Archive for August 2, 2008

T. Boone Pickens’ Real Plan

We’ve all seen the heart-warming ads on television about how private industry is going to break our chains of oil addiction through wind power, right? I have to admit that I was quite sceptical, knowing the problem with wind-generated electricity, to wit: It isn’t reliable. The power plants have to have power generated through fossil fuel anyway to make up for the variances in wind power. As it turns out, I was right to wonder what the “real” motive was:

Simply put, Pickens’ pitch is “embrace wind power to help break our ‘addiction’ to foreign oil.” There is, however, another intriguing component to Pickens’ plan that goes unmentioned in his TV commercials, media interviews and web site — water rights, which he owns more of than any other American.

Pickens hopes that his recent $100 million investment in 200,000 acres worth of groundwater rights in Roberts County, Texas, located over the Ogallala Aquifer, will earn him $1 billion. But there’s more to earning such a profit than simply acquiring the water. Rights-of-way must be purchased to install pipelines, and opposition from anti-development environmental groups must be overcome. Here’s where it gets interesting, according to information compiled by the Water Research Group, a small grassroots group focusing on local water issues in Texas.

Purchasing rights-of-way is often expensive and time-consuming — and what if landowners won’t sell? While private entities may be frustrated, governments can exercise eminent domain to compel sales. This is Pickens’ route of choice. But wait, you say, Pickens is not a government entity. How can he use eminent domain? Are you sitting down?

At Pickens’ behest, the Texas legislature changed state law to allow the two residents of an 8-acre parcel of land in Roberts County to vote to create a municipal water district, a government agency with eminent domain powers. Who were the voters? They were Pickens’ wife and the manager of Pickens’ nearby ranch. And who sits on the board of directors of this water district? They are the parcel’s three other non-resident landowners, all Pickens’ employees.

A member of a local water conservation board told Bloomberg News that, “[Pickens has] obtained the right of eminent domain like he was a big city. It’s supposed to be for the public good, not a private company.”

What’s this got to do with Pickens’ wind-power plan? Just as he needs pipelines to sell his water, he also needs transmission lines to sell his wind-generated power. Rights of way for transmission lines are also acquired through eminent domain — and, once again, the Texas legislature has come to Pickens’ aid.

Earlier this year, Texas changed its law to allow renewable energy projects (like Pickens’ wind farm) to obtain rights-of-way by piggybacking on a water district’s eminent domain power. So Pickens can now use his water district’s authority to also condemn land for his future wind farm’s transmission lines.

Who will pay for the rights-of-way and the transmission lines and pipelines? Thanks to another gift from Texas politicians, Pickens’ water district can sell tax-free, taxpayer-guaranteed municipal bonds to finance the $2.2 billion cost of the water pipeline. And then earlier this month, the Texas legislature voted to spend $4.93 billion for wind farm transmission lines. While Pickens has denied that this money is earmarked for him, he nevertheless is building the largest wind farm in the world.

Despite this legislative largesse, a fly in the ointment remains.

Although Pickens hopes to sell as much as $165 million worth of water annually to Dallas alone, no city in Texas has signed up yet — partly because they don’t yet need the water and partly because of resentment against water profiteering.

Enter the Sierra Club.

While Green groups support wind power, “the privatization of water is an entirely different thing,” says the Sierra Club. Moreover, the activist group has long opposed further exploitation of the very groundwater Pickens wants to use — the Ogallala Aquifer.

“The source of drinking water and irrigation for Plains residents from Nebraska to Texas, the Ogallala Aquifer is one of the world’s largest — as well as one of the most rapidly dissipating… If current irrigation practices continue, agribusiness will deplete the Ogallala Aquifer in the next century,” says the Sierra Club.

In March 2002, the Sierra Club opposed the construction of a slaughterhouse in Pampa, Texas, because it would require a mere 275 million gallons per year from the Ogallala Aquifer. Yet Pickens wants to sell 65 billion gallons of water per year — to Dallas alone. In a 2004 lamentation about local government facilitation of Pickens’ plan for the Ogallala, the Sierra Club slammed Pickens as a “junk bond dealer” who wanted to make “Blue Gold” from the Ogallala.

