Is T. Boone Pickens Selling Off Some Wind Turbines?

It's amazing what you can pick up sitting up at the right luncheon table in New York. The herb-crusted halibut and fingerling potatoes had just hit our plates and we were waiting for Boone Pickens to give the keynote at Chadbourne & Parke's Green Business Summit II at the New York Hilton.

Pickens was the big draw thanks to tens of millions of dollars he's been pouring into a campaign promoting -- what else -- the Pickens Plan. It's his grand energy plan and it goes like this:

1. Build lots of wind farms to generate electricity.
2. Then stop using natural gas to generate electricity.
3. Use that natural gas to power vehicles instead.
4. Get off foreign oil.

It's green. It's energy independent. And it's all-American. Too bad, as you'll see below, it's a dumb way to go about solving energy problems and it will never happen. There are cheaper and more efficient ways to go -- only they don't enrich Pickens.

To prove his green bona fides and sell his plan to the public, Pickens announced he was building the biggest wind farm in the world in Texas. (And we fell for it. Not only once, but twice.) The Pampa Wind Project, as it's called, plans to erect 2700 wind turbines across tens of thousands of barren acres in the Panhandle to feed 1 million homes 170 miles away. Mesa Power, the company Pickens created to run the project, announced back in May that it had placed a $2 billion order for 667 wind turbines with GE. Terms were not disclosed. Still he earned the very public support of Carl Pope, head of the Sierra Club, and lunch with Al Gore (burger and fries).

So it was pretty surprising when the neighbor to my right, a guy who specializes in the sale of distressed assets -- let's call him Tim McGillicuddy -- started talking about Pickens selling off his wind turbines. We had spent a good part of the morning listening to a panel deliver bad news about how the credit crunch and plummeting oil prices are slamming renewable energy projects. Maybe Pickens had his own bad news to share about Pampa?

"You think that's what he's going to talk about?"

"Goodness, no," Tim said.

"Oh. Then you're just speculating?"

"Nope. I heard it from a banker friend of mine who was in the room when Pickens' people made the offer."

Poor Tim didn't know he was sitting next to a blogger. I was wearing a suit.

Tim didn't want to go on the record, and he wasn't about to out his banker friend. What was I going to do with this juicy rumor? I called a friend for advice, a former journalist from the old school. "You need two sources," he said, "or you can't go with the story. That's the way it used to be, anyway." Unless I wanted to be like Drudge, he added. Ouch.

There was certainly plenty of oblique confirmation that Pickens and his wind investors might want to bail: in the New York Times, in its story Alternative Energy Suddenly Faces Headwinds; and in the Wall Street Journal's blog, Environmental Capital: Green Meltdown: Credit Crunch Whacks Renewable Energy, Too. Even the American Wind Energy Association issued a bleak forecast.

T. Boone is having his own problems, too, and perhaps he's suddenly in need of liquidity. His hedge fund BP Capital, which likes to park its money in crude oil, gas and tar sands plays, reported 2008 losses of $1 billion -- a quarter of it Pickens' own money, according to Forbes. In 2006 he was ranked the 101st richest man in America. He dropped to 131st in 2008 with a net worth of a bit over $3 billion. Who knows where he will be next year?

Maybe investors in Mesa Power want out of the project? Pickens hasn't disclosed who they are or how much they've ponied up. He hasn't disclosed terms of the deal with GE for buying 667 turbines. What was the down payment? When are progress payments due? Maybe the notion of the project sinking $1.5 billion into its own transmission lines -- so it could actually sell the wind power -- all of sudden seemed foolhardy, too.

So when T. Boone started talking as we ate dessert (fruit tart), what became crystal clear is that first and foremost he's an oil and gas man. In his trademark fashion, he wrote on a white board to reveal the hedge that gets his juices going: $7 worth of natural gas could provide the same energy for driving as $30 worth of gasoline from crude. Now there's a market opportunity even bigger than the state of Texas, and that's what T. Boone is after. He wants to put natural gas in every car in America. And of course, they'd have to get their gas from natural gas filling stations owned by the Clean Energy Fuels Corp. He owns 16.5 million shares of its stock that trades under the ticker CLNE.

I can't recall that he said a single word about the biggest wind farm in the world that he is building.

