units at. The barrier to get NG to market is cost... so if you reduce the cost, the revolution will start... but wait a minute here... NG is no longer cheaper than gas.

    Pickens doesn't mention solar but when confronted by Larry King, he says anything American is fine. But my suggestion is we should go all electric cars. Each home is a power station. Start building massive solar arrays and wind farm. Sure it will cost money but that's $800+ billion investment into America each year and zero oil usage. Jobs baby jobs. As demand grows, jobs will grow to build & maintain new solar & wind stations.

    We can use biofuels and our oil supply for aviation & military use and to supplement power stations. I'm not ignorant. The problem with electric cars is the range but on the upside, every home is a power station so it can easily be charged up at home, at work or at a motel. No kidding!!! Furthermore, solar and wind is the only unlimited resources we have. When oil is depleted and it will, electric is the answer. So why delay the inevitable? Start building electric cars today. Eventually, the technology will catch up with superior battery technology. Intel has even discovered how to wirelessly recharge gadgets which may help electric cars recharge while in motion.

    I agree that helping GM is a waste. They had billion$ but couldn't save themselves. So giving them a few billion will help to further the pain. It was higher oil prices that really did them in so giving them $25 billion to make more gas guzzlers will give them a few more months to go bankrupt. Nobody is buying cars period.

    So any help has to be tied to making hybrids & electric cars like the volt because if there's one thing that all 3 car makers are good at is burning through cash with nothing doing. And let's face it... even if GM had the money, it still will fail except it was producing green cars in a green economy. Therefore giving them $25 billion to do what they are doing now is still a waste.

    High gas prices would force people to go out and buy green because they don't have the money to waste on gas so GM would benefit. But it's not that simple with gas price free falling.

    But I see the bigger picture here. We are headed south and here's why. Companies continue to cut back and lay off workers. Even I am affected. These workers must default on their mortgages & bills not because it's sub-prime but because they have no money. But as these companies cut back, they too face reduced earnings because other business and customers are cutting back from supporting them. Welcome to the domino effect.

    DHL just laid off 9,000 workers and some will find work... no doubt about that... but the consequences of this is more people will be lose jobs that accommodated those 9,000 workers because of the loss of over $300 million in disposable income.

  • Report this Comment On November 15, 2008, at 11:09 AM, tshck wrote:

    A lot of good information and some not so good. Due to energy density and the requirements, solar and wind have a place in the energy equation but are limited. They also require back up from natural gas generation. We have a finite amount of uranium and the problem of where to store the waste. At this time the best source for Hydrogen is derived from cracking natural gas. The U.S. has abundant reserves of natural gas but it is getting more expensive to produce. However, with infrastucture development, CNG is currently our best and lowest priced domestic source of transportation fuel. The price of natural gas follows crude on a 1 to 10 ratio, but has a heating value of 1 to 6. It is cheaper and emits a third less emmisions than gasoline. Yes, expanded useage could result in a tightening of the cost advantage, but it has not for the last 20 years. Expanded use of wind and solar shoud offset the demand for natural gas. If and when Hydrogen is competitive, the CNG infrastructure can be used for Hydrogen.

    Clean coal may also be a viable alternative. The CO2 can be captured and used for enhanced oil recovery in mature oil fields, expanding production of our own oil and returning the CO2 to reservoirs from which it was derived. This works as I have carefully reviewed proprietery data. We have to use all domestic alternatives efficiently to create good paying jobs, reduce our emission and quit funding countries that would destroy us.

  • Report this Comment On December 31, 2008, at 9:15 PM, Scottar35 wrote:

    Pickens- The Man with the Scam, either, Plan

    http://junkscience.com/ByTheJunkman/20080731.html

    Pickens Gives New Meaning to 'Self-Government'

    http://www.junkscience.com/ByTheJunkman/20080710.html

    The Wind Cries 'Bailout!'

    http://www.junkscience.com/ByTheJunkman/20080724.html

    Is T. Boone Pickens 'Swiftboating' America?

    http://www.wnd.com/index.php?fa=PAGE.view&pageId=72225

    HEAT OF THE MOMENT

    Pelosi, Pickens plan to pick your pocket

    In Pickens own words: "The bottom line is profit!"

    Further reading:

    http://www.worldnetdaily.com/index.php?fa=PAGE.view&page...

    The 1 and only solution to America's energy problem

    Posted: August 27, 2008

    http://www.worldnetdaily.com/index.php?fa=PAGE.view&page...

    Hot air about wind power

    Posted: August 21, 2008

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