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Executive of the Year 2009 – T. Boone Pickens

Despite strong head winds, T. Boone Pickens tirelessly pushes plan to reduce America’s foreign oil dependence

Dallas Business Journal, by Chad Eric Watt — It’s just before 3 p.m. Central time, and T. Boone Pickens is tired.

The 80-year-old is on the final leg of a three-day trip spent promoting his plan to reduce American dependence on foreign oil.

In transit, and between speaking engagements (Oklahoma City, Washington, D.C., and Austin on this jaunt), Pickens has been checking with the traders running his two energy-focused hedge funds.

They’ve been struggling.

Energy prices are slumping. At 3 p.m. on Dec. 4, crude oil prices closed at $43.67 a barrel, down more than $3 on the day. Since their midyear peak, oil prices have fallen more than $100, costing Pickens about $2 billion.

A transformation of American energy policy, which seemed essential in the face of $4-a-gallon gasoline, has taken a back seat to the financial crisis, global recession and, on this particular day, the automakers’ financial bailout, which was still being hotly debated by Congress.

Aboard his Gulfstream G550 on the first cold day of December in Texas, Pickens is facing headwinds on all fronts, including a blue norther slowing progress between Austin and Dallas.

How do you know when to quit? When is it time to pull some chips off the table? Pickens doesn’t understand the questions. Past the age when most executives retire, he’s made more money for himself and investors than he did in a prodigious first 60 years.

But the last half of 2008 proved difficult for the oil tycoon turned energy activist. And it is largely because of the tenacious, against-all-odds fight he has launched for nothing less than America’s energy independence that T. Boone Pickens has been chosen as the Dallas Business Journal’s 2009 Executive of the Year.

In a nutshell, the Pickens Plan is an initiative to reduce U.S. dependence on foreign oil by 38% in the next 10 years. Pickens aims to accomplish that near-term goal by adding electricity-generating wind turbines in rural Plains states and connecting that power source to a national electricity grid.

Whether he ultimately wins or loses his quest to change U.S. energy consumption and production habits, Pickens’ impact on Texas, Dallas, the oil industry and universities from Houston to Stillwater, Okla., will be felt for generations to come.

At the moment, however, he has to focus.

In five hours, Pickens said while still airborne, he’ll be asleep. But first, a working dinner with the BP Capital staff.

The next day he’ll be up at 5 a.m. for exercise. Sleeping in tomorrow isn’t an option for T. Boone Pickens. He hasn’t gotten in his workout while he’s been on the road.

Similarly, changing his energy outlook, altering his hedge fund positions and toning down his energy dependence crusade are not options.

“He doesn’t drop anything. When he takes on anything else, his days just get longer,” said Bobby Stillwell, Pickens’ longtime attorney.

And when headwinds slow his progress, Boone doesn’t alter his course.

“That’s Boone at his best. He keeps going, under pressure, under distraction, he’ll keep going,” Stillwell said.

80 years, $3.1 billion and 1 plan

Despite the challenges he’s faced recently, Pickens accomplished much in 2008.

He celebrated his 80th birthday in May with a lavish bash at the Dallas Country Club thrown by his new wife, Madeleine, featuring entertainment from comedian Dennis Miller and singers Andrea Bocelli, Sarah Brightman and Katharine McFee.

He published his third memoir, “The First Billion is the Hardest,” and plans to donate profits from the book to programs supporting family members of wounded soldiers.

Apart from that project, Pickens and his foundation gave more than $118 million to charities, including Oklahoma State University, Big Brothers Big Sisters of North Texas and the Congressional Medal of Honor Foundation.

In addition to the DBJ recognition, Pickens was in the running for the Texan of the Year honor by The Dallas Morning News and Man of the Year by Time magazine, which went to Barack Obama. The DMN passed Pickens over, naming him No. 3. But the Texas Legislative Conference named him Texan of the Year in December.

Most importantly to Pickens, he’s made America’s dependence on foreign oil into a first-100-days priority for president-elect Obama.

The goal of the Pickens Plan is to generate 22% of U.S. electricity with wind. (Currently about 8% of electricity comes from all “green” options including wind, solar, water and other options.)

