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Boone: I really feel like I am helping do something for this country. When you get down to it, it's very, very simple. This is all about us.
Brian: Hi, I'm Brian Bradshaw. I'm here with Boone Pickens, part of an ongoing series of videos about the current state of the energy markets. Boone, today I thought we'd talk a little bit about something I doubt many people have focused on or understand. Let's start with the Trans-Alaska pipeline system. So, can you give us a little background on what I'm even talking about, what's happening?
Boone: You know, people have the idea that there's an unlimited amount of oil in Alaska and I've heard people say, "Well when we get all the Alaska oil on that it could be ten million barrels a day, it could be anything." Not so because we have a transatlantic, trans-Alaska pipeline is what we have and that is only two million barrels a day. That goes from Dead Horse down to Valdez, Alaska and it's loaded on tankers there at that point. Well, two million barrels a day is all your going to get. There will never be another pipeline built. That came on in '77 at a cost of 10 billion dollars. If you did that today it would be 50 or 100 billion dollars, something horrendous. Production started a million barrels a day and built up in '88 and peaked at 2,100,000 barrels a day. Now that's all the line will carry. It was maxed out at that point. Since then it has declined now to 500,000 - 600,000 barrels a day. So then there will be a point, I don't know exactly where it is because It hasn't been identified yet, but somewhere 300,000 - 400,000 barrels a day, this is going to be very, very difficult to move the oil.
So what you need to do is to replenish on the entry point up at [00:02:00] Dead Horse, start putting oil in up there. We don't have the oil production now because we haven't opened up the federal lands in ANWR, the Arctic National Wildlife Refuge. Okay, we've had plenty of time to see this is a pristine property and talk about people going to visit it. I'd like to see how many people went to ANWR last year. Now the haul road is the way you get there. The haul road starts at Fairbanks and goes to Dead Horse.
I've driven that haul road and I can tell you I only want to drive it one time. It's... You don't get on the blacktop 'til you're 100 miles north of Fairbanks. The rest of it is gravel so it's expensive to drive. You're going to tear up tires on it and not many people go up there to look at ANWR. It's the arctic coastal plain, doesn't have any trees on it, it's just plains country coming off the Brooks range, and so it's time to open up ANWR.
Brian: When you say if we don't replenish the line we run the risk of losing it, can you explain what you mean by that?
Boone: Yeah. Once the line goes down, it will be hard to start up again. I think the line... It will deteriorate quickly. So, it's an expensive line to operate. It's above ground because of permafrost where you have it above ground and you have to heat it. And that pipeline is 800 miles in length. It needs to be... Somebody in Washington needs to look at this asset that we have in the United States and protect it. And the only way you can protect it is to produce it. So get the oil out [00:04:00] of ANWR and start to produce it down the line to Valdez.
Brian: So, when people are saying we need to open up more federal lands you're in agreement with that?
Boone: Absolutely in agreement with it, sure. That's assets that the country has. Know this, the oils been there for 200 million years so it's not going to spoil. It isn't going to go away. It's going to be there when we want it, but we want it now. Now's the time to get oil going back through the Alaska pipeline and preserve that. Produce oil in Alaska, it'd be great revenues for the country, that's all federal lands up there. So, it should be done and it should be done now.
Brian: Now, does that change? Does it really change anything on our current kind of supply and demand dynamics? I mean we need to produce the oil, I agree, I guess what does it really accomplish for us?
Boone: Well, we're still importing half of the oil we produce in the United States, so we're importing about nine million barrels a day. So that would be another, it's about a half million barrels coming down that line today. You could build it back up to two million barrels a day. That's all you can get out of Alaska is two million barrels a day, so pick up that other million and a half barrels. Reduce your imports and trade imbalance goes down, of course when you do that because two thirds of our trade imbalance is the importing of oil.
Brian: Of course, if there are disturbances in the oil markets around the world, if the price spikes, something like that, doesn't really protect you from that.
Boone: No, the oil price is a global price is about where you come out and so it would not protect you. The only way you're going to protect yourself from price is you've got to introduce another fuel into the mix, which is natural gas will go to heavy duty to the locomotives and to the ships is the way it goes.
Brian: Boone, thank you very much. I think this was very helpful. As always, feel free to post questions or comments below. Thank you.
2012 World Oil Outlook