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Having Gas and Passing Wind - T. Boone Pickens (Part Deux)

by joelado Sun Aug 16th, 2009 at 08:57:26 PM EST

In part one of this series we looked at a possible reason why Mr. Pickens abandoned his plans for the worlds biggest wind farm. It explored a possible connection between water pipelines Mr. Pickens wants to build and legislation he pushed to allow water pipelines to follow power line tracks. The idea being, his wind farm was only a device to get his pipe line built over the objections of land owners and environmentalists.

With this blog we are going to explore the other side of the Pickens plan, the natural gas part. Remember that the Pickens' Plan is predicated on the notion of moving the nation's natural gas away from the steady utility industry into the volatile transportation sector, while wind energy moves into the utility segment vacated by natural gas.

Understand that T. Boone Pickens doesn't at this point have his promised wind farm, and given the announcement of July 8th that he had "temporarily" put on hold his wind farm plans to a certain extent trading the promise of wind if we move to natural gas in our transportation sector. He is not even making a promise of a wind farm, but rather presenting a concept. Looking at what is happing in the Pickens' plan is like watching a magician's slight of hand. The magician keeps the audiences attention on the hand that is moving with a brightly colored handkerchief. Think of the handkerchief as wind power. While up his sleeve there is an egg. Think of the egg as natural gas. The magician says keep your eyes on the handkerchief, and, vualla, the handkerchief disappears and in his hand appears a natural gas egg.

T. Boone Pickens might have been thinking something along the lines like this, "I want to get the money that oil is getting for my natural gas. I want the nation's money now going to mega oil companies and nations in the Middle East to go to me instead. To do this I want the government to spend the tax payer's money on developing a natural gas fleet of cars so I can sell them my natural gas at a much higher price then what I can ever get out of those regulated utilities with their long term contracts and steady prices." But some pesky people most likely would have said, "But Mr. Pickens we use natural gas to produce 20% of our nations electricity, and natural gas is much better than coal to produce electricity because it pollutes far less." Mr. T. Boone Pickens would have probably thought about it a second and said, "Now don't you fret none, because we are going to have wind take over natural gas' role in the utility industry. Just so you know that I am not kidding about this I plan to build the world's biggest wind farm on my ranch in Texas. This hanky symbolizes the wind. Concentrate on the hanky." And some of the people say, "Yes, we will watch the hanky," but, some other pesky people said, "Mr. T. Boone there isn't enough natural gas to replace gasoline in the transpiration sector" And Mr. Boone says, "Don't worry your silly little heads about that, we won't replace all the cars... just the heavy duty trucks. That's right. We won't replace gasoline in cars, just in big trucks like the 18 wheeler kind and trash trucks and stuff. Now if this trick is going to work you need to watch the hanky." And more of the people say," Yes, we will watch the hanky." Yet, there are still pesky people... thinking, no doubt... and we would say, "Pickens you don't really have any investment in wind. You just have a promise for wind power and a huge ranch in north Texas." At that point T. Boone Pickens says, "Abracadabra," and poof the wind hanky is gone, but the natural gas remains.

From ABC's Good Morning America, July 8, 2009, [T. Boone Pickens says,] "He was unable to secure financing for the transmission lines, and now acknowledges that natural gas is "the only option at this point," although he said he sees it as a bridge from oil to cleaner fuels."

According reporter Jim Fuquay for the Fort Worth Star-Telegram's, "...the Public Utility Commission of Texas identified nine organizations to build various segments of about 2,400 miles of power lines in the nearly $5 billion project." Reporting on January 29, 2009, 6 months prior to T. Boone Pickens' claim that he was unable to get financing, Fuquay asks Jim Owen at the Edison Electric Institute how the utility companies were able to finance $5 billion in spending given the backdrop of how bad financial markets were. Owens responded, "Utilities are hugely capital-intensive," adding, "...if you have a regulated revenue stream, it helps significantly with the financing." So, T. Boone Pickens' excuse that he can't get financing seems a little bogus since he is working with a regulated revenue stream and he is claiming now when things are loosening up that financial markets won't lend when they were lending at the peak of the financial crisis for transmission lines.

