Imagine That: T. Boone Pickens is full of shit

[asroc]

T. Boone Pickens wants your water

By Timothy P. Carney

Examiner Columnist | 8/21/08 7:10 PM

Texas oil billionaire T. Boone Pickens is about to make a killing by selling water he doesn’t own. As he does it, it will be praised as a planet-friendly wind project. After he pulls it off, the media will deride it as craven capitalism. In truth, it is one the most audacious examples of politics for profit, showing how big government helps the biggest business steal from the rest of us. The plotline behind Pickens’ water-and-wind scheme is almost too rich to believe. If it were a movie script, reviewers would dismiss it as over-the-top.

The basic story amounts to this: Pickens, thanks to favors from state lawmakers whose campaigns he funded, has created a new government whose only voters are two of his employers; this has empowered Pickens to more cheaply pump water from an aquifer and, by use of eminent domain, seize land across 11 counties in order to pipe the water to Dallas. To win environmentalist approval of this hardly “sustainable” practice, he has piggybacked this water project onto a windmill project pitched as an alternative to oil.

Pickens’ scheme is a perfect demonstration of why it’s worth asking cui bono — who benefits — from regulatory and environmental initiatives. Last week, this column pointed out that Pickens, before his current lobbying blitz for increased federal support of wind power, built the largest wind farm in the world.

I received dozens of responses from environmentalists and Pickens fans objecting to my implication that Pickens’ profit from expanding wind subsidies ought to cast suspicion on his call for more wind subsidies. “Why should I care if someone’s getting rich?” was the general gist, “windmills are good, and we need more of them.”

This objection is grounded in a good instinct: The profit motive, far from being evil, is the driving force behind most of our society’s advances. But, especially when it comes to government plans involving your tax dollars, asking cui bono helps us unearth less desirable aspects of the scheme.

Amid all the hype Pickens’ windmill plan has gotten, the interesting part — the water part — has been mostly ignored, except for an excellent Business Week story by Susan Berfield and a column by Steve Milloy.

Roberts County, Texas, sits atop the Ogallala Aquifer, a huge underground reservoir that stretches all the way to South Dakota. It’s in Roberts County that T. Boone Pickens set aside eight acres from his ranch for drilling deep into the aquifer.

Then he turned this parcel into a town, basically, with only two eligible voters — both of whom were his employees. (This required a change in Texas law in 2007 — a change facilitated no doubt by his $1.2 million in campaign contributions to Texas legislators in 2006).
Then there was an election in this district, in which both voters voted to make this 8-acre municipality a special fresh-water district.

Pickens’ wholly owned government entity now can issue tax-free bonds (meaning he can borrow at a serious discount) and use the power of eminent domain to pressure landowners to sell — or to take their land if they hold out. The eminent domain power is key to building the pipeline that will run this water down to the Dallas area, where Pickens hopes to sell the water. If your land lies in the path of his proposed pipeline, you got a letter explaining that T. Boone wants to buy a stretch of your land — and explaining that he can use eminent domain if you resist. If this begins to sound too cutthroat to the public, Pickens just reminds journalists and politicians that following this water pipeline will be the transmission cables for Pickens’ mammoth wind farm.

Are you really going to side with some greedy holdout ranchers over the future of green power? Sure enough, the Sierra Club is now rallying behind this whole scheme.

Nobody owns the aquifer — that would be too capitalist, of course — but in Texas, whoever has the water beneath his land can pump as much as he wants. The limits on this are usually pumping capacity (which requires money) and ability to sell it (which requires, among other things, pipelines). Pickens has cleared those hurdles, and now he can drain the aquifer faster than anyone ever before, future generations and other water users be damned.

This is why, when presented with some big government program, it’s worthwhile to ask who’s getting rich — because you may find something interesting when you look below the surface.

Examiner Columnist Timothy P. Carney is editor of the Evans-Novak Political Report. His Examiner Column appears on Fridays.

Find this article at:
http://www.dcexaminer.com/opinion/columns/TimothyCarney/T_Boone_Pickens_wants_your_water.html

[asroc]

There Will Be Water

T. Boone Pickens thinks water is the new oil—and he's betting $100 million that he's right

by Susan Berfield

Roberts County is a neat square in a remote corner of the Texas Panhandle, a land of rolling hills, tall grass, oak trees, mesquite, and cattle. It has a desolate beauty, a striking sparseness. The county encompasses 924 square miles and is home to fewer than 900 people. One of them is T. Boone Pickens, the oilman and corporate raider, who first bought some property here in 1971 to hunt quail. He's now the largest landowner in the county: His Mesa Vista ranch sprawls across some 68,000 acres. Pickens has also bought up the rights to a considerable amount of water that lies below this part of the High Plains in a vast aquifer that came into existence millions of years ago.

If water is the new oil, T. Boone Pickens is a modern-day John D. Rockefeller. Pickens owns more water than any other individual in the U.S. and is looking to control even more. He hopes to sell the water he already has, some 65 billion gallons a year, to Dallas, transporting it over 250 miles, 11 counties, and about 650 tracts of private property. The electricity generated by an enormous wind farm he is setting up in the Panhandle would also flow along that corridor. As far as Pickens is concerned, he could be selling wind, water, natural gas, or uranium; it's all a matter of supply and demand. "There are people who will buy the water when they need it. And the people who have the water want to sell it. That's the blood, guts, and feathers of the thing," he says.

In the coming decades, as growing numbers of people live in urban areas and climate change makes some regions much more prone to drought, water—or what many are calling "blue gold"—will become an increasingly scarce resource. By 2030 nearly half of the world's population will inhabit areas with severe water stress, according to the Organization for Economic Cooperation & Development. Pickens understands that. And while Texas is unusually lax in its laws about pumping groundwater, the rush to control water resources is gathering speed around the planet. In Australia, now in the sixth year of a drought, brokers in urban areas are buying up water rights from farmers. Rural residents around the U.S. are trying to sell their land (and water) to multi- national water bottlers like Nestlé (BW—Apr. 14). Companies that use large quantities of the precious resource to run their businesses are seeking to lock up water supplies. One is Royal Dutch Shell, which is buying groundwater rights in Colorado as it prepares to drill for oil in the shale deposits there.

