Billionaire Texas oil man makes big bets on wind

By Chris Baltimore
Fri Apr 18, 2008

WASHINGTON (Reuters) - Legendary Texas oil man T. Boone Pickens has gone green with a plan to spend $10 billion to build the world's biggest wind farm. But he's not doing it out of generosity - he expects to turn a buck.

The Southern octogenarian's plans are as big as the Texas prairie, where he lives on a ranch with his horses, and entail fundamentally reworking how Americans use energy.

Next month, Pickens' company, Mesa Power, will begin buying land and ordering 2,700 wind turbines that will eventually generate 4,000 megawatts of electricity - the equivalent of building two commercial scale nuclear power plants - enough power for about 1 million homes.

"These are substantial," said Pickens, speaking to students at Georgetown University on Thursday. "They're big."

Pickens knows a thing or two about big. He heads the BP Capital hedge fund with over $4 billion under management, and earned about $1 billion in 2006 making big bets on commodity and equity markets.

Though a long-time oil man, Pickens said he has embraced the call for cleaner energy sources that don't emit heat-trapping greenhouse gases.

"I'm an environmentalist - I can pass the saliva test," he said.

But Pickens is not out to save the planet. He intends to make money.

Though Pickens admits that wind power won't be as lucrative as oil deals, he still expects the Texas project to turn at least a 25 percent return.

"When I go into these markets, I expect to make money on them," Pickens said. "I don't expect to lose."

America is facing a looming power crunch, with electricity demand expected to grow 15 percent in a decade. And while many states have rejected big coal-fired power projects on environmental concerns, they are offering a bounty of incentives to build renewable sources.

U.S. crude futures at new records above $115 a barrel means a bright future for renewable sources like wind and solar.

Pickens' wind farm is part of his wider vision for replacing natural gas with wind and solar for power generation, and using the natural gas instead to power vehicles.

To picture Pickens' energy strategy, imagine a compass.

Stretching from north to south from Saskatchewan to Texas would be thousands of wind turbines, which could take advantage of some of the best U.S. wind production conditions.

On the east-west axis from Texas to California would be large arrays of solar generation, which could send electricity into growing Southern California cities like Los Angeles.

The end result would be to free up more clean-burning natural gas - primarily a power-generation fuel now - to power automobiles.

Major oil companies have embraced so-called natural gas liquids because they have spent billions of dollars building refineries and pipelines to turn crude oil into gasoline, Pickens said.

But shifting natural gas used in power generation to transportation needs could cut U.S. crude oil imports by nearly 40 percent, he said.

I love this part of his vision. But he underestimates how much power we can get out of solar. There's enough solar potential in the Mojave desert alone to power the entire nation. The solar potential from the "sun belt" from California to Florida can easily power the country a few times over and have the benefit of having a total sun time of nearly 18 hours a day.

The wind potential from Montana down to Texas could do the same thing.

So between the 2 you have enough renewables potential to power us forever, including the vehicle fleet.

I'm not too thrilled about this part. Why not have a major shift, prodded by government if needed, to PHEVs and EVs. Use that massive amount of electricity to power the vast majority of our vehicle fleet and get rid of foriegn oil all together and nealry off of fossil fuel completely.

Going to PHEVs and EVs also has a secondary benefit when powered with renewables - energy storage. All those vehicle batteries are a great place to put extra power generated when the sun is shining and the wind is blowing.

We saw what happened to the silicone based Li-On battery when the government scarfed it up in the name of National Security. That single battery could have revolutionized modern transportation. In just a couple of years.

I think the shift to CNG would be OK for short term use, while the alternatives were perfected. And it does decrease dependency on foreign sources by 40%, which also has it's positives. Emissions are around 30-35% cleaner too.

Not to mention most newer vehicles can be retro'd with factory and after market kits to run on CNG without diminishing performance.

The problem I still see is delivery systems for CNG.

Will the oil companies install refueling stations at convenient locations and what about the area's that aren't serviced by natural gas now?

My main worry is that we'll just be substituting one form of imported energy for another. U.S. methane production has already peaked and we're having to import from other countries (mainly Canada). At least we have to potential to ramp up NG production here to get us over the hump.

I'm really thinking that the vehicle end will take care of itself in the next 5 years or so. With gasoline prices nearing $4.00 a gallon and only going higher with peak oil, PHEVs and EVs are the only realistic alternative for people. When the Chevy Volt and Plug In Prius hit the market later this year people will get used to running on pure electric for a good chunk of their driving.