But while the Sierra Club can’t seem to do anything about Pickens’ influence with state legislators, they do have enough influence to make his water politically unpotable. This opposition may soon abate, however, now that Pickens has buddied up with Sierra Club president Carl Pope.

As noted last week, Pope now flies in Pickens’ private jet and publicly lauds him. The two are newly-minted “friends,” since Pope needs the famous Republican oilman to lend propaganda value to the Sierra Club’s anti-oil agenda and Pickens needs Pope to ease up on the Ogallala water opposition.

This alliance isn’t sitting well with everyone on the Left.

A writer recently observed, “… I am left asking myself why the green media have neglected [the water] aspect of Pickens’ wind-farm plans? Have we been so distracted by the prospect of Texas’ renewable energy portfolio growing by 4000 megawatts that we are willing to overlook some potentially dodgy aspects to the project?”

It shouldn’t sit well with the rest of us either. Pickens has gamed Texas for his own ends, and now he’s trying to game the rest of us, too. Worse, his gamesmanship includes lending his billionaire resources, prominent stature and feudal powers bestowed upon him by the Texas legislature to help the Greens gain control over the U.S. energy supply.

I highly recommend reading the other articles about this sham at

Thanks to Robert D at Bob’s Bites for bringing this issue to my attention. “This is happening in TEXAS”, you’re probably saying. “It doesn’t concern US.” Uh huh. Do you really think that the outcome would be any different if ol’ T. Boone started some “renewable energy” rip off project in Florida?

Texanna provided some further clarification in the comment section:

I am so glad that the water issue is finally coming out. Just a couple of expansions and clarifications.

First, Pickens doesn’t own the all land where he is pumping the water. He made a deal with land owners to lease their water rights. A couple of years ago, he was paying land owners $500 per acre up front, plus another $500 when the wells are drilled. One land owner I spoke with stood to earn $2 million in water lease.

Second, with his water rights, and under current water conservation district rules( 1.5% of available water per well per year; the amount varies depending on how much is available at that particular well site) , he can pump up to 200,000 acre feet of water per year. That is 200,000 acres of land covered with a foot of water. One acre foot of water is 325,851 gallons. That is nearly double what the cities of Amarillo and Lubbock use combined per year.

Third, Roberts County officials DID NOT collude with Pickens. They attempted to prevent the creation of Roberts County Fresh Water Supply District #1 through delaying tactics, but when a county’s population is only about 2,000 and the big guns of a billionaire are threatening lawsuit, they had no choice.

Fourth, the legislators who sponsored the offending laws swear they were not contacted by TBP and had no idea what the consequences would be. Both the law and the amendment were passed during the last crazy days of session, so most lawmakers probably didn’t know what they were voting on.

Finally, for those who say this has no affect on them personally, I’d like to make two points. First, the Ogallala Aquifer makes it possible for the United States to lead the world in agriculture production. Without the water it provides, the corn, wheat and beef industries will be demolished. Second, if a person like TBP can do this is Texas, what will protect you where you live?

Comments (15) »

Dr. Pepper Consolidates Southeast Distribution Facilities in Jacksonville

WESTSIDE — Dr Pepper Snapple Group Inc. is consolidating all its Southeast noncarbonated distribution facilities into one 601,500-square-foot space in Jacksonville.

The company will distribute its noncarbonated products such as Snapple, Hawaiian Punch and Mott’s brands throughout the Southeast from space leased in the West Point Trade Center, which is being developed by Dallas-based Hillwood Investment Properties.

“This is an important step toward strengthening our distribution in the southeastern United States,” said Dan Flowers, senior vice president of logistics and distribution for Dr Pepper Snapple Group. “This facility will enable Dr Pepper Snapple to get our Snapple and Mott’s brands to our customers and consumers more efficiently and will lay the foundation for future growth in the southeastern region.”

The company is consolidating its noncarbonated facilities in the U.S. and Canada into fewer regional facilities that total as much, if not more space, Flowers said. Currently the Southeast distribution facilities are located in several buildings totaling about 500,000 square feet. Flowers would not disclose their locations.

Source: Jacksonville Business Journal

I’m always pleased to hear more good financial news for Jacksonville.