Into this environment comes Pickens, who made a good living for a long time extracting oil and gas and now, at 80, believes the era of fossil fuel is over. So far he has spent $100 million and eight years on his project and still has not found any city in Texas willing to buy his water. But like many others, Pickens believes there's a fortune to be made in slaking the thirst of a rapidly growing population. If he pumps as much as he can, he could sell about $165 million worth of water to Dallas each year. "The idea that water can be sold for private gain is still considered unconscionable by many," says James M. Olson, one of America's preeminent attorneys specializing in water- and land-use law. "But the scarcity of water and the extraordinary profits that can be made may overwhelm ordinary public sensibilities."
THE BIGGEST PUMP WINS

Pickens, an Oklahoma native, geologist, and someone who calls himself the luckiest guy in the world, is the quintessential entrepreneur. He started as a wildcatter in 1956; three decades later his Mesa Petroleum was the largest independent exploration company in the U.S. But that's not how Pickens made a name for himself—it was his hostile bids, one after the other through the 1980s, for oil companies far more powerful, far wealthier than his own. Pickens thought they could do more for their shareholders. He never took over any of them. He did, however, push them into deals they might not have considered otherwise, which helped reshape the oil industry. He did, sometimes, make hundreds of millions when he sold his stakes. And shareholders did, often, benefit. He was briefly the most famous businessman in America, a corporate raider who always wished people would call him a shareholder activist.

By the mid-1990s, though, Pickens had fallen. After a brutal and expensive fight with Unocal, he gave up his raiding. He lost control of Mesa Petroleum after a series of financial and managerial miscalculations. He went through an expensive divorce from his second wife and retreated to his ranch. It was in the midst of this that he acquired a newfound regard for water as a commodity that should be bought, sold, and traded for the benefit of those who own it and those who can afford it.

In 1996 a local water utility made its first big purchase of groundwater rights in the Panhandle. The utility, known as the Canadian River Municipal Water Authority (CRMWA), bought nearly 43,000 acres of water, some of it just south of Pickens' ranch, for $14.5 million. (Property owners in Texas, and elsewhere, can sell their water separately from the land above it.) That Roberts County would become the stomping ground for the Panhandle water wars was perhaps inevitable. Underneath it lies one of the world's largest repositories of water, moving slowly among layers of gravel, sand, and silt. The Ogallala Aquifer stretches from Texas to South Dakota and contains a quadrillion gallons of water—enough to cover the U.S. mainland to a depth of almost two feet. Yet the extensive irrigation necessary to grow corn, cotton, and wheat in west Texas has left the Ogallala nearly depleted in some places. It is not an aquifer that is easily or quickly replenished. But the land in Roberts County is unsuited for agriculture, and so the Ogallala there is largely untapped.

Since the early 1900s, groundwater use in Texas has been governed by what's quaintly called the rule of capture, otherwise described as the biggest pump wins. It lets landowners pump as much water as they can, even if doing so drains neighboring properties. This put Pickens in an uncomfortable position: If he didn't sell his water to CRMWA, the utility could potentially suck some of it right out from under his ranch. So he tried. But "they told me to kiss off," he says. Kent Satterwhite, who was then assistant general manager, says: "Boone was fairly insistent that we buy his water. It made him mad that we didn't have the money to buy it." That was the first of several contretemps between Pickens and various local water authorities. Pickens next approached the city of Amarillo, which also had begun to acquire water rights in Roberts County. It wasn't interested, either, though it did purchase water from several other nearby landowners. "Amarillo was pissed off at me," says Pickens, who has a long and fraught history with the city. When Amarillo turned him down, Pickens felt surrounded. "I had to find a buyer for my water," he says, "or I was going to be drained."
LANDOWNERS DIVIDED

There's a saying in Texas: "Whiskey's for drinking. Water's for fighting." Pickens decided to fight. In 1999 he created a company called Mesa Water and began to accumulate water rights so he could strike a deal with another city altogether. The hell with Amarillo. Pickens was confident he could sell his water: The population of Texas was expected to jump 40% by 2020, mostly in urban areas one dry season away from drought.

Pickens' decision to get into the water business was regarded by some in the Panhandle as nothing more, or less, than a shrewd move by a man who knows the value of commodities. The economy of the High Plains region is based on people taking out the natural resources and selling them. If water that can't be used for farming ends up in the taps of city residents hundreds of miles away, that's fine. Pickens says he's buying stranded, surplus water that needs to be rescued. Kim Flowers, who runs an 8,300-acre ranch in Roberts County, speaks for many landowners when she says: "People can do with their water as they wish as long as they're not wasting it."

In all, Pickens, CRMWA, and Amarillo have spent about $150 million to buy up nearly 80% of the water rights in Roberts County, undermining and outbidding one another along the way. One unsurprising effect of their competition is that the price of an acre of water has in some places doubled, to $600. That's something in which Pickens takes pride. Much as he did in the 1980s, when he went after big oil companies he believed weren't doing right by their shareholders, Pickens now talks about creating value for Roberts County landowners. They make money from selling their water while continuing to live, run cattle, and hunt on their property. "I told them I was going to raise the value of the land, and I accomplished that. The landowners are all tickled to death. I made our water worth something. And anybody with any sense would sell it."

Not all Roberts County landowners wanted to do business with him, though. Pickens intended to pull water from an aquifer that is pretty much the sole source for the Panhandle, and that isn't refilled quickly, and sell it to a place like Dallas, whose water use is the highest of any city in Texas. This seemed ludicrous, even reckless, to some. C.E. Williams runs the Panhandle Groundwater Conservation District, which is responsible for managing the competing demands on the region's share of the Ogallala. He puts it this way: "As a district, we cannot pick and choose where the water goes. But personally I am concerned. I have a son who is an irrigated farmer, and I have grandkids, and I want to make sure that they can conduct commerce when they want to."

