The Pickens Plan

I’ve been hearing an awful lot about the Pickens Plan lately, and although I’m a little bit skeptical of its viability, I thought I’d attempt an objective look at what this former oil man is proposing. I’ve been to the site, and read through the proposal. I’m a little uncertain about his assertion that “oil production has peaked.” Suffice it to say that estimates of global oil reserves have never been all that accurate, and no one really knows how much oil is in the ground right now. In fact, just look at this headline from earlier today.

Mr. Pickens, however, is right about a lot of things. The current high gas prices are the result of high demand and low supply, so the best solution to drive prices down is to either increase supply or decrease demand. Give him credit for at least getting the economics right – which is more than we can say for any Democrat in congress. He’s also correct in his assertion that we are far too dependant on foreign sources for oil - having the lifeblood of our economy in the hands of people who at best dislike us, and at worst want nothing more than to see us destroyed, is not at all ideal. So, what exactly does T. Boone propose?

Contrary to some assertions, the Pickens Plan never purports to be a permanent replacement for our current energy supply structure. This plan seeks to “buy us some time” in order to allow development of new, long-term alternatives for the future. According to the Pickens Plan website, studies have shown that “wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States at a cost of $1 trillion.” Another $200 billion would be required to build facilities for transmission of this power to cities and towns.

My first response to those who want to see this type of power generation replace our current scheme is that wind, like solar power, cannot be relied on for continuous power generation. The wind doesn’t always blow…the sun doesn’t always shine, but I assume these kinds of contingencies have been included in the aforementioned studies. 20% at lease sounds more reasonable. The site also states that our nation currently relies on natural gas for 22% of our electrical production. The Pickens Plan proposes that we invest in wind power technologies in order to effectively replace natural gas in production of electricity. This would then free up the natural gas resources for use as vehicle fuel. This is where the plan looses me.

I don’t know a lot about Compressed Natural Gas vehicles, but one argument of proponents is that the technology is “already in place.” That is true. In fact, Canada tried, and failed, to get these vehicles to catch on in the 1980’s. A conversion can be done to standard Otto and diesel cycle engines, at a cost of several thousand dollars, depending on the vehicle, and new vehicles can and are being produced that run on natural gas instead of gasoline. Only one, however, the Honda Civic GX, is currently on offer in the U.S.

So let’s look at some of the drawbacks to CNG-powered vehicles. I’m not all that concerned about the whole emissions thing - I don’t necessarily buy into man-made climate change – so the bottom line is whether this is a viable alternative that can be cost effective.

First of all, it takes a lot more volume to store CNG than it does an equivalent amount of liquid gasoline. In other words, you have to have larger storage tanks in order to accomplish a range of travel between refueling that would be comparable to gasoline. The lack of infrastructure is also a serious problem. I don’t know about you, but I have never seen a natural gas refueling station. They do exist, but are not common in most parts of the country. Combine this with the reduction in range, and you have a big problem. This plan would require serious investment by the government, or private industry, in order to build up the necessary infrastructure to make conversion to CNG viable.

But what about natural gas supply in this country? Right now, 98% of the natural gas used in this country is from domestic supplies, according to Pickens. Almost all of that is used to generate electricity, and it’s generally done using combined cycle gas turbines, which have an efficiency of up to 60%. For the scientifically challenged, the efficiency of a cycle is the ratio of what you get out vs. what you put in (or net power output vs. required fuel input). CNG engines are internal combustion engines, and won’t see an efficiency of more than 20%. In other words, we’ll have to use even more natural gas to produce the same amount of power in vehicles. The Pickens site also claims that “domestic natural gas reserves are twice that of oil.” That may be, but how do we know that we have enough to replace the current demand for petroleum-based fuels, accounting for the loss in efficiency?

And what happens when natural gas reserves run out? I realize that this has been proposed as a temporary solution, and that at least makes it worth debating. But the cost would be astronomical, and I don’t see any private companies being willing to take the risk of investing in CNG as a replacement for gasoline…which means government – talk about inefficiency – which means higher taxes. I’m willing to make some changes if it means getting us off foreign oil, but the thing that makes the most sense right now is to drill. We have oil available in Alaska, off the coast, and elsewhere that we need to access and refine. We need to make a move towards implementing nuclear power as well. Solar and wind power should be pursued and implemented to the fullest extent possible, but they are not long-term replacements for our current energy structure. Neither is drilling for more oil. However, an approach that makes use of every available option can give us time to develop more realistic alternatives.

I appreciate Mr. Pickens’ efforts, and I honestly believe he means well. If nothing else, he has helped to instigate a necessary debate about this issue. I can’t wait to see what American ingenuity produces as a solution to this problem.