Pickens Pulls Up Stakes
It's been a tough year for T. Boone Pickens: The 81-year-old oilman-turned-alternative-energy evangelist wanted to build the world's biggest wind farm, in Pampa, Tex., but this week announced he was delaying that idea. He had already suspended a controversial project to pipe underground water he had bought in the Texas Panhandle to Dallas. And he has had to contend with billion-dollar losses at his hedge funds. "The capital markets have dealt us all a setback and I'm less aggressive with the Panhandle project than I have been," said Pickens in a statement. "I'm committed to 667 wind turbines and I am going to find projects for them." Pickens spent much of the past year, and some $60 million, promoting the "Pickens Plan" for reducing America's dependence on foreign oil. Pickens advocates increasing the amount of the nation's electricity that is supplied by
from 1% to 20%. The natural gas that would have been used to generate power could then be used to fuel cars, he says. And that in turn would lessen America's reliance on oil.
Realizing that vision has become even more difficult than Pickens had anticipated. The price of oil and natural gas has fallen considerably since last year, when his said it would spend $2 billion to buy 667 wind turbines from General Electric ( (GE)). Cheaper prices for conventional energy, of course, make wind power less attractive to some investors and utilities. And the credit crisis has made it hard, sometimes impossible, even for figures such as Pickens to raise the money necessary for big projects. Pickens didn't just have to buy the wind turbines, he had to build transmission lines to carry the electricity from the remote town of Pampa, in the Texas Panhandle, to the state's big cities.
Wind Plan Linked to Water And it affects land in Texas, where politics comes into play. From the beginning, Pickens' wind power project has been connected to a decidedly less popular plan to sell water. Pickens owns more water than any other individual in America. For several years he has been buying up the rights to underground water in the Texas Panhandle with the idea that he could one day pipe it to Dallas, some 250 miles southeast. Pickens' Dallas-based Mesa Power had hoped to use the extraordinary power of eminent domain to force landowners along the proposed route to allow him to lay water pipes and erect the power lines to transmit electricity from the wind farm.
But that didn't work out. Last August, legislation that gave Pickens the right to seize land ran afoul of the Justice Dept. And by then landowners had made their concerns known to Pickens. He suspended construction of the pipeline in September but continued to make the case for wind power. At the time, Mesa General Counsel Bobby Stillwell said the company "got too clever."
Said Stillwell: "We had thought that doing them jointly would be a convenience and maybe even a cost savings to us and the landowners. There were two things that we misjudged. To do that we would have to acquire a 250-foot right of way instead of just a 150-foot one for electricity. That was enough difference to the landowners," he said. "Secondly, they were criticizing the whole project, both water and electricity, when they were really concerned about water. We didn't want both to be subject to the same criticism."
Texas Landowners Skeptical The wind project did seem to have benefits for the local community, mostly in the form of jobs, possibly as the beginning of a rural revitalization. But some remained skeptical of Pickens' intentions. As a local senator, Robert Duncan, said a few months after the water project stalled: "Everybody kind of thought that the wind was a Trojan horse for the water. And if you look at how it all came down, it would seem to me that those were legitimate concerns."
Pickens continues to buy up water rights and says he expects to build smaller wind farms in Texas, as well as in Oklahoma, Kansas, and Wisconsin. He's still hopeful about his hedge funds, too.