Pickens has a way of dismissing the complexity of a situation, sometimes even the possibility of an opinion contrary to his own. In this case, any opposition to his plan from anyone who is not a Roberts County landowner, who is not essentially a shareholder in this venture, he deems irrelevant. Williams, he points out, doesn't himself have any property. "Water is a commodity," he says. "Heck, isn't it like oil? You have to come back to who owns the water. The groundwater is owned by the landowner. That's it." When it comes to potential buyers, Pickens cares about only one thing: how much they're willing to pay. "Do I care what Dallas does with the water? Hell no."

Republican State Representative Warren Chisum is a Roberts County rancher who owns 12,000 acres next to Pickens and sold his water to Amarillo in 2001. He would seem to be a natural ally. He's not. "My water will remain local," he says. "It's controversial to ship it out of the Panhandle. When we run out, we're done. The long-term value is to keep it here. That's contrary to what Pickens wants to do. It's his water. But he won't be here in 50 years."

In 2002, Pickens began approaching several of Texas' sprawling cities, all of which share one defining feature: Their populations are growing so quickly that they are constantly in need of new supplies of water. But with water, as with so much else, location is critical. And Pickens' water is far, far away from anyplace that might buy it. Pickens knew he'd have to build a pipeline, and to do so at anything resembling a reasonable cost, he'd need the power of eminent domain—the right of a government entity to force the sale of private property for the public good. Water utilities have that right. If Dallas agreed to buy Pickens' water, it could extend such authority to him. But Dallas deemed Pickens' price too high and declined to do a deal. So Pickens and his executives tried to create a Fresh Water Supply District—a government entity that would have that power. But they couldn't get it through.

Over the next several years, Pickens continued accumulating water rights and began to lease other land, this time with the idea of creating the world's biggest wind farm. "One of the great wind areas is right up where we are," says Robert L. Stillwell, Pickens' general counsel. "You can set it right on top of where the water is." And since, one day anyway, Dallas may well buy both, Mesa could use a single right-of-way for the water pipeline and the electric lines. In Roberts County there would be real economic benefits from the wind farm. "The wind is meant to sweeten the deal," says Representative Chisum. "The big money for Pickens is in the water."

It had been a decade since Pickens first realized the potential value of the water deposited eons ago in the sand below the High Plains. Now it was time to employ the one resource he hadn't yet used: his lobbying clout.
POWERFUL LOBBYING

In January, 2007, the Texas Legislature convened in the grand statehouse in Austin. The 80th session turned out to be very productive, and one person who kept busy during that time was J.E. Buster Brown, a former state senator and one of the most powerful lobbyists in town. Among Brown's clients is Mesa Water. "My job is primarily defensive," Brown says of his work for Pickens. "I'm watching to make sure there is no legislation passed that creates obstacles to Pickens doing what he wants to do. I'm supposed to make sure nothing bad happens."

Brown did more than that: He helped win Pickens a key new legal right. It was contained in an amendment to a major piece of water legislation. The amendment, one of more than 100 added after the bill had been reviewed in the House, allowed a water-supply district to transmit alternative energy and transport water in a single corridor, or right-of-way. "We helped move that along," says Stillwell. "We thought it would be handy and helpful to everyone."

After the bill passed, Tom "Smitty" Smith, Texas director of Public Citizens, an advocacy group, says several legislators were drinking coffee and reading through it. "Uh-oh," one said. They'd just realized the amendment would help Pickens build his pipeline. "Many legislators were watching for this play," Smith says, "and it still snuck by." State Senator Robert Duncan, a Republican who represents Lubbock, says: "It probably should have raised our suspicions, but we were moving a lot of bills. And it would have been hard to hold up this one even if we'd discovered the amendment."

Pickens still needed the power of eminent domain if he was going to build his pipeline and wind-power lines across private land. And by happy coincidence, the legislators passed a smaller bill that made that all the easier. The new legislation loosened the requirements for creating a water district. Previously, a district's five elected supervisors needed to be registered voters living within the boundaries of the district. Now, they only had to own land in the district; they could live and vote wherever. The bill, as it happens, was put forth by two legislators from Houston; Brown says he and Mesa had nothing to do with it. "That wasn't our bill," says Brown. "I wish I could take credit for it."

Pickens moved quickly to take advantage of the new rules. Over the summer of 2007, he sold eight acres on the back side of his ranch to five people in his employ: Stillwell, who resides in Houston, two of his executives in Dallas, and the couple who manage his ranch, Alton and Lu Boone. A few days later, Mesa Water filed a petition to create an eight-acre water-supply district with those five as the directors and sole members. On Nov. 6, Roberts County held an election to decide whether to form the new district. Only two people were qualified to take part: Alton and Lu Boone. The vote was unanimous. With that, Pickens won the right to issue tax-free bonds for his pipeline and electrical lines as well as the extraordinary power to claim land across swaths of the state.

No one at Mesa regards Roberts County Fresh Water Supply District No. 1 as an unusual arrangement. "We're no different from any other water or electricity supplier," says Stillwell, meaning they, too, would use the power of eminent domain only as a last resort and for the public good. As for the suggestion that he wouldn't have qualified to be a board member under the old rules, Stillwell says: "It doesn't matter that I'm on the board. It would have been another me, just a local me."
"WE'RE NOT HAPPY"

Pickens was ready to reach out to landowners along the route. In April, 2008, Mesa sent out some 1,100 letters to people along the 250-mile proposed right-of-way, from Miami, Tex., to a town called Jacksboro, just short of Dallas. The letters included a Texas landowners' bill of rights, information on the condemnation procedure, a map of the route, and a list of open houses they could attend for more information.

One stifling evening in May, about 50 people showed up at the Twin Lakes Community Activity Center just outside Jacksboro. When the ranchers arrived, more than a dozen of Mesa's public-relations consultants, hydrologists, and land men were waiting for them. Standing behind tables laid out with pens, cups, hats, and bags with the District No. 1 logo, the officials were available to answer questions about the 250-foot-wide corridor Mesa would use to construct, maintain, and possibly expand the pipeline and electric lines. While this arrangement allowed everyone to get information specific to their property, it also precluded any public questioning of the Mesa standard-bearers. This did not go unnoticed by the ranchers. "We're not happy," said one. "Pickens is pushing his power trip on us. I can't fight his money. But if he asked first, I might have thought better of it." Another said: "Land goes way back for a lot of people here. If you tell people you want their land, Texans raise their guns." At the end of the evening, most of the pens and hats and cups still lay on the tables.