He would then take the natural gas that is currently being used to generate electricity and replace some gasoline as a transportation fuel. By Pickens’ math, that would amount to a 38% reduction in American reliance on foreign oil in the next decade.

Pickens has spent about $60 million of his own money advertising the plan, and countless hours of his own time in the last six months traveling to pitch the plan to practically any audience that fits his schedule.

At the same time, Pickens has ordered $2 billion worth of wind turbines to build what he said will be the largest wind farm in the world in the Panhandle town of Pampa, although plans for the project were put on hold last fall when his wind power company couldn’t find financing to buy the 667 General Electric turbines.

Despite that setback, his message still resonates.

“If it were not for Boone spending that money and engaging both parties in the debate, it would’ve been shoved under the carpet no matter who won,” said Ken Luce, California and Southwest region president for the public affairs firm Weber Shandwick and a former campaign strategist for Texas Gov. Rick Perry and others.

Pickens, a conservative through-and- through, has made inroads into the new Democratic regime, and it appears he’s being taken seriously.

He’s made his pitch to Carol Browner, Obama’s future energy czar, and North Dakota Sen. Byron Dorgan has pledged to introduce wind-power aspects from Pickens’ plan to the next Congress.

Pickens and California Democrat Sen. Nancy Pelosi, who as speaker of the House is the highest-ranking lawmaker in Congress, have collaborated to push for parts of the Pickens Plan.

Similar to the Obama campaign, Luce said, Pickens has built a database of supporters outside of Washington, D.C. Those backers are looking to take action, and should Washington attempt to put energy dependence back on the shelf, those backers will be ready to cry foul.

Pickens is confident that backers and reporters will make sure the issue will be on Obama’s short list.

“I think Obama, he’s got himself in a spot when he says no imports of Mideast oil in 10 years. I’ve stirred up the pot to the point where journalists will ask, ‘How’re we coming on that, Mr. President?’ ” Pickens said.

If Obama doesn’t reduce America’s dependence on foreign oil, then soon, Pickens said, “We’ll have to go in and take it.

“There’s no way this country can be secure importing 70% of its oil and half of that coming from the Mideast and Africa. We’re insane to do that,” he said. “We’re paying for both sides of the war. There’s no question about that.”

That grim assessment underscores the importance Pickens puts on his plan to replace a portion of transportation fuels with natural gas and replace natural gas electricity generation with wind power.

The Pickens gospel

But it’s a small part of the gospel he’s been preaching since July 8, the day Pickens unveiled his energy plan.

The Pickens Plan message is more focused on blue skies, whirling turbines and American empowerment. He’s been barnstorming the nation like a jet-powered revival preacher offering hope and jobs in a time of despair and cutbacks.

Like the revival preacher, Pickens can look you in the eye and say he’s not concerned about profits.

“At 80 years old, I don’t think you go out and put $50 (million) or $60 million in something trying to figure out how you’ll make money on it. It isn’t realistic,” Pickens said. “As far as the wind goes, gosh there’s a front-row seat for everybody. There’s so much wind between Texas and Canada.”

Every month since July, Pickens and his Pickens Plan entourage have spent about two out of every three days in the air delivering the plan in town hall and briefing-room settings.

At the same time, he’s been touting his book, which is half memoir and half advocacy piece for the Pickens Plan.

When he launches into his well-practiced whiteboard presentation on the Pickens Plan, it’s easy to forget that he’s 80 years old. Talking rapidly, his mouth is trying to keep up with his brain, and his right hand is racing to keep up with his words.

On stage, Pickens is slim and spry, he moves quick and deliberately, his brain always one step ahead. Up close, he shows some evidence of his actual years. His skin hangs a little loose and his face is etched with the striations that come from decades under Oklahoma and Texas suns. His hearing is weak.

Those signs of age are more clear between presentations and calls back to the office. As the year winds to a close, the tireless campaigner was looking a little tired.

Back to the airwaves

The Monday before his tiring December trek, Pickens kicked off the week in his office, shooting a commercial that’s set to hit the airwaves in January after president-elect Obama’s inauguration.

He had spent the prior Saturday watching his beloved Oklahoma State Cowboys football team lose an intense shootout to the Oklahoma Sooners.

