Pickens' wind plan hits a snag

T. Boone Pickens

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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.