Pickens isn't bothered that by his invoking the right of eminent domain, Mesa has inflamed landowners up and down the route. "It always does," he says. Mesa expects to acquire the land it needs in the next 18 months and pay about $30 million for it; Pickens wants to begin construction on the $1.2 billion pipeline right afterward. It should take about three years to complete. If all goes according to plan, Mesa will be able to pump enough water to satisfy the needs of some 1.5 million Texans every day.

Pickens hopes to strike a deal with Dallas or the urban areas around it before Mesa starts building the pipeline. "Eventually they will need it," he says. So far, though, the talks might best be characterized as preliminary. "We continue to meet with Pickens' staff and engineers to get a better understanding of the proposal and so they can understand what our needs are," says Mike Rickman, assistant general manager of the North Texas Municipal Water District, which supplies water to 13 cities north and east of Dallas. "Mesa has a lot of water. But how much will it cost to buy it and deliver it?" Rickman says that at some point he would have to consider the consequences for the Ogallala: "Does it make sense to take water from an arid portion of the state? We don't want to harm our neighbors out there."

In Roberts County, people hold on to the hope that pumping from the Ogallala can be controlled. In 1998, as Pickens and local water utilities began buying up water rights, the groundwater conservation district placed some restrictions on the rule of capture that it calls the 50-50 rule: Anyone who receives a new permit to pump can draw down the aquifer by only 50% over the next 50 years. Later, an additional limit of 1.2% per year was set. These essentially manage the depletion of the Ogallala under Roberts County; there, it is replenished at a rate of only 0.1% a year. Williams, who put the rules into place, says: "It's like taking dollar bills out of your bank account and putting nickels back in. Even with a big bank account, there's an end. That's pretty much what's happening in the Ogallala."

Pickens has promised to abide by the 50-50 rule. "I don't have any concerns about depleting the aquifer. All I'm doing is selling surplus water," he says. "I'm not about to drain all the water out of Roberts County. I have my ranch there. But I could sure take it down 50% and not hurt anybody. And it could make a lot of people a lot of money."

http://www.businessweek.com/print/magazine/content/08_25/b4089040017753.htm

[Independent Harry]

smart man, if this is true, he shoudl be stopped. But smart man.

[Moby]

This is in Texas and he's an Energy Guy. Did you think that any of the Energy Guys or Politicians from Texas really care about the people? In many other states he could be stopped. In Texas I'm not so sure that people even want it stopped.

They elected Tom Delay and Bush after they both claimed to hear voices in their heads. This is a weird place.

[Independent Harry]

This is in Texas and he's an Energy Guy. Did you think that any of the Energy Guys or Politicians from Texas really care about the people? In many other states he could be stopped. In Texas I'm not so sure that people even want it stopped.

They elected Tom Delay and Bush after they both claimed to hear voices in their heads. This is a weird place.

LOL, yes if we were to take a picture of what it looked like when that new supercolider in europe smashed its first set of atoms together. I bet it would be an exact replica of texas on the molecular level.

[Binky]

There Will Be Water

T. Boone Pickens thinks water is the new oil—and he's betting $100 million that he's right

by Susan Berfield

Roberts County is a neat square in a remote corner of the Texas Panhandle, a land of rolling hills, tall grass, oak trees, mesquite, and cattle. It has a desolate beauty, a striking sparseness. The county encompasses 924 square miles and is home to fewer than 900 people. One of them is T. Boone Pickens, the oilman and corporate raider, who first bought some property here in 1971 to hunt quail. He's now the largest landowner in the county: His Mesa Vista ranch sprawls across some 68,000 acres. Pickens has also bought up the rights to a considerable amount of water that lies below this part of the High Plains in a vast aquifer that came into existence millions of years ago.

If water is the new oil, T. Boone Pickens is a modern-day John D. Rockefeller. Pickens owns more water than any other individual in the U.S. and is looking to control even more. He hopes to sell the water he already has, some 65 billion gallons a year, to Dallas, transporting it over 250 miles, 11 counties, and about 650 tracts of private property. The electricity generated by an enormous wind farm he is setting up in the Panhandle would also flow along that corridor. As far as Pickens is concerned, he could be selling wind, water, natural gas, or uranium; it's all a matter of supply and demand. "There are people who will buy the water when they need it. And the people who have the water want to sell it. That's the blood, guts, and feathers of the thing," he says.

In the coming decades, as growing numbers of people live in urban areas and climate change makes some regions much more prone to drought, water—or what many are calling "blue gold"—will become an increasingly scarce resource. By 2030 nearly half of the world's population will inhabit areas with severe water stress, according to the Organization for Economic Cooperation & Development. Pickens understands that. And while Texas is unusually lax in its laws about pumping groundwater, the rush to control water resources is gathering speed around the planet. In Australia, now in the sixth year of a drought, brokers in urban areas are buying up water rights from farmers. Rural residents around the U.S. are trying to sell their land (and water) to multi- national water bottlers like Nestlé (BW—Apr. 14). Companies that use large quantities of the precious resource to run their businesses are seeking to lock up water supplies. One is Royal Dutch Shell, which is buying groundwater rights in Colorado as it prepares to drill for oil in the shale deposits there.

Into this environment comes Pickens, who made a good living for a long time extracting oil and gas and now, at 80, believes the era of fossil fuel is over. So far he has spent $100 million and eight years on his project and still has not found any city in Texas willing to buy his water. But like many others, Pickens believes there's a fortune to be made in slaking the thirst of a rapidly growing population. If he pumps as much as he can, he could sell about $165 million worth of water to Dallas each year. "The idea that water can be sold for private gain is still considered unconscionable by many," says James M. Olson, one of America's preeminent attorneys specializing in water- and land-use law. "But the scarcity of water and the extraordinary profits that can be made may overwhelm ordinary public sensibilities."
THE BIGGEST PUMP WINS

Pickens, an Oklahoma native, geologist, and someone who calls himself the luckiest guy in the world, is the quintessential entrepreneur. He started as a wildcatter in 1956; three decades later his Mesa Petroleum was the largest independent exploration company in the U.S. But that's not how Pickens made a name for himself—it was his hostile bids, one after the other through the 1980s, for oil companies far more powerful, far wealthier than his own. Pickens thought they could do more for their shareholders. He never took over any of them. He did, however, push them into deals they might not have considered otherwise, which helped reshape the oil industry. He did, sometimes, make hundreds of millions when he sold his stakes. And shareholders did, often, benefit. He was briefly the most famous businessman in America, a corporate raider who always wished people would call him a shareholder activist.

