WATCHING WASHINGTON PICKENS PUSHES NATURAL GAS

Dec. 10, 1990
with Patrick Crow T.Boone Pickens, general partner of Mesa Limited Partnership, says the Persian Gulf crisis should force the U.S. to question its energy priorities and rising dependence on foreign oil. He told Washington Gas Roundtable last week the crisis and environmental concerns make "natural gas solidly positioned to become the nation's premium fuel. The question is, when?" He said gas prices were at a 12 year low this summer, well under replacement costs for Mesa.

T.Boone Pickens, general partner of Mesa Limited Partnership, says the Persian Gulf crisis should force the U.S. to question its energy priorities and rising dependence on foreign oil.

He told Washington Gas Roundtable last week the crisis and environmental concerns make "natural gas solidly positioned to become the nation's premium fuel. The question is, when?"

He said gas prices were at a 12 year low this summer, well under replacement costs for Mesa.

Pickens lamented, "I don't understand why we pay foreign producers a premium for crude, while our own natural gas resources are being sold at a discount."

He said the nation has a large supply of gas, with 158 tcf of proved reserves in the Lower 48 and a substantial resource base beyond that.

GOVERNMENT'S LEAD

Pickens said the federal government should take the lead to capitalize on that asset by "immediately converting 500,000 federal vehicles to natural gas. What's more, they should quit purchasing gasoline powered cars and trucks completely after 1991."

He said that would give U.S. automakers "a needed push to become a global leader in the design and production of natural gas powered cars.

"We don't need more pilot programs to determine the merits of natural gas. America can't keep falling victim to the study-study, test-test, delay-delay, debate-debate syndrome."

The federal vehicle conversion would save taxpayers $137.5 million/year in fuel costs, he estimated.

"We could cut our foreign oil imports substantially and reduce our trade deficit in the process. And it sends an important message to the American consumer that natural gas is the fuel of the future.

"Next, Washington should influence oil companies to develop the natural gas infrastructure to make widespread conversions possible and practical. That can be achieved by encouraging and, if necessary, subsidizing the construction of compressed natural gas fueling stations across the country. That removes a key consumer concern about gas powered cars.

"Subsidies to develop a market for natural gas are better than tax incentives to encourage exploration of a resource already in oversupply.

"Tax breaks should be given to businesses and consumers who switch to U.S. produced natural gas, and help reduce our trade deficit in the process."

Along those lines, Pickens recently told Los Angeles officials in 3 years they could make their air quality "seem like the atmosphere in Geneva, Switzerland."

He suggested they give consumers a $2,000 tax credit for converting gasoline powered cars to natural gas the first year, a $1,000 credit the second, and impose penalties on gasoline powered cars the third year.

PRICE PESSIMISM

Although he's optimistic on the potential for gas demand growth, Pickens is pessimistic about prices. "Gas prices next year probably won't be any better than they are right now."

He said this winter's weather will be critical: All storage is full, and if the winter is mild, gas prices will drop by the first of February.

Pickens noted four of the five warmest winters in the past 30 years occurred in the last decade.

Copyright 1990 Oil & Gas Journal. All Rights Reserved.