T. Boone Pickens was the featured guest at the Hudson Institute in Washington, DC for a conversation hosted by Arthur Herman. This conversation is well worth watching because of the historical nature of the oil and gas industry through which Boone leads the audience. This is fact-filled but also generous with the famous Boone Pickens sense of humor.
To set the stage, Boone said that we use about 20 million barrels of oil per day (70 percent of that is used as our primary transportation fuel) and we import about half of it.
Boone talks about the tremendous impact horizontal drilling and fracking have had on the industry.
“I didn’t believe horizontal drilling would work when I saw it the first time. You have one well, you bend the pipeline 90 degrees and extend it out 10,000 feet; you frack it 40-60 times and you have access to all that oil or gas with just one hole and one rig.”
On American technology, Boone said, “When I got out of Oklahoma State University in 1951, we knew that over 90 percent of all the oil in the world had been found by American geologists and geophysicists. Today, 65 years later, it’s still about the same.”
Will oil prices go up? Boone thinks so: “Today we produce 93 million barrels per day worldwide. 70 percent of that goes to transportation fuel. The demand is growing, so next year we’ll need 94.5 million barrels a day, but oil fields tend to deplete at about 4 percent a year. So, globally, we are seeing modest growth on the demand side, and modest reduction on the supply side. What happens? Prices have to go up.”
What about the military cost involved in protecting Middle East oil? Boone told the group that 17 million barrels a day passes through the Straits of Hormuz. The U.S. gets about 1.2 million barrels – less than 10 percent – yet American taxpayers fund 100 percent of the costs.
“I asked the Pentagon if we could charge China and India and Europe for their share of those costs. They told me ‘We can charge them, but they won’t pay it.’”
On one of his favorite subjects, The Pickens Plan, Boone reminded the audience that he was not interested in changing passenger vehicles over to natural gas. But, moving from diesel to natural gas for heavy-duty trucks would save the truckers money because natural gas is much cheaper on a BTU-equivalent basis, it’s cleaner than diesel, and because of our enormous natural gas reserves we don’t have to worry about protecting someone else’s natural gas supplies.
Boone was asked: If the next President asked you what three elements of an energy policy should be, what would you say? He replied that he would say that the speech should begin with, “We will use our own resources.”
Second, Boone would tell them that we need to bring together Canada, the U.S. and Mexico to make it one oil and gas market as the North American Energy Alliance.
Third, get heavy-duty trucks on natural gas – not passenger cars or light trucks – and we can save 3 million barrels of oil per day.