When you analyze wind production of electricity and the demand for electricity you can see that wind alone could never fully replace natural gas in electric power generation. Wind, as even T. Boone Pickens understands it, is largely produced in a corridor that spans from north Texas to North Dakota, areas that are sparsely populated, while consumption of electricity is largely relegated to the coasts both east and west. T. Boone's wind farm could power a part of the Dallas/Ft. Worth areas... when the wind is blowing. What could be used to generate electricity when the wind isn't blowing? You guessed it, natural gas... or coal, or something else. There are other operational problems with wind too that make it difficult to fit into the grid completely. Wind, in north Texas tends to blow strongest at night, electric use is strongest during the day. Wind also blows steadily most of the winter long and doesn't blow nearly as much during the summer when electric use peaks as air conditioners turn on. Surprise, there is even a conflict built right into the plan. Wind blows the least at the height of peak driving season meaning that natural gas would have to pull double duty providing electricity for all those air conditioners as well as all those cars. What do we know from economics 101? High demand on a limited resource makes prices rise.

So, for me it is simple folks. I believe that T. Boone Pickens truly has a plan, it just isn't the plan he has spent millions of dollars promoting. I believe that T. Boone Pickens' desire has always been to inject oil money profits into his enormous investment in natural gas. I don't believe he ever had any intention of doing anything with wind power. He bought his north Texas ranch because it has water under it in an aquifer. Aquifers, according to the Energy Information Agency (EIA) are used by natural gas companies to store natural gas. I think he needs to get some of the water out for it to be a good place for him to store natural gas. That is the natural gas that he plans to pull off the market at peak demand, so he can then jack up the price to an unsuspecting public. On top of that T. Boone Pickens knows that some deep well aquifers store gas in the water itself. Natural gas and methane gas become water soluble under high pressure under the earth.

T. Boone Pickens' real plan, I believe, is to create much more demand for natural gas by injecting the transportation sector into its market. I also believe that he plans to force prices for natural gas to raise by removing natural gas from the market and hording it in an enormous natural gas storage facility in the aquifers under his ranch in north Texas. He plans to keep supply out of the market during peak air conditioning and the driving season causing prices for natural gas to skyrocket, then selling back the natural gas he horded at a premium at the top of the market. On top of that I believe T. Boone Pickens plans to make money on depleting the aquifer of water while extracting gas from the depressurized water. He plans to sell that water to the Dallas/Ft. Worth area of Texas on pipelines that he has laid down in a corridor originally designated to be for wind power, power lines. He plans to use that same corridor to pipe natural gas to be used for transportation, as well as using it to supply power plants in the region. However, there is one thing that I am almost certain about, I am afraid that wind power will never be transmitted through power lines along that corridor. T. Boone Pickens really doesn't swing that way, he is not an environmentalist, or a man truly interested in the prospects of making money with wind. In reality, T. Boone Pickens is an ultra-right wing, wing nut known for financing ultra-right wing campaigns and torpedoing even moderate political campaigns. I believe that Mr. Pickens fancies that he has performed a slight of hand having fooled a gullible American public in believing that he was planning on building a wind farm when in reality what he was doing was setting them up to be gouged for his natural gas.

And the pesky people say, "Mr. Pickens' we see what you are and we are not amused."  

I also believe that he plans to force prices for natural gas to raise by removing natural gas from the market and hording it in an enormous natural gas storage facility in the aquifers under his ranch in north Texas.

Is that even possible? What does the capacity of that reservoir look like relative to the amount that would have to be put into it?

As an aside, if you want to jack up the spot prices of oil or natural gas, all you need to do is stop pumping it: The gas fields it comes from worked fine to store it for millions of years.

Not that it is even evident to me that it is possible to make a spot market for a commodity that can only go where the pipelines go.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Aug 29th, 2009 at 01:15:59 PM EST

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