By the mid-1990s, though, Pickens had fallen. After a brutal and expensive fight with Unocal, he gave up his raiding. He lost control of Mesa Petroleum after a series of financial and managerial miscalculations. He went through an expensive divorce from his second wife and retreated to his ranch. It was in the midst of this that he acquired a newfound regard for water as a commodity that should be bought, sold, and traded for the benefit of those who own it and those who can afford it.

In 1996 a local water utility made its first big purchase of groundwater rights in the Panhandle. The utility, known as the Canadian River Municipal Water Authority (CRMWA), bought nearly 43,000 acres of water, some of it just south of Pickens' ranch, for $14.5 million. (Property owners in Texas, and elsewhere, can sell their water separately from the land above it.) That Roberts County would become the stomping ground for the Panhandle water wars was perhaps inevitable. Underneath it lies one of the world's largest repositories of water, moving slowly among layers of gravel, sand, and silt. The Ogallala Aquifer stretches from Texas to South Dakota and contains a quadrillion gallons of water—enough to cover the U.S. mainland to a depth of almost two feet. Yet the extensive irrigation necessary to grow corn, cotton, and wheat in west Texas has left the Ogallala nearly depleted in some places. It is not an aquifer that is easily or quickly replenished. But the land in Roberts County is unsuited for agriculture, and so the Ogallala there is largely untapped.

Since the early 1900s, groundwater use in Texas has been governed by what's quaintly called the rule of capture, otherwise described as the biggest pump wins. It lets landowners pump as much water as they can, even if doing so drains neighboring properties. This put Pickens in an uncomfortable position: If he didn't sell his water to CRMWA, the utility could potentially suck some of it right out from under his ranch. So he tried. But "they told me to kiss off," he says. Kent Satterwhite, who was then assistant general manager, says: "Boone was fairly insistent that we buy his water. It made him mad that we didn't have the money to buy it." That was the first of several contretemps between Pickens and various local water authorities. Pickens next approached the city of Amarillo, which also had begun to acquire water rights in Roberts County. It wasn't interested, either, though it did purchase water from several other nearby landowners. "Amarillo was pissed off at me," says Pickens, who has a long and fraught history with the city. When Amarillo turned him down, Pickens felt surrounded. "I had to find a buyer for my water," he says, "or I was going to be drained."
LANDOWNERS DIVIDED

There's a saying in Texas: "Whiskey's for drinking. Water's for fighting." Pickens decided to fight. In 1999 he created a company called Mesa Water and began to accumulate water rights so he could strike a deal with another city altogether. The hell with Amarillo. Pickens was confident he could sell his water: The population of Texas was expected to jump 40% by 2020, mostly in urban areas one dry season away from drought.

Pickens' decision to get into the water business was regarded by some in the Panhandle as nothing more, or less, than a shrewd move by a man who knows the value of commodities. The economy of the High Plains region is based on people taking out the natural resources and selling them. If water that can't be used for farming ends up in the taps of city residents hundreds of miles away, that's fine. Pickens says he's buying stranded, surplus water that needs to be rescued. Kim Flowers, who runs an 8,300-acre ranch in Roberts County, speaks for many landowners when she says: "People can do with their water as they wish as long as they're not wasting it."

In all, Pickens, CRMWA, and Amarillo have spent about $150 million to buy up nearly 80% of the water rights in Roberts County, undermining and outbidding one another along the way. One unsurprising effect of their competition is that the price of an acre of water has in some places doubled, to $600. That's something in which Pickens takes pride. Much as he did in the 1980s, when he went after big oil companies he believed weren't doing right by their shareholders, Pickens now talks about creating value for Roberts County landowners. They make money from selling their water while continuing to live, run cattle, and hunt on their property. "I told them I was going to raise the value of the land, and I accomplished that. The landowners are all tickled to death. I made our water worth something. And anybody with any sense would sell it."

Not all Roberts County landowners wanted to do business with him, though. Pickens intended to pull water from an aquifer that is pretty much the sole source for the Panhandle, and that isn't refilled quickly, and sell it to a place like Dallas, whose water use is the highest of any city in Texas. This seemed ludicrous, even reckless, to some. C.E. Williams runs the Panhandle Groundwater Conservation District, which is responsible for managing the competing demands on the region's share of the Ogallala. He puts it this way: "As a district, we cannot pick and choose where the water goes. But personally I am concerned. I have a son who is an irrigated farmer, and I have grandkids, and I want to make sure that they can conduct commerce when they want to."

Pickens has a way of dismissing the complexity of a situation, sometimes even the possibility of an opinion contrary to his own. In this case, any opposition to his plan from anyone who is not a Roberts County landowner, who is not essentially a shareholder in this venture, he deems irrelevant. Williams, he points out, doesn't himself have any property. "Water is a commodity," he says. "Heck, isn't it like oil? You have to come back to who owns the water. The groundwater is owned by the landowner. That's it." When it comes to potential buyers, Pickens cares about only one thing: how much they're willing to pay. "Do I care what Dallas does with the water? Hell no."

Republican State Representative Warren Chisum is a Roberts County rancher who owns 12,000 acres next to Pickens and sold his water to Amarillo in 2001. He would seem to be a natural ally. He's not. "My water will remain local," he says. "It's controversial to ship it out of the Panhandle. When we run out, we're done. The long-term value is to keep it here. That's contrary to what Pickens wants to do. It's his water. But he won't be here in 50 years."