That Monday, Pickens hit the office with the same kind of energy that filled Boone Pickens Stadium for the game. He launched into his script with a practiced delivery and a forceful Okie-Tex baritone.

“Goddamn, I’ve lived through 14 presidents!” he remarked as he read aloud the script.

Pickens got his workout in early this morning (lunges and squats with a 40-pound vest), and he’s practically playful. As the commercial crew that’s commandeered his conference room sets up, he peppers inside jokes into the script: “I’m back again, and now I got a little money back,” referring to a late fall rally in energy prices, which helped him regain some lost ground in his hedge funds.

As he wraps up the commercial shoot, Pickens chats with members of his campaign brain trust on energy policy.

“How many people now have a plan?” he asked. “Everybody has a plan now, is that coming off of me?” (Of course, the group he’s paying to push the plan says yes.)

Before waiting for an answer, Pickens is out of his makeup and visiting with a BP Capital trader to check on the markets — particularly oil prices and energy equities.

Their discussions are quick and decisive, and Boone moves on to someone else.

The office of BP Capital, on the second floor of a Preston Center office tower, is a comfortable beehive of activity. It’s finished with wood and leather chairs accented by Pickens’ personal and political mementos as well as large-scale hydrology, wind and geology maps. About 35 people work there, although it feels like twice that many. This is the place where Pickens looks most comfortable, most energized and most focused. His employees are loyal, happy to see him and work with him.

When attorney Stillwell retired from the Houston office of the Baker Botts law firm in 2001, Pickens talked to him about doing some work in-house in Dallas.

“We’re seven years into that program,” Stillwell said. “I didn’t ever get to work at 7 when I was at Baker Botts, but I do now.”

Hometown crowd

The Pickens Plan campaign has kept Boone away from the office more and more as he pushes toward the start of a new administration. So when the Borders bookstore at Preston Road and Royal Lane in Dallas hosted a book signing and talk by Pickens, his own employees mingled with plan fans and charity recipients — ranging from the Center for BrainHealth at the University of Texas at Dallas to the Dallas Junior League.

That late November day was an easy travel day for Pickens. Only Fort Worth and Dallas were on his itinerary.

Dallas businessman Fury Zaidi brought a white, natural gas-powered, convertible stretch Oldsmobile festooned with longhorns on the hood and pro-Pickens signs elsewhere to the signing.

The weird rolling billboard isn’t the kind of thing Pickens and his strategists would put together, but that’s the way grass-roots movements grow.

In addition to $60 million and counting on televisions spots, the Pickens Plan has included an active weblog and vigorous use of interactive Web 2.0 community tools such as Facebook and Twitter.

All told, the Pickens Plan counts 1.3 million supporters in cyberspace.

Zaidi, who runs a Beckley Avenue business converting gasoline vehicles to natural gas, has a stake in seeing the Pickens Plan put into action. But he’s also got questions for Pickens.

Pickens is a founder of Clean Energy Fuels Corp., the main operator of natural gas fuel stations in Dallas. So why, Zaidi wonders, is natural gas fuel so much more expensive in Dallas than it is on the West Coast?

Half an hour before Pickens’ arrival, Pickens’ fans had filled all the chairs set up for his talk, sitting quietly and reading copies of “The First Billion.”

The mostly male and middle-aged fans at the Preston Hollow event were sitting so politely that they didn’t even seem to notice Pickens and his entourage sweep in and conduct a talk radio interview and pose for pictures with gracious Junior Leaguers before he took the podium and delivered his familiar speech.

Less than a mile from his Preston Hollow estate, Pickens was at home and in his element. Surrounded by enthusiastic supporters, he stayed well past his required time to sign books and speak with fans. By the event’s end, more than 300 people left with one or more signed copies of his book.

Connecting with Dallas

Dallas has been a good fit for the oilman who left Amarillo for Dallas in 1990 and still has little good to say about the town where he built Mesa Petroleum into his first fortune.

In his newest memoir, Pickens notes that he even moved his parents’ remains from Amarillo to a cemetery in Holdenville, Okla., his birthplace. “I now had no reason to ever return to Amarillo. I felt I had overstayed in a small town,” he writes.

