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T. Boone Pickens' Motives in Energy Plan Questioned


By Dave Michaels
Dallas Morning News
August 7, 2008


Railing against the "club" of Big Oil and promising to shake up
"management entrenchment," T. Boone Pickens once turned his epic takeover
battles with oil companies into a national effort to make public companies more
accountable to shareholders.

He modeled his effort on a political campaign – complete with lobbyists,
grass-roots supporters and his own money. A corporate raider whose duels with
incumbent managers earned him millions, Mr. Pickens became the public advocate
of shareholders betrayed by dull corporate bosses.

Now 80, Mr. Pickens is again casting business as a "crusade," as a Democratic
senator once put it. On commercials and in testimony before Congress, he is
urging the country to use more wind power and natural gas – the focus of his own
investments – to wean itself off foreign oil.

While the Texas oil and gas executive has downplayed his self-interest – he's
made enough money, he says – a company that he founded has engineered a
California ballot initiative to put $5 billion toward renewable-energy
incentives, much of which would benefit the firm, known as Clean Energy, by
subsidizing the purchase of vehicles powered by natural gas.

Critics say the referendum, Proposition 10, could undermine Mr. Pickens' effort
to portray his "Pickens Plan" as a selfless crusade.

Based in California, Clean Energy is the biggest provider of natural gas for
transportation needs. Mr. Pickens has long cultivated political ties in
California, a state friendly to clean-energy interests. He recently gave Gov.
Arnold Schwarzenegger a private briefing on the Pickens Plan. Neither Mr.
Pickens nor his aides deny his financial interest in both the national campaign
and the California initiative.

"That is how he's hard-wired," said Michelle Laxalt, Mr. Pickens' longtime
lobbyist in Washington. "He is very straightforward about that."

But Ms. Laxalt and others close to Mr. Pickens' effort insist money isn't the
big prize. Mr. Pickens is focused on advocating an energy policy that stresses
American security, they say.

"He wants to see Americans move into a domestic self-reliance, which protects us
from a lot of creepy people who hate our guts," Ms. Laxalt said.

Energy analysts have questioned Mr. Pickens' vision and say he's offered few
supporting details. According to the Pickens model, wind power would replace
natural gas in power generation, freeing up natural gas – produced abundantly in
the U.S. and Canada – for transportation.

Mr. Pickens has invested more than $2 billion in turbines for a wind farm in the
Texas Panhandle. But without new transmission – paid for by utility customers –
the power can't be moved to population centers where it's needed.

"A lot of what he's trying to do is add value to a stranded asset," said Kenneth
B. Medlock III, an energy fellow at the James A. Baker III Institute for Public
Policy at Rice University. "It's a misnomer to say he's doing this with the
country's best interests at heart, because he's obviously got millions of
dollars on the line."

Stepping up campaign

Mr. Pickens has been promoting wind and natural gas as alternatives to oil for a
long time. But he's made a big splash since announcing a $58 million advertising
campaign that allows him to speak directly to voters about his ideas.
Lawmakers from both parties have quoted his plan, and some pending legislation
would help move it along.

"I'm glad he's sending the message," said Rep. Joe Barton, R-Ennis and ranking
member of the House Energy and Commerce Committee. "He may fine-tune it for his
self-interest, but that is kind of the American way."

The California ballot initiative, funded almost entirely with $3.2 million from
Clean Energy, would include about $2.9 billion to rebates for consumers who buy
vehicles that don't run on gasoline or diesel, which create more pollution than
natural gas.

The measure's critics say the initiative promotes natural-gas vehicles over
other technologies. The biggest rebates, of $35,000 and $50,000, would go toward
the purchase of heavy-duty trucks and transit buses fueled by natural gas.
The largest rebate for passenger vehicles – $10,000 – would be offered for
"dedicated clean alternative fuel vehicles," according to the proposed law.

While electric cars would eventually qualify, only natural-gas vehicles are
available now.

"A lot of people are recognizing the initiative was set up to favor the
natural-gas industry involved in the transportation sector," said Dan Kalb,
California policy director for the Union of Concerned Scientists, a nonpartisan
group working on science environmental policy.

Faulting federal policy

Andrew Littlefair, Clean Energy's chief executive, said the company pursued the
state initiative because federal policy hasn't done enough to assist alternative energy.

In some cases, California offers more funding than the federal government for
projects, such as cleaner-fuel school buses, Mr. Littlefair said.

"A lot of people have learned that if you want this stuff, you don't wait for
the federal government to do it," he said.

So far, the initiative has received little media coverage. Its opponents plan to
highlight its overall cost, about $10 billion, at a time when California is
seeking cuts to deal with a $15 billion budget deficit.

For some critics, the referendum highlights Mr. Pickens's propensity to market
his business ventures as the tides that raise all boats.

Mr. Pickens often characterized his 1980s corporate-raider activities as efforts
to make money for shareholders poorly served by risk-averse corporate managers.
That prompted former Ohio Sen. Howard Metzenbaum to remark: "Pickens makes a
crusade out of what he's doing because he can make a lot of money."

More recently, Mr. Pickens has said a separate effort to sell West Texas water
to other cities has raised property values for landowners with water to sell.
"Prop 10 just has all the earmarks of legislation designed to benefit a
particular corporation, in this case majority-owned by Mr. Pickens," said
Richard Holober, executive director of the Consumer Federation of California.
"That is going to undermine his credibility in promoting the national scheme."

Mr. Littlefair disagreed. Mr. Pickens displays a streak of populism, but is
willing to put his money behind big ideas, Mr. Littlefair said.

"What Boone would say is capitalism is what this country is based on," Mr.
Littlefair said. "We like to think that you can do good for society and also do
well. You shouldn't apologize for that."

On commercials and in public appearances around the country, T. Boone Pickens
has promoted an energy plan that he says would reduce U.S. oil imports. While
the plan has gained currency in Washington, some critics have said it's too
tinged with Mr. Pickens' own financial interests.

A LOOK AT THE PICKENS PLAN

•The plan relies on a combination of wind power and natural gas to displace a
significant amount of petroleum used for transportation. And Mr. Pickens has a
lot of money tied up in wind and natural gas.

•Mr. Pickens' power company, Mesa Power LLP, is planning a $10 billion wind farm
in the Texas Panhandle and has already ordered $2 billion worth of turbines.

•Mr. Pickens is majority shareholder of Clean Energy, the largest supplier of
natural gas for transportation in America. The company has lost money since 2006
and faces more losses in 2008 as it expands its natural gas fueling
infrastructure. Clean Energy has underwritten a California ballot initiative
that would boost demand for its product by subsidizing the cost of vehicles that
run on natural gas.

 

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