In 2002, Pickens began approaching several of Texas' sprawling cities, all of which share one defining feature: Their populations are growing so quickly that they are constantly in need of new supplies of water. But with water, as with so much else, location is critical. And Pickens' water is far, far away from anyplace that might buy it. Pickens knew he'd have to build a pipeline, and to do so at anything resembling a reasonable cost, he'd need the power of eminent domain—the right of a government entity to force the sale of private property for the public good. Water utilities have that right. If Dallas agreed to buy Pickens' water, it could extend such authority to him. But Dallas deemed Pickens' price too high and declined to do a deal. So Pickens and his executives tried to create a Fresh Water Supply District—a government entity that would have that power. But they couldn't get it through.

Over the next several years, Pickens continued accumulating water rights and began to lease other land, this time with the idea of creating the world's biggest wind farm. "One of the great wind areas is right up where we are," says Robert L. Stillwell, Pickens' general counsel. "You can set it right on top of where the water is." And since, one day anyway, Dallas may well buy both, Mesa could use a single right-of-way for the water pipeline and the electric lines. In Roberts County there would be real economic benefits from the wind farm. "The wind is meant to sweeten the deal," says Representative Chisum. "The big money for Pickens is in the water."

It had been a decade since Pickens first realized the potential value of the water deposited eons ago in the sand below the High Plains. Now it was time to employ the one resource he hadn't yet used: his lobbying clout.
POWERFUL LOBBYING

In January, 2007, the Texas Legislature convened in the grand statehouse in Austin. The 80th session turned out to be very productive, and one person who kept busy during that time was J.E. Buster Brown, a former state senator and one of the most powerful lobbyists in town. Among Brown's clients is Mesa Water. "My job is primarily defensive," Brown says of his work for Pickens. "I'm watching to make sure there is no legislation passed that creates obstacles to Pickens doing what he wants to do. I'm supposed to make sure nothing bad happens."

Brown did more than that: He helped win Pickens a key new legal right. It was contained in an amendment to a major piece of water legislation. The amendment, one of more than 100 added after the bill had been reviewed in the House, allowed a water-supply district to transmit alternative energy and transport water in a single corridor, or right-of-way. "We helped move that along," says Stillwell. "We thought it would be handy and helpful to everyone."

After the bill passed, Tom "Smitty" Smith, Texas director of Public Citizens, an advocacy group, says several legislators were drinking coffee and reading through it. "Uh-oh," one said. They'd just realized the amendment would help Pickens build his pipeline. "Many legislators were watching for this play," Smith says, "and it still snuck by." State Senator Robert Duncan, a Republican who represents Lubbock, says: "It probably should have raised our suspicions, but we were moving a lot of bills. And it would have been hard to hold up this one even if we'd discovered the amendment."

Pickens still needed the power of eminent domain if he was going to build his pipeline and wind-power lines across private land. And by happy coincidence, the legislators passed a smaller bill that made that all the easier. The new legislation loosened the requirements for creating a water district. Previously, a district's five elected supervisors needed to be registered voters living within the boundaries of the district. Now, they only had to own land in the district; they could live and vote wherever. The bill, as it happens, was put forth by two legislators from Houston; Brown says he and Mesa had nothing to do with it. "That wasn't our bill," says Brown. "I wish I could take credit for it."

Pickens moved quickly to take advantage of the new rules. Over the summer of 2007, he sold eight acres on the back side of his ranch to five people in his employ: Stillwell, who resides in Houston, two of his executives in Dallas, and the couple who manage his ranch, Alton and Lu Boone. A few days later, Mesa Water filed a petition to create an eight-acre water-supply district with those five as the directors and sole members. On Nov. 6, Roberts County held an election to decide whether to form the new district. Only two people were qualified to take part: Alton and Lu Boone. The vote was unanimous. With that, Pickens won the right to issue tax-free bonds for his pipeline and electrical lines as well as the extraordinary power to claim land across swaths of the state.

No one at Mesa regards Roberts County Fresh Water Supply District No. 1 as an unusual arrangement. "We're no different from any other water or electricity supplier," says Stillwell, meaning they, too, would use the power of eminent domain only as a last resort and for the public good. As for the suggestion that he wouldn't have qualified to be a board member under the old rules, Stillwell says: "It doesn't matter that I'm on the board. It would have been another me, just a local me."
"WE'RE NOT HAPPY"

Pickens was ready to reach out to landowners along the route. In April, 2008, Mesa sent out some 1,100 letters to people along the 250-mile proposed right-of-way, from Miami, Tex., to a town called Jacksboro, just short of Dallas. The letters included a Texas landowners' bill of rights, information on the condemnation procedure, a map of the route, and a list of open houses they could attend for more information.

One stifling evening in May, about 50 people showed up at the Twin Lakes Community Activity Center just outside Jacksboro. When the ranchers arrived, more than a dozen of Mesa's public-relations consultants, hydrologists, and land men were waiting for them. Standing behind tables laid out with pens, cups, hats, and bags with the District No. 1 logo, the officials were available to answer questions about the 250-foot-wide corridor Mesa would use to construct, maintain, and possibly expand the pipeline and electric lines. While this arrangement allowed everyone to get information specific to their property, it also precluded any public questioning of the Mesa standard-bearers. This did not go unnoticed by the ranchers. "We're not happy," said one. "Pickens is pushing his power trip on us. I can't fight his money. But if he asked first, I might have thought better of it." Another said: "Land goes way back for a lot of people here. If you tell people you want their land, Texans raise their guns." At the end of the evening, most of the pens and hats and cups still lay on the tables.

Pickens isn't bothered that by his invoking the right of eminent domain, Mesa has inflamed landowners up and down the route. "It always does," he says. Mesa expects to acquire the land it needs in the next 18 months and pay about $30 million for it; Pickens wants to begin construction on the $1.2 billion pipeline right afterward. It should take about three years to complete. If all goes according to plan, Mesa will be able to pump enough water to satisfy the needs of some 1.5 million Texans every day.

Pickens hopes to strike a deal with Dallas or the urban areas around it before Mesa starts building the pipeline. "Eventually they will need it," he says. So far, though, the talks might best be characterized as preliminary. "We continue to meet with Pickens' staff and engineers to get a better understanding of the proposal and so they can understand what our needs are," says Mike Rickman, assistant general manager of the North Texas Municipal Water District, which supplies water to 13 cities north and east of Dallas. "Mesa has a lot of water. But how much will it cost to buy it and deliver it?" Rickman says that at some point he would have to consider the consequences for the Ogallala: "Does it make sense to take water from an arid portion of the state? We don't want to harm our neighbors out there."

