Oil Billionaire T. Boone Pickens Orders 667 Wind Turbines
HARTFORD, Conn. _ Maverick oilman T. Boone Pickens' plan for a mammoth wind farm in the Texas Panhandle is a $2 billion bet that Congress will extend a tax credit critical to the environmentally friendly industry.
Pickens' company, Mesa Power, is purchasing hundreds of wind turbines from General Electric Co. to create the Pampa Wind Project, which will eventually cover 400,000 acres and generate enough power for more than 1.3 million homes.
"We are making Pampa the wind capital of the world," Pickens said. "It's clear that landowners and local officials understand the economic benefits that this renewable energy can bring not only to landowners who are involved with the project, but also in revitalizing an area that has struggled in recent years."
Pickens said the total cost of the deal will grow to between $10 billion and $12 billion after the initial $2 billion investment in GE's turbine technology. The entire four-phase project is forecast for completion in 2014. It will eventually have 4,000 megawatts of capacity.
Wind farms and other alternative fuels are gaining more interest as the cost of oil keeps breaking records. Oil prices hit a trading record near $127 a barrel Tuesday.
Pickens, who was born in nearby Oklahoma and made the early part of his fortune hunting for oil and natural gas, said that developing alternative energy projects is critical for the nation's future. But the industry has relied on federal tax credits to survive, a point that Pickens underscored Thursday.
"I believe that Congress will recognize that it is critical not only to this project, but to renewable energy in this country, that they enact a long-term extension of the Production Tax Credits," he said.
Tax credits of 2 cents per kilowatt hour are set to expire this December, said Christine Real de Azua, a spokeswoman for the American Wind Energy Association.
The credits expired in 1999, 2001 and 2003, Real de Azua said. Wind power installation dropped significantly in each year following expiration of the credits, according to the organization.
Because it is unclear that the production tax credit will be in place, financing for many projects is still pending, she said.
"These projects are being held up and investment is at stake," Real de Azua said.
More than 5,200 megawatts of new wind power capacity was installed last year, more than double the amount in 2006, the American Wind Energy Association said.
The deal is a windfall for Fairfield-based GE, which makes jet engines, locomotives and water treatment plants and runs the NBC television network. Normally a reliable producer for its shareholders, GE's failure to hit its own projected earnings marks in the first quarter this year sent a ripple through Wall Street and underscored that even the world's largest companies are struggling with the weakened economy.
The wind announcement came a day after reports surfaced that GE was shopping its 101-year-old appliance business for as much as $8 billion. Last year, it sold its struggling plastics business to a Saudi Arabian company for $11.6 billion.
While GE has worked in recent years to shed underperforming products, Thursday's deal with Mesa Power was in line with its strategy to grow its renewable investment business.
GE set a goal of investing $6 billion in renewable energy by 2010, increasing its investment by 50 percent.
"As America's demand for energy escalates, it is clear that wind can and will play a bigger part in meeting that need," said Jeffrey R. Immelt, GE Chairman and CEO. "We're excited to partner with an energy visionary like T. Boone Pickens to bring our wind technology to the marketplace."
GE fell 14 cents per share, or less than 1 percent, to $32.37, on Thursday.
AP Business Writer Adam Schreck in New York contributed to this report.