The people of Amarillo have mixed feelings about Pickens.

“With Boone Pickens, I’ve never heard the same story twice,” said Les Simpson, now the publisher of the Amarillo Globe-News. (Simpson arrived after Pickens’ Amarillo era, in which he famously feuded with the hometown newspaper.)

“With business success came business ego, and he wielded a big stick,” Simpson said. “He burned many a bridge when he left town.”

But people who worked for Pickens remember him fondly, said Jerry Hodge, chairman of Maxor Pharmaceuticals, which now occupies the 10-story building that was Mesa’s headquarters.

“We’ve got people who work for Maxor who used to work for Mesa who speak very highly of him,” Hodge said.

Hodge himself is in the midst of reading Pickens’ latest book and is ready to take one piece of advice.

“I’m getting ready to start working out,” said Hodge, 66.

Pickens connected with Dallas for several reasons. He writes: “Not only has the city accepted me with open arms, but I also soon realized the business significance of being headquartered in one of the country’s major metropolitan areas.”

In contrast to his Dallas bookstore pep rally, giving the same pitch in Austin to 23 freshman state legislators and University of Texas staffers in the shadow of the Darrell K. Royal-Texas Memorial Stadium some two weeks later, Pickens appeared less at home.

The new state House members, all elected 30 days before, were a bit like deer in Austin’s city headlights, trying to find their bearings around the capital and big political issues as Pickens launched into his whiteboard presentation chock-full of numbers.

“What about oil industry jobs? Wouldn’t the Pickens Plan threaten jobs in my district?” asked a young Houston legislator.

Pickens replied that his plan was about creating jobs, and reducing dependence on foreign oil. Like the book signing, Pickens lingered, speaking directly with newly minted state reps, including the gentlemen concerned about jobs there.

It’s important to Pickens to connect and talk to everyone who wants to speak with him.

“Even if you don’t have 10 minutes, you’ve got to take that 10 minutes,” he said, adding that he felt he was able to get the concerned congressman to come around.

Then he turned to a cell phone to resume the ongoing discussion with his hedge fund traders. The day wasn’t going well.

A pause on the upward climb

As energy prices last fall continued to follow the downward path of economic output and consumption, Pickens remained confident that the setback was temporary, even if temporarily costly.

When he kicked off the Pickens Plan, gasoline cost an average of $4.11 a gallon. At that rate, Pickens had pegged American spending on foreign oil at $700 billion a year — long before $700 billion became more associated with the government’s financial system bailout.

“That’s $700 billion at $140 a barrel,” Pickens said. “The dollar amount will vary with price, but the quantity just keeps going up.”

At current crude oil prices, that dollar figure would stand between $200 billion and $250 billion. But again, current energy prices are temporarily low, Pickens said. We’ll see $100 barrels of oil return very soon, he insists.

Underpinning that outlook is a firm belief in the peak oil theory — the concept that global oil production has already peaked and has begun to decline.

It’s a theory that major oil firms and petro-producing nations generally don’t ascribe to.

“The major oil company guys say it hasn’t peaked. I say ‘Why don’t you increase your production?’ ” Pickens said. “They don’t increase their production. The best they can do is flatline. Global supply is also on the same spot — 85 million barrels a day is all the world can do.”

A California trouncing

While the Pickens Plan has kept some of its momentum on the national stage, it was dealt a serious trouncing in California on November Election Day.

A proposition to use California funds to shift large fleet vehicles from diesel and gasoline to natural gas was defeated 59.5% to 40.5%.

One key factor in that was an active opposition that portrayed Pickens as a backer of the proposition standing to reap a windfall on the backs of California taxpayers, said Richard Holober of the Consumer Federation of California, one of the measure’s key opponents.

“Even after he spent $60 million nationally, our polling indicated few people had a favorable opinion of Pickens,” Holober said.

Luce, the Weber Shandwick PR specialist, said the California proposition actually got swept up in the sudden seizure of credit markets and California’s real estate collapse.

“It got caught in everything else, including the gay marriage initiative,” he said. “I believe there were bigger issues than just that.”

