Pickens: World’s Biggest Wind Farm No Longer on Drawing Board

By Jeff St. John

T. Boone Pickens has officially downsized his Texas-sized wind power plans.

The oil tycoon has scrapped his plans for a 4-gigawatt wind farm in Texas, planning instead to build five or six much smaller wind farms using the General Electric (GE) wind turbines he's already ordered.

That's according to an interview Pickens gave to the Dallas Morning News last week, in which he blamed falling financial markets and natural gas prices for the change of heart.

But Pickens' big plans for a massive wind farm for the Midwest has been on hold since October or so, a victim of the ongoing economic collapse, falling natural gas prices

In July 2008, when Pickens launched his plan to spend about $10 billion on what was to become a 4-gigawatt wind farm, his hedge funds were managing about $4 billion (see T. Boone Pickens Has a Plan).

By October, however, the value of those funds had been cut in half, stalling his plans (see Knocking the Wind Out of Pickens). Now Pickens' hedge funds manage about $1.5 billion, the Dallas Morning News reported Monday.

Natural gas prices also play a role, since Pickens' plan called for using wind power to replace electricity made from burning natural gas. That could free up the fossil fuel to be used for transportation fuel – the second half of the Pickens plan, and one closely aligned with his business interests.

But wind power was far more competitive with natural gas-fired electricity last summer, when gas was selling for $9 per British thermal unit, Pickens told the Dallas Morning News. Today that price is closer to $4, he said, putting wind power at a competitive disadvantage and making financing for the project difficult.

Pickens is still seeking to push natural gas as a transportation fuel, and has called for $28 billion in federal stimulus spending to help convert about 350,000 big rigs to run on the fuel, as well as build a network of fueling stations to support them (see Pickens Wants Natural Gas-Fueled Big Rigs).

Pickens co-founded Clean Energy Fuels (NDSQ: CLNE), a natural gas distributor in Seal Beach, Calif. with investments in natural gas-powered transportation (see Clean Energy Fuels Buys Landfill Gas Plant).

The company spent $17 million last year to back a failed California ballot initiative calling for the state to raise $5 billion in bonds to fund rebates for buying and retrofitting vehicles to run on alternative fuels including natural gas (see States Tackle Green Ballot Initiatives).

In the meantime, Mesa Wind, the company Pickens formed to build the wind farm, still has about $2 billion worth of wind turbines on order from GE.

The 637 wind turbines ordered are set to start being delivered in 2011, and as Pickens told the Dallas Morning News, "I don't have that big a garage to put them in, so I've got to start getting ready to use them."

That's where the smaller wind farms come in. Pickens said he's looking at building farms of about 150 turbines apiece and is scouting locations in Texas, Oklahoma, Kansas and Wisconsin.

Beyond the financing and economic challenges, Pickens said there just isn't enough transmission capacity for a wind farm of the size he first envisioned.

The country will face this problem if it seeks to build massive scale wind and solar power projects in the more remote areas where those natural resources are at their best for producing power, renewable energy backers say (see Solar and Wind Groups Lobby FERC to Lead Grid Expansion and Texas Approves $5B Worth of Transmission Line Projects).

Comments

[john s. gordon:]

this transmission of wind-farm juice to consumers thing reminds me of 'all dressed up & no place to go'.
> jack

Jul 08 08:39 AM

[RWM:]

declining private interest in wind reflects its inability to compete with Nat Gas on equal footing. Where are the environmentalists now that were protesting wind in the 70's in central NY because of geese getting sliced and diced?

Jul 08 08:48 AM

[Shale Gas:]

I agree with Pickens on natural gas as a transportation fuel alternative. On the wind farm if he truly believes his hype that he pushes on CNBC on oil prices and peak oil then I can't understand why the cut.

Jul 08 09:25 AM

[User 443041:]

That's how the market rolls and Pickens knows it. That's what the big rush to save us from global warming is all about, so the investors can catch the wave before the general public wakes up. ;)

Jul 08 10:08 AM

[Ferdinand E...:]

I knew that Mr Pickens would change his mind on this wind project before he did. The reason is that it is NUTS. Normally I refer to the situation with wind in Denmark and Germany when arguing against too much wind, but I think that there are good examples in the US where wind has failed to deliver the goods.

But yes, more wind is necessary. The voters want it, and if the locations of wind parks are optimal, there should be room for a few thousand or so turbines in the US.

Jul 08 10:10 AM

[La Marque:]

Good article! It included all the pertinent facts that other articles have left out. Pickens has not given up on wind, just modified his plan.

Shale Gas: when the economy perks up and nat gas prices pick up and coal's environmental problems are priced into electric prices, wind generation will again be demanded by Joe Sixpack along with the desire for cng cars.

Jul 08 10:46 AM

[quick:]

So with the lack of transmission infrastructure, would this make companies like PWR a buy? What about ITC or MDU?

