Texas Oil Tycoon Tackles Renewable Energy

As you alight from the elevator, you see, at the end of a long, paneled corridor, a huge Wilson Hurley painting of a Mars sunset bleeding from rust to black; in one corner soars NASA's Mariner 4 spacecraft "on its way to oblivion," according to the caption.

T. Boone Pickens's office is a shrine to a life of Texas power and wealth: framed Western landscapes, a portrait of his platinum-haired wife, photos signed by Republican presidents, magazine covers featuring the impish billionaire during his corporate-raider days with headlines such as "Boone Pickens: Hero or Heel?" But Hurley's painting of Mars stands alone in encapsulating this singular moment for Pickens: At 80, he is hurtling ahead, oblivion be damned, toward new frontiers. His flight plan focuses on the escalating global-energy and environmental crises. He has minted billions with BP Capital, a fossil-fuel hedge fund he founded in 1996. He listed Clean Energy Fuels, a company that markets natural gas for vehicles, on Nasdaq last year. Convinced of an imminent water shortage, he has amassed rights to billions of gallons per year of the Texas panhandle's aquifer and hopes to build a 300-mile pipeline to Dallas. But perhaps most audacious: He's building the world's biggest wind farm, a sprawling $10 billion project.

Pickens wears hearing aids. His eyesight is failing, so he constantly asks the score of the Oklahoma State University Cowgirls basketball game he watches while we talk. His arm is in a cast, after a late-night fall. "They put in 11 pins and a plate," he says in his thick drawl, seated behind a huge wooden desk. "I got lucky. It could have been my head." Between calls from Michael Milken and the governors of Texas and Mississippi, I trail Pickens from his office to an investment meeting to a private dining room in Dallas's Park Cities Prime Steakhouse. As vivacious and thought-provoking as ever, he unspools his opinions, rancor, and rage.

Listening to all of your environmental ideas, it sounds like you're the Al Gore of Texas Republicans.
Don't connect me to Al Gore! A lot of what he says just doesn't make sense. Texans know I'm environmentally directed in some ways. But I'm realistic about what's going on. Industry people are comfortable with me. Gore talks about getting rid of the combustion engine. I don't talk about that.

You recently announced plans to build the world's largest wind farm, in the panhandle. Is that about money or the environment?
Money! First thing, it's about money. Of course, I'm also a good environmentalist. I can pass the saliva test. But I'm not going to go do a 4,000-megawatt wind farm for the environment first and money second. I'd rather go give money someplace else. You're talking about $10 billion.

What kind of return do you expect?
A minimum of 15%. It'll probably be closer to 25%.

Tell me about the project.
It's huge, the size of two nuclear plants in output, enough to power a million homes. More than 2,000 turbines, each between 2 and 3 megawatts. The first 1,000 megawatts will be ready by 2011, and 1,000 each year or two after that.

And you'll do all this on your beautiful 68,000-acre ranch?
I'm not going to have the windmills on my ranch. They're ugly. The hub of each turbine is up 280 feet, and then you have a 120-foot radius on the blade. It's the size of a 40-story building.

So whose land is it going on?
My neighbors', mainly south of my ranch. They'll get royalties of 4% to 7% on the energy produced, an average per turbine of $10,000 to $20,000 per year. They still can run cattle or farm on the land with the turbines there too. We'll put in only five per square mile. And unlike oil, this is not a declining situation. Let's say a guy has a 3 megawatt turbine, and it does $20,000 per year. It's going to be out there for, say, 100 years. You're talking about $2 million. It's not like having an oil well that's a real pisser for a few years, and then it starts to decline.

What about when the wind doesn't blow?
[Pickens purses his lips and starts puffing.] That's the problem with wind generation. You've got to supplement it with a gas-fired or coal-fired source so whoever buys it gets continuous 24-7 generation.

So you're going to build that?
Either we will or someone else, like TXU.

What happens if Congress doesn't extend the $20-per-megawatt-hour Production Tax Credit for wind -- set to expire December 31? On a project this size, that's an $80,000 deduction every hour at full capacity.
Then you've got a dead duck. It would be hard to go without a subsidy. But they'll probably pass it.