Special Reports
Pickens' Natural Gas Idea Picking Up Steam - Going Green

By Jennifer Alsever
October 31, 2008

What will power your car a decade from now? Billionaire T. Boone Pickens is
betting big that it will be compressed natural gas.

The former oil tycoon has put $58 million into touting his "Pickens Plan" in TV
ads, YouTube videos, town hall meetings and media interviews to get people
talking about boosting wind power for electricity and using the nation's natural
gas supply for the next auto fuel.

The publicity is working. After years of a relatively low profile in the
alternative fuel discussion, compressed natural gas or "CNG" vehicles are now at
the forefront of a national debate.

"No one would be talking about CNG in vehicles but for T. Boone Pickens’ ad
campaign," said Tyson Slocum, director of the energy program for Public Citizen,
a consumer advocacy group.

Multiple congressional bills aim to expand the use of natural gas vehicles,
proposing new research programs, tax incentives for automakers and changes in
fueling station requirements.

In California, a fight is under way over Proposition 10, a November ballot
initiative that would authorize the state to issue $5 billion in bonds to
provide financial incentives to buy and develop such vehicles.
Critics charge that Pickens' own financial interests drive the push for CNG
cars. He is the largest shareholder of Clean Energy Fuels, a Seal Beach, Calif.,
company that builds natural gas filling stations for buses and fleet vehicles.

Clean Energy is also the author and co-financier of the California ballot proposal.

Pickens also has come under fire for misstating some facts in the debate. For
example, he contends in media interviews and in ads that the United States
spends $700 billion on foreign oil, but the figure is closer to $327.6 billion,
according to the U.S. Energy Information Administration.

And critics point out that natural gas is a finite resource, just like oil.
“Most environmentalists believe natural gas is not the future,” said Richard
Holober, executive director of the Consumer Federation of California, which is
opposed Prop 10. “This is an attempt to divert public money away from
zero-emission vehicles to a dead-end technology that gets us nowhere.”

The group estimates the bond issue will cost state taxpayers $350 million a year.

Natural gas industry executives say CNG is a cleaner alternative to gasoline —
producing 23 percent less greenhouse gas than diesel vehicles and 30 percent
less than gasoline vehicles. And thanks to new drilling technology, they say,
unprecedented amounts of natural gas can be obtained domestically and at far
cheaper prices — about $1.50 a gallon.

“It is the most viable technology that you can do on a big scale,” says Jim
Harger, a senior vice president of Clean Energy. “We have a glut of natural gas
across the country. It’s right here in our backyard. We can do this now. It’s
all ready to go.”

Harger said more than a dozen automakers, including Porsche, General Motors and
Volkswagen, now make natural gas vehicles for the European, Argentinean and
Brazilian markets. But the only domestically available natural gas car is the
Civic GX from Honda.

Since Pickens began pushing his plan last summer, Honda has seen increased
demand for the Civic GX, said Todd Mittleman, American Honda Motor Co.’s
environmental specialist. But the number sold is still tiny — just 2,000
vehicles nationwide. Honda continues to heavily invest in research and
development of battery electric and hybrid vehicles, but “as gas prices remain
high, there will be growing demand for CNG vehicles,” Mittleman said.

One of the biggest challenges for CNG vehicles is a lack of fueling stations.

There are only 1,200 natural gas stations in the nation, compared with more than
100,000 gas stations. So even if you buy a CNG car, you might not be able to get
very far.

Pickens wants to change that. His Clean Energy Fuels is building 35 to 40
filling stations across the country and last month purchased a Toronto company
called FuelMaker, which sells a home fueling device — called Phill — that lets
people gas up at home via a natural gas line. The machine costs $3,500 and
another $500 to $1,000 to install.

“It’s going to be an excellent bridge to move people away from gasoline to
natural gas because they can fuel up at their house,” said Harger of Clean
Energy. “People will be able to buy these and use them in their home and
essentially never have to go to fueling station for a commuter car.”

Despite the CNG buzz, a number of energy experts argue that natural gas is the
wrong direction for the nation, because it would simply replace one limited
fossil fuel for another and require costly vehicle conversions and a new infrastructure.

“While CNG is somewhat cleaner than gasoline, moving to a new fossil fuel to
power our cars is expensive and is a lower priority than increasing fuel economy
and moving away from fossils altogether,” said Therese Langer, transportation
director for the American Council for an Energy Efficient Economy.

Plus, the price of natural gas is not guaranteed to stay low if millions of cars
and trucks start relying on it, said Slocum of Public Citizen. “As we know,
prices and markets change based on supply and demand, so you will see prices
increase,” he said.

In the short term, carmakers should invest in fuel efficiency technologies like
turbocharging, direct injection, lightweight materials and hybrids, said Langer.
In the longer term, electric vehicles, powered by batteries or recharged through
a plug, will be increasingly important, she said.

General Motors moved in that direction last month when it unveiled the Chevrolet
Volt, an electric car powered by a 400-pound lithium-ion battery with enough
power to go 40 miles on a single charge before switching to a gas engine. The
gas engine then creates electricity on board to power the car for several
hundred additional miles.

GM expects production of the Volt to begin in November 2010, but the company is
continuing to develop the battery technology. Industry watchers expect the car
to be sold for about $40,000.


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