T. Boone Pickens talks Canada-U.S. energy, Keystone and Trump
Winding his way through downtown Calgary in the back of a limousine, legendary oilman T. Boone Pickens muses about crude prices, the Keystone pipeline, the future of the energy industry — and Donald Trump.
The larger-than-life U.S. tycoon points out he’s seen the sector endure at least five major downturns since the 1980s with the price of oil falling by more than half.
Despite volatility in commodity and equity markets, the billionaire investor has never been shy about forecasting the price of crude, or talking bluntly about hot button issues facing the oilpatch.
And he’s not about to stop today.
“You’re going to see $60 oil by the end of the year,” Pickens said Wednesday, moments before jumping into the vehicle to head off to the Calgary airport.
“It’s going up, there’s no question. You only have 342 rigs running in the United States where in November ’14, we had 1,609 rigs.
“You have Nigeria in terrible shape, you have Venezuela about to go belly up and you have northern Iraq struggling. So there’s going to be a good price for oil. Just give it a little chance.”
Trained as a geologist at Oklahoma State University, Pickens lived in Calgary in the late 1950s and ’60s and still returns to see friends. On Tuesday night, he was back for an event for the Hotchkiss Brain Institute, named for his friend Harley Hotchkiss who died five years ago.
By his own account, the 88-year-old American “made a lot of money in Canada and it was great living here.” His oldest daughter graduated from Henry Wise Wood High School and he remembers when the Great Canadian Oil Sands project was first launched.
Pickens returned south of the border and started his own oil company, quickly becoming famous for his aggressive, acquisitive strategy.
He appeared on the cover of Time magazine in 1985 under the headline The Takeover Game: Corporate Raider T. Boone Pickens, and later founded investment firm BP Capital Management.
But it’s his candid views on energy that keep business leaders, analysts and the media coming back for his insights.
Asked about the state of markets today, Pickens rattles off key statistics about why oil prices will continue to rebound by the end of the year.
With only 20 per cent of the rigs running south of the border, U.S. oil production has fallen sharply from 9.7 million barrels per day, he notes.
“We lost a million barrels and it’s declining fast. And you can’t replace that decline. You’ve got to run 750-800 rigs to keep that up.”
He doesn’t see a return to US$100 a barrel “for several years, probably” but thinks normal winter weather could erase a glut of natural gas that’s depressing prices.
Pickens remains an energy continentalist and believes a formal North America energy alliance would be beneficial for all sides, providing more access for Canadian producers.
“They just need a market. And the best market, of course, is the United States because it is so close. You don’t want to go to the east coast of Canada and ship it, unless you have to.”
But in Canada, there’s growing frustration over an inability to get new oil pipelines built in any direction, including south.
The Obama administration’s rejection of TransCanada Corp.’s Keystone XL oil pipeline last year still sticks in his craw.
After it was turned down, Pickens wrote an open letter to Canada apologizing on behalf of his fellow Americans for the decision and asking Canadians to “please have patience. The Keystone pipeline will happen.”
He still feels that way. As a supporter of Donald Trump, Pickens believes it will take place after this year’s election.
“If we get Trump as president, you will have the Keystone pipeline. And if we get Hillary Clinton, you will not have the Keystone pipeline. It’s that simple. But I think Trump will win. So we’ll see.”
Trump comes with his own complexities for the energy industry with his views on Keystone. The businessman-turned-politician has stated he would approve the cross-border pipeline, but only if the U.S. receives a “piece” of the project’s profits.
“He doesn’t know what he’s talking about,” Pickens says. “But he, Trump, is a smart guy and can be informed and he’ll understand how it all works.”
There are other hurdles, of course. The pipeline turned into a political football in the U.S. Congress and became a magnet for criticism about greenhouse gas emissions from the oilsands.
Why would a new U.S. president reverse course following such a heated, partisan debate?
“Because the United States needs oil… We use 20 million barrels a day and produce nine. So we need oil and the closest oil to us is Canadian oil. It’s so simple to see where the oil is, see where the market is.”
Pickens doesn’t have much time for Obama’s worries about Keystone, insisting the outgoing president remains ill-informed on energy policy.
A former investor in wind farms, Pickens believes it’s also unrealistic to expect the world will be able to replace fossil fuels with renewable energy in the short- or mid-term, calling the notion “idiotic.”
“There is no way that can happen. You need the fossil fuels and we are going to have them for the next 50 or 100 years,” he says.
As for the fallout of Trump potentially winning, Pickens thinks it would be good for Canada-U.S. relations and energy trade between the two countries.
“It would be a lot easier for us to do business — the United States and Canada – than it was in the Obama administration. Canada would like it.”
As the limo pulls up in front of the airport, Pickens concludes with his thoughts on the ugly downturn that’s battered energy companies for almost two years.
“Don’t have the idea that the oil and gas industry is dead,” he says with a drawl.
“We still have an industry here and they’re going to come back. It won’t be exactly like it was, but it will look a lot like it.”
Chris Varcoe is a Calgary Herald columnist.
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