T. Boone Pickens was a disrupter well before that term became widely adopted to mean a new technology or business model that shakes up an industry and threatens the future of the incumbent players. Prime examples include what the internet did to print newspapers and what Amazon did to retailing, but the pattern has been repeated all over the business universe.
Pickens mainly confined his disruption to his home territory of the oil and gas industry, although there was that time in the late 1980s when his corporate raider fame sufficiently spooked Boeing and the Washington Legislature into passing anti-takeover measures when he filed a notice of intent to acquire a sizable stake in the company.
Operating on the philosophy that "it has become cheaper to look for oil on the floor of the New York Stock Exchange than in the ground," Pickens went after several oil companies. In his best-known campaign, Pickens, through his company Mesa Petroleum, launched a takeover bid for the much larger Gulf Oil. Gulf sought refuge in a deal with Chevron, leaving Pickens with a consolation prize of hundreds of millions of dollars from the gain on Gulf shares he'd accumulated.
Later in his career Pickens, who died in September at the age of 91, attempted another disruption, this time on a much grander scale: a restructuring of the American energy economy.
The Pickens Plan, as it was billed, proposed a change in roles for natural gas and wind-generated electricity, and it's a plan worth revisiting not as a historical curiosity but as an illustration of the ongoing debate over what fuels to use for what purpose, and how dramatically the fortunes and circumstances of natural gas have changed since the plan was unveiled in 2008.
The Pickens Plan called for reducing U.S. dependence on oil imported from OPEC countries by switching to natural gas "as a principal transportation fuel for fleets and heavy-duty trucks."
It also called for increased electricity generation from wind and solar, strengthening the "backbone electrical transmission grid," and increasing commercial and residential building efficiency.
"Natural gas is not a permanent solution, it is a critical bridge fuel to immediately slash our oil dependence, buying us time to develop new technologies that will ultimately replace fossil fuels in transportation," says a description on the website pickensplan.com (which, as of early October, was still available for viewing).
"Natural gas is the critical puzzle piece RIGHT NOW [all caps in the original]," the description continued. "It will help add hundreds of billions of dollars to our economy every year instead of spending that money overseas on imported oil. That'll strengthen our economy, and help pay for our investments in a smart grid, wind and solar energy, and increased energy efficiency.
"By investing in alternative energies while utilizing natural gas for transportation and energy generation, America can decrease its dependence on OPEC oil, develop the cutting-edge know-how to make wind and solar technology viable, and keep more money at home to pay for the whole thing. It is this connection that makes The Pickens Plan not just a collection of good ideas, but a true, comprehensive, plan."
An expensive plan, though—Pickens Plan estimates at the time called for $1 trillion in spending on wind-farm development, with hundreds of billions more for moving electricity from generation point to consumption point.
A lot of that—the reference to natural gas as bridge fuel, for example—sounds highly contemporary, but there are some huge differences since 2008, starting with the matter of supply.
In 2008 the returns, in the form of huge increases in domestic oil and gas supplies, from hydraulic fracturing and horizontal drilling were yet to hit the energy markets and energy policies in full force. At the time the question was whether North America would have to import natural gas in the form of LNG. Some of the proposed LNG export terminals of today were import terminal proposals of 2008. Thus the Pickens Plan ran into the issue of whether there would be enough gas to do everything that would be expected of it, even with renewables offsetting some of the use for electricity generation.
(Interestingly, for a man who spent his professional life in the business, Pickens missed the call on the domestic energy revolution. Quoting from The Wall Street Journal obit story, "As fracking triggered a revolution in U.S. oil production, Mr. Pickens was initially skeptical that the techniques could produce enough to have an effect on global prices, a stance that proved folly." He also tried his hand at developing a wind-power project in Texas, but later scrapped that.)
Natural gas as a vehicle fuel wasn't a new concept in 2008. Buses, taxi cabs and fleet vehicles were all powered by gas. Paccar, the Bellevue-based parent of Kenworth and Peterbilt trucks, had been experimenting for years with natural gas-fired trucks. The technology worked best for fleets that wouldn't be ranging far from a central refueling point to which they'd return.
Ports interested in cutting emissions from short-haul and idling trucks are encouraging the use of natural gas. Nor was the idea limited to highway vehicles. Burlington Northern had one of its locomotives converted to natural gas (the work was done at a shop in Tacoma, Wash.) as an experiment in the early 1990s. Puget Sound Energy is building an LNG fueling facility at the Port of Tacoma to fuel Tote Maritime Alaska vessels.
But then, as now, natural gas as a motor-vehicle fuel hasn't been more than a niche market. With the rise of electric vehicle technology, it may not even maintain that status.
That's because of the huge swing in attitudes in environmental, and increasingly political, circles. Yes, Pickens was using the term "bridge fuel" for natural gas a decade ago, and yes natural gas has had plenty of controversies of its own, mainly stemming from fracking.
But the notion that natural gas shouldn't be used for anything—not power generation, not transportation, not home heating is—pardon the phrase—picking up steam, even though, unlike a decade ago when it was being nominated for multiple uses, we're now awash in the stuff.
Now it's electricity that is supposed to do it all, even as there are looming questions about having sufficient supply to do everything asked of it.
If we're not going to get it from coal or nukes or natural gas, and hydro is under its own pressures and constraints, and storage and intense grid-management technology are still in the developmental stages, are we putting a huge, risky bet that renewables are up to the task?
Pickens wanted energy disruption, with natural gas at the center of it, when he proposed his plan. Disruption he got, but not in the form he envisioned. More disruption we're likely to get, but it's increasingly looking like natural gas will be the target, rather than the instigator, of energy upheaval