In Roberts County, people hold on to the hope that pumping from the Ogallala can be controlled. In 1998, as Pickens and local water utilities began buying up water rights, the groundwater conservation district placed some restrictions on the rule of capture that it calls the 50-50 rule: Anyone who receives a new permit to pump can draw down the aquifer by only 50% over the next 50 years. Later, an additional limit of 1.2% per year was set. These essentially manage the depletion of the Ogallala under Roberts County; there, it is replenished at a rate of only 0.1% a year. Williams, who put the rules into place, says: "It's like taking dollar bills out of your bank account and putting nickels back in. Even with a big bank account, there's an end. That's pretty much what's happening in the Ogallala."

Pickens has promised to abide by the 50-50 rule. "I don't have any concerns about depleting the aquifer. All I'm doing is selling surplus water," he says. "I'm not about to drain all the water out of Roberts County. I have my ranch there. But I could sure take it down 50% and not hurt anybody. And it could make a lot of people a lot of money."

http://www.businessweek.com/print/magazine/content/08_25/b4089040017753.htm



Both articles are very interesting and long, but I made it through them. :D Thanks for posting them. :thumbsup:

Seeing as how Texas is such an arid state and goes through draughts, I see nothing wrong with Mr. Pickens seizing the chance to create this pipeline and make money selling the water. Eventually, someone would be doing it. It's inevitable. With the very serious potential of overpopulation in the horizon, it's wise to have other resources to fall back on. Water is something that we simply can't exist without. Therefore, no matter what the cost, the people from those areas will have to bite the bullet, so to speak, and pay the piper in order to use the water and/or wind commodity.

The emmient domain thing is always going to create hard feelings for landowners involved. I'm sure I wouldn't want a pipeline running within my home viewing area. But it's a sign of the times and there are always people that will capitalize on something in order to make money. In this case, he is not only making the money, but actually utilizing the water by piping it into other areas. Mr. Pickens is also a visionary. And visionaries are essential to mankinds existance. America would not be here today if it weren't for the vision of early on settlers that visualized this great land as a country filled with all sorts of people with creative abilities. They came, they settled, they envisioned, they created, they worked toward the goals, they fought, they conquered and they survived. That's what it's all about.

[SeedyROM]

I read about this guys plan with water rights, he'll corner the market on local prices in Texas. He knows his plan is going to work because he's already got the state and many cities on his side.

The commodity exchanges and big brokerages want to commoditze water and trade it like oil. Pickens will cash in big whether commoditization occurs or not. All his oil investments paid off, so now he's on to the next big thing. We already have water ETF's that index various water product service companys. Commoditization will zap your wallet as prices are set on world commodity exchanges. Water is indeed the new oil if these people continue to collaborate.

http://www.globalissues.org/article/601/water-and-development
Alternatives are often not considered. Those private consultancies often follow a privatization ideology and they of course stand to win money from it. A major problem is that it is the government of the poor country left to pick up the pieces of failed privatization projects .
Privatization of such vital resources (a right for all to access even if they do not have money) risks losing democratic accountability, and as cases in Bolivia, Argentina, Chile and elsewhere have shown, soaring water prices as a result can lead to many, many people not affording a basic right, and even spark massive unrest;
Profits from a private company can also be siphoned off elsewhere (often to other countries from where the company came) to their shareholders, and less is reinvested into the system itself;
Investment is likely only on those parts of the system that may bring profit, leaving the government with less resources to deal with the other parts of the system;

This link busts the investment myth that water commoditization is legit, while commoditzation goes beyond Picken's plan for water, this man already knows how influential peopel will push the water agenda and its false promises.

Water privatisation is failing to deliver the investment necessary to connect new communities on the scale needed to tackle the global water crisis.
http://www.wdm.org.uk/resources/briefings/water/pipedreamsbriefing01022006.pdf

[Independent Harry]

Both articles are very interesting and long, but I made it through them. :D Thanks for posting them. :thumbsup:

Seeing as how Texas is such an arid state and goes through draughts, I see nothing wrong with Mr. Pickens seizing the chance to create this pipeline and make money selling the water. Eventually, someone would be doing it. It's inevitable. With the very serious potential of overpopulation in the horizon, it's wise to have other resources to fall back on. Water is something that we simply can't exist without. Therefore, no matter what the cost, the people from those areas will have to bite the bullet, so to speak, and pay the piper in order to use the water and/or wind commodity.

The emmient domain thing is always going to create hard feelings for landowners involved. I'm sure I wouldn't want a pipeline running within my home viewing area. But it's a sign of the times and there are always people that will capitalize on something in order to make money. In this case, he is not only making the money, but actually utilizing the water by piping it into other areas. Mr. Pickens is also a visionary. And visionaries are essential to mankinds existance. America would not be here today if it weren't for the vision of early on settlers that visualized this great land as a country filled with all sorts of people with creative abilities. They came, they settled, they envisioned, they created, they worked toward the goals, they fought, they conquered and they survived. That's what it's all about.

So you think its ok that a corporate entity that is for profit gets emminent domain rights?

[SeedyROM]

All those bottled water companies are going to salivate of water rights across the country. I hope most states avoid Texas's mistake. Water rights to private entities is reminiscent of the wild west days when a cattleman or farmer would dam up a river or stream and cause shortages downstream. Hog the water and name your price.

If ther're allowed to trade water futures we'll pay for it and then some. Think bottled water is high now, wait till this storm hits the nation. Bottled water companies could compete for water rights, as will beer and beverage companies.

[Independent Harry]

All those bottled water companies are going to salivate of water rights across the country. I hope most states avoid Texas's mistake. Water rights to private entities is reminiscent of the wild west days when a cattleman or farmer would dam up a river or stream and cause shortages downstream. Hog the water and name your price.

If ther're allowed to trade water futures we'll pay for it and then some. Think bottled water is high now, wait till this storm hits the nation. Bottled water companies could compete for water rights, as will beer and beverage companies.