And if ZAP can deliver on the ZAP-X in 2010 and Tesla with the White Star sedan, it's game over for the IC car as we know it. The ZAP-X is a cool little sports SUV with over 600 HP, 300+ mile range, and a 10 minute charge time on the batteries. Tesla is shooting for 300+ miles with BMW M5 performance with the White Star.

Very good points in this thread. I'll just say I'm happy to see the beginning of a paradigm shift in thinking... ANYWHERE! And coming from a former oil-man, that's pretty impressive, whether he's just trying to get rich or not. At least it's a step in the right direction. :)

I think the "conversion fad" would die out as newer affordable alternatives took hold in the market place. And you already know where I stand on alternatives, I'm for that technology taking over.

As far as supply, according to some recent figures, current supplies are estimated at 1,475 trillion cubic feet.

Replacing current US demand for crude at 100%, those supplies would last an estimated 67 years. At the projected 40% replacement rate, the estimated time frame increases to 145 years plus.

But even with imports from Canada, I think it's a better short term deal than long term reliance on crude.

But I'm also sitting here wondering about alternatives for our farm equipment. Hell we have tractors that drink 60-85 gallons per day, some even more. I'm wondering what's going to replace those and at what price?

As you know, some of these cost as much as a new home so our investments are critical as it is.

Holy crap, are we really that close to having a car that can go 300+ miles on a 10 minute charge and get 600 horsepower???

I knew there were a lot of hybrids, but I was still under the impression that HP was limited and charge times were longer.

I've said all along the change would have to come from people in the business. Once one person publicly makes the change, will others follow?

Then again, with the huge profits in oil right now, he could be doing this as a means to gain back some public trust.

Either or, at least he's committed 10 Bill to the cause in his project. And we can all agree with you it is a move in the right direction. Hopefully more will join and follow his lead.

BP is a world leader in solar technology and research and now they stand to gain tremendously in that field. Revenues they lose in oil production will be more than made up for in electricity production.

You should do a Google search on the Tesla Roadster (predecessor to the White Star, and incidentally, on sale now). That damn thing is faster (to its 110 mph limit) than most Ferraris ever made, AND has a 200 mile range.

There is some great technology out there. Battery design is the bugaboo, but they're getting there quickly. The roadster is around $100K. The White Star should be half that or less.

The Zap-X is a joint effort between Lotus and ZAP cars in California. ZAP already makes and imports little city electric vehciles, and the ZAP-X is their next step into "real" cars. Like Tesla, they're going for the top end of the market. But unlike Tesla, they're putting out a 5 passenger sports SUV in the $60k price range. Still upper market, but within reach for a good many families. Especially when fuel costs are only $0.10 a day.

It uses a motor in each wheel to give a total of 644 hp, 0-60 in 4.8, and over 300 miles of range. The charge time of 10 minutes is with a special charger that basically stores electricity and dumps it on the batteries all at once. So you leave the charger hooked to the grid to store up power, then when you plug it in to the X it flash charges the batteries. Something that could be easily upt at any filling station in the country.

It's using the technology developed by PML Flightlink. It's in a car and tested already. They got cars up and running right now with over 600hp and well over 200 miles of range, including a MINI.

This stuff is coming. Detroit better get it's ass in gear or they're toast.

ZAP-X:

I'm thinking that the solution for farm equipment is to keep the current fleet diesel, and free up diesel from other markets like moving goods.

Move the vast majority of stuff across the country by train and just use trucks for the local delivery from termial to store. All we need to do is keep enough diesel on the market cheap enough for farmers. And as farm equipment needs to be replaced in a couple of decades, then bring in electric for that as well.

Farm equipment is actually a great candidate for electicity power because it doesn't go very far or very fast. And it's already heavy as all hell, so piling on enough batteries to run it for a full day isn't a big deal.

I think ultimately the only vehicle flee that we can't power with electricity is our aircraft.

This really is great news. If anything is ever going to happen in a big way in this country, it will be the result of capitalism. A guy like Pickens is just the key: he has the resources (both his own and investors) to make a huge initial investment, the kind that would produce profitable results in a shorter time. It would take a long time, and a lot of losses for a small company to build into a national alternative energy powerhouse. This guy can build a mammoth initial infrastructure.