Interview: T. Boone Pickens on His Energy Plan

T. Boone Pickens is a bit ornery these days. Not that this isn't his normal disposition. The legendary oilman didn't build a net worth of $3 billion and become one of the most ruthless corporate raiders of the 1980s by being agreeable. But Pickens's recent consternation is understandably a little more intense than usual. A year after he unveiled his $10 billion bid to save America by planting wind turbines up and down the Midwest, thereby helping wean us off some of the $475 billion of foreign oil we consume each year, the Pickens Plan is now stuck in the mud, if not dead on arrival; its obituary already written by most media outlets: "Pickens Plan for Huge Wind Farm Blows Away" read a CBS News headline last month.

Pickens insists the criticism is just a bunch of hot air and that we're missing the point. Sure, there've been some setbacks to his wind plan, most notably a steep decline in the price of natural gas that makes wind untenable at the moment. But the Pickens Plan, he says, wasn't just about wind, but about reducing dependency on foreign oil; cheap natural gas does that. Pickens still has to figure out what he's going to do with the 667 wind turbines he bought from GE for $2 billion, and which are still slated for a 2011 delivery. Problem is they won't have anything to hook them into the grid. The Texas panhandle transmission lines Pickens was planning to finance himself have been delayed, and it now appears that Texas electricity customers will foot the roughly $5 billion bill. But that won't happen until 2013. So Pickens has to find a buyer. The secondary market for wind turbines isn't exactly a liquid one. Yet he insists it won't be a problem, and that despite reports of his own demise, that he's more bullish than ever on renewable energy in the U.S. Pickens spoke to NEWSWEEK's Matthew Philips.

What are you going to do with all those wind turbines you bought?
Well, I'm committed to them, so right now I'm looking for deals on where to put them. They're scheduled for delivery in 2011, so I have to have someplace for them to go. We'll probably announce the first deal within the next two to three weeks. We're still negotiating. But those deals will be made.

I can't imagine it's easy to find a buyer for 600 wind turbines. Are you going to lose any money on this?
Oh, I fully expect to make a profit.

There's been a lot of talk that the Pickens Plan is dead. Is that the case?
Show me where I'm dead. Things didn't go off like I hoped they would. But am I out of the wind business? Hell no. I've got $2 billion committed to this, which is a good-size interest, if you ask me. So I'm in the wind business, and that's because I think there's a future in the wind business. Nothing's changed.

What happened with those transmission lines in Texas?
The price of natural gas dropped. When it goes below $7 [per cubic feet], it's hard to finance those lines. We're now at $4. But actually natural gas helps the Pickens Plan when it's down. The goal was always about reducing the dependency on foreign oil, whether by wind or natural gas or whatever. So having a cheap, abundant supply of natural gas is crucial, and now we do after that Colorado School of Mines report [which found another 1,000 trillion cubic feet of natural-gas reserves in Texas, Louisiana, and Arkansas] came back. That elevates us above the biggest gas producers in the world: Russia, Iran, and Saudi Arabia. So now we're not just a sitting duck. Now we have our own resources and can at least start negotiating for the price of oil. But to do that we've got to start directing that natural gas into our transportation cycle.

You mean retrofit our cars and trucks to run on natural gas?
You got it. Especially for our heavy-duty transportation fleet. You convert the 350,000 eighteen-wheelers on the road from running on diesel to running on natural gas, that saves us 2 million barrels of foreign crude a day, and the rest is gravy. Plus, think of the jobs that'll create. We import 5.5 million barrels a day of Russian crude—you think they're our friends? I don't think so.

And how long can that last? Our natural-gas reserves? And aren't we still just burning fossil fuels?
The natural gas takes us for about 25 to 30 years down the road. By then, Al Gore tells me, we'll have a battery good enough to run our cars. So natural gas is a bridge, a necessary bridge, from here to the future. But as for the fossil fuels—look, I'm for anything that's American that solves this problem of shipping so much of our wealth over to countries that don't like us. It's the biggest national-security issue in the history of this country. And I'm always amused by the people who say we don't have the infrastructure to do it, or the political will to do. Well then, go with foreign oil, pal! I swear, we gotta start thinking positive.