Christ, imagine the natural resource water, a necessary element for people to survive on a basic level. Being deprived to people because of price. Some wealthy know no moral boundaries.

[Binky]

So you think its ok that a corporate entity that is for profit gets emminent domain rights?


Not really, but for the sake of progress, it has, over the years, been what was necessary to do. Look at all the freeways alone in this country. The land came from somewhere. The roads weren't just "plopped there." Much of the land had at one time belonged to landowners. In that case, would you rather drive on smaller secondary roads from one end of a state to the other, or, would you rather enjoy hopping on an expressway for a much quicker drive to wherever you had to go? A drive that bypassed the many small towns along the way, making for a speedier drive, is what was decided.


I wouldn't like having to sell part of my property as well. Who would, for that matter? But there are times when one has to do what one has to do. And for the sake of progress, that is one of those times, whether or not someone, somewhere is getting rich over it.

[Independent Harry]

Not really, but for the sake of progress, it has, over the years, been what was necessary to do. Look at all the freeways alone in this country. The land came from somewhere. The roads weren't just "plopped there." The land had at one time belonged to landowners. In that case, would you rather drive on smaller secondary roads from one end of a state to the other, or, would you rather enjoy hopping on an expressway for a much quicker drive to wherever you had to go? A drive that bypassed the many small towns along the way, making for a speedier drive, is what was decided.


I wouldn't like having to sell part of my property as well. Who would, for that matter? But there are times when one has to do what one has to do. And for the sake of progress, that is one of those times, whether or not someone, somewhere is getting rich over it.

Yes but you're missing the point, the roads were created by the state using tax money for everyone to drive on. The water is being piped and pipelines laid using eminent domain for a private enterprise to then sell the water to make a profit. that' smuch different than laying down raods for public use. This water isn't being funded by tax dollars for public use...

[Moby]

Where's Bill in all this? He's been mentioning the future wars over water for some time.

[Binky]

Yes but you're missing the point, the roads were created by the state using tax money for everyone to drive on. The water is being piped and pipelines laid using eminent domain for a private enterprise to then sell the water to make a profit. that' smuch different than laying down raods for public use. This water isn't being funded by tax dollars for public use...


Well, then, maybe the people of Texas should've gotten up off their behinds and put a stop to it in the early days of the project. If they had raised their voices or did massive letter writing to their reps, then maybe they could have put an end to it before it really began.

And besides, some utilities corp. got their start by forcing others to sell some property to them through eminent domain.

And are you saying that people haven't made money from the laying of roads? Please. Somewhere, somehow, someone, made the bucks. And we paid for them. The same as those people will have to do to get the water.

[SeedyROM]

Christ, imagine the natural resource water, a necessary element for people to survive on a basic level. Being deprived to people because of price. Some wealthy know no moral boundaries.

Exactly, 3rd world nations will see even deeper poverty. Dying due to lack of water is as painful as death from starvation.

[Independent Harry]

Well, then, maybe the people of Texas should've gotten up off their behinds and put a stop to it in the early days of the project. If they had raised their voices or did massive letter writing to their reps, then maybe they could have put an end to it before it really began.

And besides, some utilities corp. got their start by forcing others to sell some property to them through eminent domain.

And are you saying that people haven't made money from the laying of roads? Please. Somewhere, somehow, someone, made the bucks. And we paid for them. The same as those people will have to do to get the water.

yes someone made money building them, and someone makes money maintaining them, but they can't put up a toll to charge people for using that road. Thats what that is, let's say I have the only highway from point A to point B and its privately owned. that means I can charge $20 a car or $40 a car if I want. doesn't matter. That is essentially what these people are trying to do with water. But with taxpayer money and govenrment powers.

[Independent Harry]

Exactly, 3rd world nations will see even deeper poverty. Dying due to lack of water is as painful as death from starvation.

I've done fastings taht lasted up to 2 weeks. Once you get past 3 or 4 days its not so bad.

[SeedyROM]

Well, then, maybe the people of Texas should've gotten up off their behinds and put a stop to it in the early days of the project. If they had raised their voices or did massive letter writing to their reps, then maybe they could have put an end to it before it really began.

And besides, some utilities corp. got their start by forcing others to sell some property to them through eminent domain.

And are you saying that people haven't made money from the laying of roads? Please. Somewhere, somehow, someone, made the bucks. And we paid for them. The same as those people will have to do to get the water.

Corporations want to pretend they can do it better...an elitist point of view they have. Corporate water will cost more than municiple water due to profit goals, executive salaries and thier expenses, multiple layers of management and employees, plus the book keeping requirements for the publically traded SEC requirements. The cost of water and even toll roads and bridges will be enourmous. Governments usually charge less and turn a small profit if they can. But they operate for the majority. We lose if corp.s take over government

The corporate conspiracy suggests they can do it better and cheaper. I can't say one does it better than the other. Primarily because it's the corporations that influence the Fed, states and cities to spend money on what the corporations desire. They convince governments to shift money from one program to another, when a program falls behind and assets need maintenance the money is not there because the corporations manipulated the money away and the politicians agreed to executive demands.

The real problem is still the same, government spends wildly and without accountibility at the influence of the people and more often corporations. We have spendthrifts in DC have neglected Federal roads and bridges by spending money on defense programs and bailouts. Neither benefitted the public.

[SeedyROM]

I've done fastings taht lasted up to 2 weeks. Once you get past 3 or 4 days its not so bad.

Shoot if I went 3 days without food even a Quarter Pounder with cheese would be tasty.

[SeedyROM]

Imagine this, today's water is cheap and readily available. Tomorrow corporations require a credit check, people with bad credit have to pay more for water or pay interest if they run a tab due to the credit risk.

Corporations start thinking like the airlines and decide that over weight people drink more water so they should pay more per cubic meter of water.

When a drought comes, water prices in that area will go up. A flood would see high prices at times since the potable water is contaminated with additional debris and bacteria from dry river banks. Rising water picks up everything. The possibilities are endless......just wait till wallstreet masterminds the next financial game.

Invest in water based mutual funds and stocks.
http://seekingalpha.com/article/18433-six-water-stocks-to-keep-investors-afloat-barron-s

The Lure Of Liquid Assets