Leave a comment »

Mexico Grapples with Oil Production Woes

MINATITLAN, Mexico — Pungent smoke billows from aging petrochemical plants here. Foul-smelling bluish water gathers in pools outside the walls. Fading paint announces the creaky Lazaro Cardenas refinery, a perfect metaphor for one of the world’s biggest and most antiquated state oil companies.

Petroleos Mexicanos employs more than 147,000 people and has long operated as a state within a state, with its own hospitals, pensions and integrated business operations.

But Pemex has historically overinvested in a bloated work force and underinvested in new or expanded refineries and sophisticated oil exploration and production. That’s evident in the rust, smog and environmental contamination here in the state of Veracruz and further east in the state of Tabasco.

A big reason for the decrepit state of affairs is that much of the national oil company’s earnings go directly to the Mexican treasury.

Given the sorry shape of Pemex, President Felipe Calderón in April proposed a controversial energy overhaul that would give it more control over its budget and allow private foreign firms to search for deep-water oil and to build and run refineries.

Now the nation is in knots over whether and how to modernize the 70-year-old company and find new sources of oil before Mexico’s easy-to-extract oil goes dry.

Mexico is already a net importer of gasoline — most coming from the United States — as it’s unable to refine enough oil to meet its demands. Within a decade, Mexico could compete with the United States for ever-scarcer barrels of imported oil.

Oil production in Mexico — until recently the second largest oil exporter to the United States after Canada — is falling precipitously because output at the Cantarell offshore oil field is declining faster than expected.

In fact, Pemex officials on Wednesday reeled back their output projections for the second time this year; they now say that Mexico will produce 2.8 million barrels per day this year, not the 3.1 million first forecast.

It falls to Carlos Morales Gil, the director of exploration and production, to turn things around. But in an interview on the 41st floor of Pemex’s towering Mexico City headquarters, he warned, half jokingly, that it could take a century to tap Mexico’s vast but unproven oil reserves.

Morales doesn’t have that much time, nor much room to maneuver. Restrictive rules govern contracting, and little of what Pemex earns can be reinvested. About 40 percent of federal spending in Mexico comes from oil earnings.

In Morales’ best guess, there are 30 billion barrels of yet-unfound oil under the deep waters in Mexico’s portion of the Gulf of Mexico. U.S. companies have drilled hundreds of test wells in the U.S. deep waters, but Pemex has drilled just four to date in Mexico’s deep Gulf waters.

That’s where Mexico’s wrenching national debate over Pemex begins.

Ever since President Lazaro Cardenas nationalized the oil industry in 1938 and kicked out Standard Oil, which much later became Exxon Mobil, Mexicans have equated Pemex with national sovereignty. Allowing foreigners to extract oil in Mexico, even if on behalf of Pemex, is simply anathema.

Two deep-water teams operate for Pemex now, and three more will arrive in 2010. With five operators, Mexico’s annual deep-water drill rate will grow to about 12 or 13 wells, still woefully insufficient.

”I need to drill in deep waters about 1,500 wells in order to find these 30 billion barrels I mentioned, because not all will become producers,” Morales said. If the overhaul doesn’t progress and he must drill at current rates, “it implies it will take me 100 years to discover all the hydrocarbons that are there. Meanwhile, nobody benefits from them.”

It’s not just oil that troubles Mexico. Pemex hasn’t built a new refinery since 1979. As the country’s economy and middle class grew, the six surviving Pemex refineries couldn’t keep up with the demand for gasoline.

Read the rest in the Miami Herald.

Even with historically high oil prices, the nationalized companies of other nations have sucked so much money out of their oil companies that they can’t afford routine maintenance, modernized equipment, and environmental protection. These are the countries that the Democratic “leadership” wants us to rely upon for our energy needs.

In the meantime, they say they want to save the environment. If they *really* wanted to save the environment instead of screwing their constitutents, they would be encouraging oil production here, where we have environmental controls.

I know, I know. They would actually prefer *we* (not they) take a vow of poverty, give up manufacturing, commuting, and electricity so that we can demonstrate our worthiness at the altar of gaia. The reliance on windmills and solar energy for power is about the stupidest thing I’ve ever heard coming out of Washington, and that’s saying something.

Leave a comment »