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So what do you do when you believe devoutly in hydraulic fracking but also understand that too much fracking is responsible for an oil glut that's hammering the price of oil like a pile-driver?
If you're legendary Texas oil billionaire T. Boone Pickens, you call for a time out. But you don't cloak that call trying to make excuses for the controversial oil-extraction process, which injects water and chemicals into underground rock to free fossil fuels trapped within. You simply stick to the financial facts of the case.
That's why Pickens was speaking so positively about fracking on March 23 in Monterey, Calif., at a panel discussion hosted by the Panetta Institute, named for Leon Panetta, the former White House chief of staff, CIA director, and defense secretary.
"I've fracked over a thousand wells,"said Pickens, chairman of BP Capital Management. "I've never had a failure on one of them. ... Texas, Oklahoma lead in fracking wells and it has been a great success for both those states."
There was pushback, though, from Steven Chu, President Obama's former energy secretary, and Carol Browner, who ran the Environmental Protection Agency (EPA) under President Bill Clinton and was Obama's director of energy and climate change policy.
Chu said that despite Pickens' personal experience with fracking,not all shale is the same, and that as a result, serious fracking mistakes have been made in other regions of the United States. For her part, Browner said she believes the EPA will be back in the business of regulating fracking, freeing each of the country's 50 states of having to come up with its own rules.
Pickens, however, refused to budge from his position. He said he's drilled 44 fracking wells at his Texas ranch, and plans to drill 62 more. "We've had no problems with any of those wells," he said.
That doesn't mean that Pickens believes fracking should plow ahead unfettered. In aninterview with the Financial Timespublished March 18, the oilman said shale companies have "overproduced," and that it's up to them to rein in output to help restore oil prices to a more profitable level.
Oil extraction from shale has been rising steadily over the past few years, causing an oil glut that prompted OPEC to declare a price war at its November meeting in Vienna by keeping the cartel's daily combined production at 30 million barrels. Oil companies that rely on fracking are especially vulnerable to low oil prices because it is more expensive than conventional extraction methods.
As a result, Pickens told the newspaper, he expects shale companies to level off production voluntarily around the middle of 2015.
And Pickens refused to criticize Saudi Arabia's oil minister, Ali al-Naimi, the architect of the OPEC strategy, for sparking the price war, even though American shale producers were its primary target. The reason, he said, is that it's up to American oil producers, not the Saudis, to balance their own oil market.
"That's the resources of Saudi and they can do what they want to with their resources," Pickens said. "We'll adjust to it. That's just life. Why do we expect the Saudis to cut for us? We're the ones that overproduced."
Pickens said judicious cuts in U.S. shale extraction could help oil prices to rally back to $70 per barrel by the end of this year. That would be nowhere near the price of more than $110 per barrel in late June, just before oil prices began their plunge, but a price that would benefit all oil producers, even those who rely on relatively costly fracking.
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