Pickens spoke recently with DC VELOCITY
Senior Editor Mark B. Solomon about the
project and its challenges and implications.
QDo you have a realistic number for the size of the conversion potential?
AEight million trucks out of 250 million vehicles in America. Heavy-duty trucks
use 20,000 to 30,000 gallons a year. That totals
3 million barrels a day. We import 4. 4 million
barrels a day of OPEC (Organization of the
Petroleum Exporting Countries) crude. So
you can knock out 70 percent of OPEC oil by
going to domestic natural gas for heavy-duty
trucks.
QThe biggest challenge at this point is building out a robust natural gas fueling
and maintenance infrastructure. Can this network be developed without some form of government assistance?
AWhat you want to get from the govern- ment is a tax credit to offset the $24,000
cost differential between diesel and natural gas
trucks. That differential will be there for a
while because of the size of the engines.
Eventually, the differential will disappear
because you can otherwise build natural gas engines as
cheaply as you can build diesel engines.
Because natural gas is cheaper than diesel, the fuel savings
will be such that you won’t need federal money for the
infrastructure. The conversion is going to happen without
government help. What you want from the government is
the help to make it happen faster.
QWhat is your time frame for this conversion?
AFive years with government leadership, 10 years with- out leadership.
QAs we talk, oil prices have come off their highs, while natural gas prices have begun climbing from historic
lows. Do you have projections as to where these prices will
be a year from now?
AAbout $115 a barrel for Brent North Sea crude (world oil prices), and $95 to $100 a barrel for West Texas
Intermediate crude (domestic). Natural gas prices will
probably be at $3.50 to $4 per million BTUs (British thermal units).
QMany natural gas producers have scaled back produc- tion because prices are not compensatory for their
investments. That could explain why prices have been rising
lately. What would be a good price point for natural gas that
would encourage production but not choke off demand?
A$5 [per million BTUs] would put producers back to work.
QWhat’s it going to take to maintain the industry momentum to convert from diesel?
AThe fuel is cheaper. That’s the bottom line. If I am competing against you and you can cut your fuel bill
by a third, I have to do the same thing to be competitive
with you. That’s where the industry is. It’s happening right
now.
QDoes it require shipper buy-in, or is this something truckers will do independent of shippers?
AShippers are asking for this. They want to get away from the diesel surcharge. There is no surcharge on
natural gas. Shippers are asking for two prices for shipping,
natural gas and diesel.
QHow much will it cost to modify each station to accommodate natural gas refueling?
AAbout $1.5 million to $2 million a station for liquefied natural gas. The exact figure would depend on site
improvements, which include driveway ingress/egress,
retention ponds, landscaping, lighting, and street and curb
improvements. If stations add compressed natural gas, special equipment and dispensers would add about $750,000
to the cost.
QYou’ve said you support Mitt Romney’s candidacy because he has a credible energy plan, whereas
President Obama has had three and a half years to deliver
one and has not. Have you discussed your conversion plan
with Gov. Romney?
