An Unvarnished Interview With T. Boone Pickens

  

Crude oil prices are plunging, but T. Boone Pickens isn’t surprised. The billionaire oilman has seen plenty of spikes and dips during more than 60 years in the industry, including some he predicted. 
Texas is producing more oil than it has in 30 years, and pumping twice as much as it did just three years ago. It now accounts for more than one-third of all U.S. production. The surge, however, comes as a stagnant global economy slows demand. 
West Texas Intermediate oil, the U.S. benchmark, has traded recently in the low-$80-per-barrel range, the lowest price since 2012 and a more than 20 percent drop since last June. 
For companies and countries highly dependent on oil money, the prospect of idled rigs and choked-back production has stirred fears about plummeting profits. 
So what’s next for Texas’ oil and gas industry? The Tribune asked Pickens, chairman of the hedge fund BP Capital Management and former CEO of Mesa Petroleum.  
After politely declining a cup of coffee – a drink he has never tasted, at his grandmother’s instruction – the 86-year-old discussed oil prices and other issues: natural gas-powered vehicles, natural gas exports and efforts to ban hydraulic fracturing in Denton. 
The following is an edited and condensed transcript of the interview. 
TT: These sliding oil prices have stirred plenty of concerns within the U.S. oil industry. Will they fall much further? 
Pickens: I think it can go down further. I don’t think it’s going to go to $60, but wouldn’t be at all surprised if it went down in the $70s. 
TT: What does that mean for Texas and its boomtowns? 
Pickens: There was an old bumper sticker back in ’86, it said “Dear God, just give us one more boom, and we promise not to piss it away.” 
TT: In drilling towns like Midland and Karnes City, officials say they aren’t too concerned right now, because they’ve budgeted conservatively, and energy companies have built up too much infrastructure to walk away. But should they be worried? 
Pickens: You’re not going to have a bust. But I think you will see capital expenditures cut in 2015 and see some rigs go down. You oversupplied gas, and now you’ve oversupplied oil. Nobody wants to stop drilling. We’ve screwed ourselves. That’s what we did.  
TT: Will U.S. drillers ever change that mindset? 
Pickens: Who would be the leader? In 1991, when the price of gas went down to a dollar, I announced that I was shutting down a platform in the Gulf of Mexico. Hell, I never got one call saying, “Bully for you – good idea, we’ll do the same.” 
TT: Just the nature of capitalism? Nobody wants to stop pumping first? 
Pickens: Probably so. 
TT: You’ve been pushing for us to find more ways to use the large supply of natural gas we’ve been producing. Texas now has at least 104 natural gas fueling stations – nearly a 50 percent increase over the past year, with 67 more planned to open in 2015. Is that significant progress? 
Pickens: I think you’re going to go towards more natural gas for transportation fuel. I’m not big on it for the passenger car. For the trucks, yes. 
TT: So commercial fleets are the answer because it’s easier to get those up to scale, in terms of long-term savings on fuel? Why not the personal vehicles? 
Pickens: The stations are in for the trucks. Those vehicles are burning 20,000 to 30,000 gallons a year, and the companies saving $1.50 to $2 a gallon. Personal vehicles don’t use enough fuel to get people to buy a more expensive vehicle. And when companies buy natural gas fleets, they can build their own fueling stations. 
TT: A lot of people are looking at Denton ahead of its vote on banning hydraulic fracturing within city limits. Many industry representatives claim such a move would create a domino effect, emboldening other communities to do the same. Do you subscribe to that theory? 
Pickens: Nobody’s told me yet what fracking damages. All it does is increase the resources available to you. It creates jobs and profits and taxes. Now tell me why would you want to shut it down? 
TT: Opponents cite fumes, truck traffic noise – some of which can be attributed to the industry’s presence in general, not specifically fracking. Texas is seeing more disputes between surface and mineral property, particularly as drilling moves into urban areas.   
Pickens: Most of it, I think, is generated by lawyers. For $500 an hour, they can come up with some reasons for not doing or doing things. 
TT: So you don’t think people living right next to drilling sites have any legitimate concerns? Some people in Denton have wells 300 feet from their homes. 
Pickens: I’m not going to worry about those people, because you’re talking about a handful of people. 
TT: Do you think a fracking ban in Denton would affect other towns? 
Pickens: If they shut down Denton, Texas, it would mean a lot to those landowners there, but not to anybody else. Can you think, now, how long we’ve talked about this? We’ve probably spent more than half of our time here, talking about Denton, Texas, or something like that. 
TT: It’s one of the biggest stories on my beat. 
Pickens: I think our time is best spent on the state of Texas. What do we have to offer that hardly any state in the United States does? It’s unbelievable, and we talk about trying to stop it? Just develop it safely and proceed. And I think we do that in this state. 
TT: Some industry officials have suggested that any distrust of drilling in Denton – or elsewhere – may be the fault of a minority of careless operators. Should the industry do more to clamp down on any bad actors – or address the perception that they exist? 
Pickens: If you want to criticize the oil and gas industry, say it created too many jobs. Companies have paid taxes, made money and employed one hell of a lot of people. Move onto something else. I’m tired of talking about this. 
TT: You’re not convinced that we should focus on ramping up natural gas exports. Why? 
Pickens: Leadership in the United States, with a little encouragement and maybe a little incentives, could direct cheap natural gas to be used here instead of shipping it out. When you start shipping gas out of Lake Charles (a planned export terminal in Louisiana), by the time you get it to a location it costs $10 or $12 (per Mcf, a unit equal to the volume of 1,000 cubic feet of natural gas). And at Lake Charles, it costs $3.50 today.  
TT: Plenty of politicians here (including Gov. Rick Perry) have called on the federal government to facilitate natural gas exports, saying it would bolster our global influence. 
Pickens: You can’t export a billion cubic feet until 2016. A billion cubic feet – it’s nothing. You have silly congressmen up here saying, we’re going to send gas to the Ukraine to take care of the Russians, who cut off Ukraine’s supply. You want to say, “Hey, how are we going to get it there?” Honestly, it’s embarrassing how little is understood about energy in Washington. 
TT: You don’t buy the idea that we can use natural gas as a weapon against Russia? 
Pickens: It’s silly. Shit no.  
Disclosure: T. Boone Pickens has been a major donor to The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here. 
Jim Malewitz is a write for the Texas Tribune where this story originally published. It is reprinted here through a news partnership between the Texas Tribune and the San Marcos Corridor News.
Share
Published by
Staff

Recent Posts

San Marcos City Council reviews Sidewalk Maintenance and Gap Infill Program

The San Marcos City Council received a presentation on the Sidewalk Maintenance and Gap Infill…

2 years ago

San Marcos River Rollers skate on and rebuild

The San Marcos River Rollers have skated through obstacles after taking a two-year break during…

2 years ago

After 8 Years, San Marcos Corridor News Bids Our Readers Farewell

San Marcos Corridor News has been reporting on the incredible communities in the Hays County…

2 years ago

High bacteria levels at Jacobs Well halts swimming season

Visitors won't be able to swim in the crystal clear waters of the Jacobs Well Natural…

2 years ago

Pets of the Week: Meet Sally & Nutella!

Looking to adopt or foster animals from the local shelter? Here are the San Marcos…

2 years ago

Texas still leads in workplace deaths among Hispanics

The Lone Star State leads the nation in labor-related accidents and especially workplace deaths and…

2 years ago

This website uses cookies.