Nathan VanderKlippe

Calgary — Globe and Mail Update, Wednesday, Jun. 17, 2009 06:03PM EDT

T. Boone Pickens expects natural gas prices to hit $7 (U.S.) by next year, nearly double their current value, the Texas oilman told a Calgary audience on Wednesday.

“I bought a 12-month strip for $6.02, and when I did it, I said I'm going to make $1 off of it. So I think the average price next year will be $7,” he said.

Natural gas spot prices rose nearly 10 per cent Wednesday, but remain at $4.17 per thousand British Thermal Units.

Mr. Pickens said he is also looking to Alberta for a potential wind investment. He gave few details, save that he has planned a meeting during his trip to Calgary for a discussion along those lines.

“I mean, if it's a better deal in Alberta than it is in Texas, I'd be more interested in Alberta than I would in Texas. I want to take the best deal I can wherever I invest,” he said.

His main focus, however, remains on U.S. energy security. Mr. Pickens has pushed U.S. lawmakers to create subsidies for diesel-powered semi-trucks, as part of his work to urge a new energy plan for the U.S., which he believes must dramatically reduce its dependence on foreign oil.

The Obama administration will bring forward such an energy plan by this fall, he said, although he had reassuring words for Canada, and the industry that has supplied much of his wealth.

“It's going to be good for America, it's going to be good for Canada, it's going to be good for the producers, it's going to be good for everybody,” he said. “I can only see that the only loser in this deal is foreign oil. And I don't call you foreign. You don't look foreign.”

The legendary oilman drew a sold-out audience of 770 guests, including leaders from Canadian Natural Resources Ltd., Nexen Inc., Pengrowth Corp., TransAlta, TD Securities, TransCanada Corp., BMO Nesbitt Burns and some of the city's largest law firms and engineering companies. The event was arranged by the Calgary Chamber of Commerce.

Mr. Pickens created tremendous goodwill for himself in Calgary last year, when he made a surprise $25-million donation for brain research to the University of Calgary. It was the single-largest gift made to the university by an individual donor.

Mr. Pickens lived in Calgary during the 1960s – he sold his Canadian assets in 1979 for $600-million – and is friendly with some of its most august business leaders, including Calgary Flames co-owner Harley Hotchkiss.

He has spoken about being in the Calgary Petroleum Club in 1967 as Ottawa announced an investment in what was then a risky new bet: the Athabasca oil sands. With oil then at $5 a barrel, he figured only governments could pull crude out of the area around Fort McMurray. He has since become one of the oil sands' most prominent boosters. In 2006, he said Suncor Energy Inc. (SU-T34.30-1.88-5.20%) was his single-largest holding.

Mr. Pickens gained fame for predicting that oil prices would rise to $200. Today, he has changed tack.

An ardent oilman, Mr. Pickens has taken up U.S. energy independence as his greatest cause. The U.S. spends $484,087 per minute to buy foreign oil, an export of currency that worked out to $475-billion in 2008.

Mr. Pickens' solution is two-fold. First, supply 20 per cent of U.S. electricity demand with wind from a corridor through the central U.S. he calls the “Saudi Arabia of Wind.” Then use that electricity to replace natural-gas fired power, and convert vehicles to burn natural gas.

But don't expect that gas to come from the Arctic, he said.

“All the gas on the Arctic coastline is 39 trillion cubic feet,” he said. “That's not as much as you have in the Barnett Shale, that's sitting over there underneath Fort Worth.

“I don't see quite how that pipeline gets built right now.”


Buck