Still, Holober pointed out, several larger spending propositions did receive funding.

Even when things don’t go according to plan, Pickens can interpolate some value to his work.

“When we started on July 8, gasoline was (at an average of) $4.11 (a gallon); now it’s less than half that, so I did something,” Pickens said, straight-faced.

But at the same time, the decline in energy prices has caused him to put his plans for a giant Panhandle wind farm near the town of Pampa on hold. When natural gas prices go down, the economics of power generation by wind disappear. But the challenge for that project was getting access to financing.

While Pickens isn’t happy about delaying the wind project, he said lower-priced natural gas is good for the country.

“It’s sort of like seeing your mother-in-law go off the side of the mountain in your new Cadillac,” he quipped. “You have mixed feelings about it.”

Little time for reflection

There’s little that T. Boone Pickens has mixed feelings about. Practically every move he makes is done with certainty, attorney Stillwell notes.

“Once Boone decides he’s going to do a big project like that, No. 1, you know he’s been thinking about it a long time and, No. 2, you can only help him refine it and improve it,” he said. “You don’t know for sure when you start what the finish is, or at what point you declare victory.”

For commercial ventures, you know you’re finished when it starts making money. “With the Pickens Plan, that’s a patriotic personal fulfillment kind of thing,” Stillwell said.

“He already knows he’s gotten it into the national mix, and he knows (the Obama) administration transition team and Congress are supportive of part of it.”

On the flight back from Austin where he met with new lawmakers, Pickens is preoccupied by energy prices and the crisis du jour — a potential bailout for the Big Three U.S. automakers. Highlights of the day’s congressional testimony on that topic are running on his plane’s ticker television.

The prospect of an auto bailout disgusts Pickens, the former corporate raider/shareholder activist: “They divvied up the equity between management and the workers. Equity owners had nothing left,” he said.

A few minutes and a mini-catnap later, Pickens is back on the tarmac at Love Field, heading for his car.

“I’m going to work,” he declares to everyone.

It’s no surprise to his entourage. Despite the headwinds, literally and figuratively, it’s what he does. He never stops.

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Does this look like the traditional face of an environmentalist? Take a look at this interview with T. Boone Pickens about why he is investing in Wind Power in West Texas:

Investing in Wind

The concept of viewing our dependence on foreign oil as a historically massive transfer of wealth is excellent. It allows people on every side of the energy debate to frame it in a way that shows what is critically important about our dependence on oil.

I am a fan of locally produced energy. Even when we mine and burn coal, at least as a country we see the impact on our soil. Divorcing ourselves from our consumption (and consumption of anything, not just oil) is one of the first mistakes we need to rectify, and in a hurry.
I am a firm believer that once you frame consumption, reduction becomes a set of quantifiable goals. If you don’t have that frame, you have no place to start.

Now I am not naive enough to think that a lifelong oil guy like T. Boone Pickens is doing this out of the goodness of his heart. Like all of us he has larger motives – in his case mainly profit motives. In fact I would put money on the fact that this story is way more complicated than it seems.

Pickens has been taking advantage the odd regulations regarding drilling in Texas and is buying up land above a set of aquifers. So along with lobbying himself into a Water Authority and distributing water into the Dallas metropolitan area, I have no doubt that wind generated electricity can be easily transmitted down those same pipe lanes.

Eminent Domain is a wonderful concept.

If it turns out that there is Natural Gas on his land, then you can see the whole plan come together – one $2 billion pipeline, three critical services.
There is big money in this thing for Pickens, and all in all it is pretty brilliant if totally shady.

But in the end, I sit here and ask myself; “Do I Care?” And the answer is no. From the outset of embarking on this journey, I told myself that I didn’t care why people came to the table as long as they came. Well Pickens, came to the table because he saw huge money in wind power. I may not personally love all of his reasons, but his reasons frame the problems in ways many other people can identify with. And for that I am excited to welcome an old Oil Wildcatter to the party.

Let’s talk more about the transfer of wealth, it is a great point and one that I never would have conceived of if not for Pickens’ approach. It is simple and straight forward, and it matters.
Here is the You Tube explanation of the plan.

Here is the full website: www.pickensplan.com

Judge for yourself.