Pickens' wind plan hits a snag

Credit crunch and falling natural gas prices delay plans for giant Texas farm.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Steve Hargreaves, CNNMoney.com staff writer

t_boone_pickens.03.jpg
T. Boone Pickens
Where will you do most of your holiday shopping?
  • At a mall
  • At a discount store
  • Online
  • Won't be shopping

NEW YORK (CNNMoney.com) -- Billionaire oilman T. Boone Pickens is delaying his massive Texas wind project, citing a drop in natural gas prices and the tightening credit market.

"With natural gas prices where they are, you can't kick off a wind project, you're not economical." Pickens said Tuesday at a news conference in Arizona.

But Pickens, who has spent millions over the last few months promoting his "Pickens Plan" to wean the United States off foreign oil by switching to wind and natural gas, said natural gas and oil prices will rise again in less than a year, and characterized the setback as temporary.

A spokesman for Mesa Power, Pickens' company that is building the Texas wind farm, laid the blame more on the credit markets.

"The capital markets are problematic for everyone and...may lead us to scale back a bit," Jay Rosser, a spokesman for Mesa, said in a statement. "But we are still going forward with our wind business."

Pickens' wind farm in Texas, known as the Pampa Wind Project, was slated to be the largest wind farm in the world, generating 4,000 megawatts of electricity, enough to power 1.3 million homes.

A spokesman for Pickens said turbines for the first phase of the project, 1,000 megawatts of power, are still being purchased. The first phase was slated to come online in 2011. Although now it is no longer clear when it will come on line.

The Pickens Plan, which the billionaire has been pushing in TV commercials, media appearances and lobbying efforts since last summer, calls for the country to use wind to generate 20% of its electricity, displacing some of the natural gas that's currently used to generate power. The natural gas, an abundant domestic resource, could then be used to power vehicles, thus reducing oil imports.

But natural gas prices have fallen from over $12 per million British thermal units last summer to current levels of around $6.

The fall in natural gas prices makes switching to wind power a less certain bet, as utilities would be reluctant to replace natural gas with wind now that natural gas prices are so low.

Pickens said Tuesday that natural gas prices need to be about $9/Btu in order for wind power to be competitive.

He remained confident the dip in prices would not effect his overall Pickens Plan.

"We will get the plan," he said.

Pickens, who made his money in oil production and trading, has been saying for years that the United States is too dependent on foreign oil, and that oil prices will continue to rise over the long term as demand outstrips supply.  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
50 years of the Ford Mustang Take a drive down memory lane with our favorite photos of the car through the years. More
Cool cars from the New York Auto Show These are some of the most interesting new models and concept vehicles from the Big Apple's car show. More
8 CEOs who took a pay cut in 2013 Median CEO pay inched up 9% in 2013 to $13.9 million. But not everyone got a bump last year. Here are eight CEOs who missed out. More
Sponsors

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.