Plenty of blogger ink has been spilt explaining why the Pickens Plan is bogus, and especially why the wind part of his equation is a greenwash. Natural gas plants are fired up to meet peak demand and so it won't work to substitute wind for natural gas. When you really need to, you can't just flip a switch and say "let there be wind!" What's more, what are you going to do with the natural gas plants built over the last decade or two? Tell the owners to shut them down because the Pickens Plan is here? And most damning of all, do the math -- as Climate Progress did -- and it turns out that it would be far cheaper and more efficient to move the US auto fleet to plug-in hybrids than to natural gas by a 2:1 margin.

I checked in with the American Wind Energy Association. They hadn't heard the rumor about the sale of Pickens' wind turbines. I called a reporter down in Texas who's been covering the project for the Pampa News and sent him an e-mail. He hasn't responded. Then I listened to the garbled tape I made of Pickens talking at the luncheon, but it was clear enough for me to realize it doesn't matter whether Pickens is selling off his wind turbines or not. The rumor is not about Pickens or his plan, really. That's the sideshow.

It's about something much bigger -- the power of incumbent fossil fuel interests as exemplified by Pickens -- whose support for and involvement in renewable energy is fickle and dangerous. Pickens has always said he's getting involved with wind for the money -- not because he's an environmentalist or because he cares about global warming. In his remarks he said he told Al Gore "global warming is on page two" -- what's on "page one" is energy for America from domestic sources. And what that really means is an endless fossil future.

The world's biggest wind farm just might turn out to be Texas-sized braggadoccio and a big, bait and switch. Go to the Pickens Plan and you'll see an article about why exploiting oil shale is such a great idea. We've written here about why it would plunge us into an abyss from which no amount of patriotism could extract us. And although Pickens said nary a word about his wind farm, he was transported with excitement when he spoke about all the natural gas that's out there waiting to be exploited -- in Appalachia, in Louisiana, in Arkansas, in Oklahoma, in West Texas, even in British Columbia.

And all that gas is now for the taking because of the development of technology that can "hydraulically fracture the carboniferous shale, and with that you get a good flow of gas." No mention of the fact that there is great concern that the technique imperils supplies of drinking water. Pre-emptively, the industry made sure the Energy Bill of 2005 included a provision that exempted hydraulic fracture from regulation by the Safe Drinking Water Act, and the Bush-Cheney EPA has been playing along as lapdog instead of watchdog.

It turns out that California is on the front lines of the Pickens Plan right now more than anywhere else, thanks to a ballot Initiative called Proposition 10. It's an initiative that was largely funded by Pickens' company -- the Clean Energy Fuels Corp -- CLNE. So far CLNE has dropped $10 million on Prop 10 -- which is officially called the California Alternative Fuels Initiative. Sounds like something voters in California would want to support. The day before I saw Pickens speak, CLNE had made the news for contributing the latest chunk of change: $3 million.

The main thing the measure does is authorize California to issue $5 billion in state bonds, and make $3 billion of the proceeds available in the form of rebates for alternative fuel vehicles -- i.e. natural gas vehicles. After accruing interest, the bonds will cost California taxpayers $10 billion over the next 30 years -- all so Boone Pickens can get help from citizens in a state where he is not resident to create the need for the natural gas filling stations CLNE is in the business of building.

Here's what's really odd. Proposition 10 goes by the nickname "Big Wind." It's not because with Proposition 10, Pickens is both passing gas and breaking wind, and when you see what's going on, you want to hold your nose. This man wraps himself in green goodness and the American flag, and he's got folksy charm. He had us all laughing repeatedly with his round-about way with making a point, and half the audience gave him a standing ovation when he was done.

Not me. I couldn't help thinking about the rumor that he's shopping his turbines -- which despite lacking another source has revealed a larger truth: how we have our work cut out for us in this country to establish a clean energy economy far away from the business-as-usual world of the fossil energy present and wildcatters like T. Boone Pickens.

UPDATE:

NewsChannel 10 in Amarillo reports the Pampa Wind Project is being scaled back.

Mesa power told NewsChannel 10 this week:

"The capital markets are problematic for everyone, and we are keeping an eye on them. We are committed to wind development projects and believe it's a viable business for us. The capital markets may lead us to scale back a bit but we are still going forward with our wind business."

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