Boone Pickens, CEO of BP Capital

This is a partial transcript from Your World with Neil Cavuto, June 9, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Well, has your utility bill doubled this year? If so, you’re not alone. Folks across the country are seeing natural gas costs higher than ever before.

The reason? Well, reserves are lower than ever before and production is slower than ever before.

Alan Greenspan even thinks it’s a problem. Should you? My next guest says absolutely.

He’s Boone Pickens, the CEO of BP Capital. Little more than two decades ago, he ruled the corporate raider planet. That was then. This is now.

Boone Pickens, good to have you. Thanks for coming.


CAVUTO: How big a problem is this?

PICKENS: Big. It is big. You nailed it when you said that reserves were down and production was down, and that’s exactly where we are.

We’re going to start to import more natural gas, and it will have to be liquefied natural gas, and it will be several years before it will impact our supply, and we’re just up against higher prices -- you’re going to see prices higher this summer because up to now -- you know, you’re in the East, and we’ve had no summer, and the price is $6.50 today.

And the reason it’s $6.50 is because we are taking gas into storage. Right now, we’re in the injection season, and we’ll be in it until October 31. When we get air-conditioning load on the natural gas supply, the price is going to go up even further.

CAVUTO: You know, it’s interesting because we’re talking about 60-million homes here that could be adversely affected. When all of those homes and the people in them have been focused on gasoline prices or oil prices, they missed this one, and this is going to be potentially a much bigger deal?

PICKENS: Well, you’re going to feel it on the electric bill is where you’re going to see it in the summer, and then, in the winter, of course, you’ll see it on your natural gas bill.

CAVUTO: How much did that hard winter have to do with all of this?

PICKENS: Well, the hard winter pretty well drained the storage. We went into storage last year with over three-trillion cubic feet of gas in storage. We’ll be lucky -- we drained it down.

It’s kind of like letting air out of a balloon, and the first air that comes out’s the easy air, and then it gets harder as you get further into the storage, and we took storage down to about 600 billion, and we’re going to try to get back in 2.8 trillion.

I don’t think we’ll get 2.8 trillion in, and, if we have another winter that’s even normal with only 2.8 trillion in, that’s going to be a bigger problem.

CAVUTO: But, as you know, Boone, there are some Republicans in Congress who argue that if you just open up reserves where they are and allow for exploration and are not hindered by environmental requirements, that you not tap those reserves, we could solve this problem tomorrow. Not literally tomorrow, but soon. What do you think of that?

PICKENS: Well, I don’t know who said that. I don’t think you’re quoting anybody, but you’re saying some Republican or somebody. You can’t solve the problem that way. The problem could be helped, there’s no question, if you opened up the western states, and most of what you...

CAVUTO: Well, I’m sorry, Boone. When you say helped, I mean, what some Republicans are trying to do now is open up 40 percent of what they say are potential gas reserves that we are unable to tap right now. Are they right, or is it that high? What do you think?

PICKENS: Well, I don’t know that I agree with 40 percent, but there’s no question that if you open up the western states that you would have more natural gas.

CAVUTO: How likely is that?

PICKENS: How likely that they open it up?


PICKENS: Or how likely would it be that you found it?

CAVUTO: Well, I guess both.

PICKENS: OK. I think that you’ll find more natural gas if you opened up the western states. I’m not so sure that is going to happen, but it’s not going to solve the problem.

CAVUTO: Now you, of course, have an uncanny mind for this sort of thing in finding investment opportunities. I’m sure you have a great deal of natural gas. As things stand now, can you see anything in the way of natural gas prices maybe coming down dramatically?

PICKENS: No. There’s no reason for them to come down dramatically, and $6.50 would be the floor? No. I think you could come down substantially from $6.50, but, still, the gas price would be very high. I don’t think that I’ll ever see gas prices at $4.50 again, for instance. This time last year, we were at like $3.

CAVUTO: All right. Boone Pickens, you have a good read on this sort of stuff. I think a lot of people should pay attention. Thank you sir. Appreciate it.

PICKENS: You bet.

CAVUTO: Boone Pickens.

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