Jul 08 11:05 AM

[Jimbo:]

Please add me to the list of natural gas advocates. The range of gas fueled vehicles is less than that of gasoline and diesel vehicles. Nevertheless, natgas, domestically produced, helps cut down on currency destroying imports of oil. EVs may work in short haul situations but they can't propel trucks and buses for distance. Bio fuels seem to be destined for the laboratory for several years. There are logistical and technical problems with all these biofuel alternatives. I hope we can come up with a winner, but it will take time.

Jul 08 11:08 AM

[stockferret:]

Either Pickens is an idiot (not ruling it out) or he truly believes that nat gas will be $4 for a long long time. You don't go and scrap a long term energy source just because of current prices.

That is going to be one heck of a yard sale for all those turbines. Doesn't look very good for the wind ETF (FAN) or the more pure play turbine makers since some of most of these turbines will probably end up in the secondary market.

Jul 08 11:17 AM

[Longinvestor:]

"The oil tycoon has scrapped his plans for a 4-gigawatt wind farm in Texas, planning instead to build five or six much smaller wind farms using the General Electric (GE) wind turbines he's already ordered."
This makes more technical sense than the first plan. Now the farms can be located just outside the outskirts of 5 or 6 cities and thereby save the huge transmission line costs that was necessary to implement the first plan. Pickens' natural gas for transportation is better than what we have, but hydrogen in trucks and trains would be even better. Only truck stops and train stations would need to be the hydrogen fillup stations in that scenario.

Jul 08 11:59 AM

[rajsekar:]

Pickens has a basic credibility issue. Why is Congress listening to Pickens and his plans? It's a well known fact that US is dependent on foreign oil for many years now and Pickens thinks that Congress realized it just last year. Picken's lean towards Natural Gas is surprising and I don't think our automotive or industrial sector is geared towards using Compressed Natural Gas (CNG). Countries like India, China and Singapore have invested money to run fleet vehicles using CNG, while US is lagging behind on usage of CNG. Storage of natural gas is a tricky issue unlike oil. Pickens is dead wrong on his plan. I wouldn't trust anything that Pickens talks. I wish some billionaire swift boats Pickens for his Natural Gas strategy and flip-flopping. Boone's wind plan is "Gone with the Wind". So what's next up in Boone's sleeve?

Jul 08 05:45 PM

[nakedjaybird:]

Someone should check to see how many counties in the US DO NOT already have transmission lines running across them already - starting with all the counties that ALREADY DO HAVE hydro, coal, nuclear, and nat gas power generation plants; linking up dispersed wind and solar farms won't be much of an addition. The talk is big. T&D and generators need some "valid" reasons to continue to raise rates........DUH!!!!!!

Hey, convert the gas and coal plants to wind and solar and all the transmission stuff is already there.......DUH AGAIN!

And the generation cost will be almost ZERO...... HAT TRICK DUH!!!!!

Jul 09 12:21 AM

[nerfer:]

It's not that simple. The transmission grid can't handle changes in supply and demand (wind dies down in one part of the state but picks up in another), or for moving from one section of the country to another. Converting plants is very expensive, basically you need to build new plants. Doesn't come out to a generation cost of zero in my book.


On Jul 09 12:21 AM nakedjaybird wrote:

> Someone should check to see how many counties in the US DO NOT already
> have transmission lines running across them already...DUH!!!!!
> Hey, convert the gas and coal plants to wind and solar and all the
> transmission stuff is already there.......DUH AGAIN!
> And the generation cost will be almost ZERO...... HAT TRICK DUH!!!!!

Jul 13 05:57 PM

[nakedjaybird:]

NERFER - DUH!!!!! Generation cost is the fuel cost, the energy cost, not the cap ex. So it's near zero. Duh!!!!

Jul 15 12:28 PM

[Perro:]

Whats your plan rajsekar? Just bashing pickens is not helping. Pickens talking natural gas because its one of the United States biggest natural resource. We are paying other countries for oil. The idea is to keep the money local.


On Jul 08 05:45 PM rajsekar wrote:

> Pickens has a basic credibility issue. Why is Congress listening
> to Pickens and his plans? It's a well known fact that US is dependent
> on foreign oil for many years now and Pickens thinks that Congress
> realized it just last year. Picken's lean towards Natural Gas is
> surprising and I don't think our automotive or industrial sector
> is geared towards using Compressed Natural Gas (seekingalpha.com/symbo...).
> Countries like India, China and Singapore have invested money to
> run fleet vehicles using CNG, while US is lagging behind on usage
> of CNG. Storage of natural gas is a tricky issue unlike oil. Pickens
> is dead wrong on his plan. I wouldn't trust anything that Pickens
> talks. I wish some billionaire swift boats Pickens for his Natural
> Gas strategy and flip-flopping. Boone's wind plan is "Gone with the
> Wind". So what's next up in Boone's sleeve?

Aug 17 10:46 AM