Texas' energy industry continues to diversify with alternative sources
Posted On: Monday, Dec. 31 2007 11:29 PM
By John Porretto
The Associated PressHOUSTON – To understand the increasing diversity of Texas' energy economy, consider this: T. Boone Pickens, the legendary wildcatter who made his fortune in oil, is now betting on wind.
Pickens announced plans in June to build the world's largest wind farm in West Texas, a project that could cost as much as $6 billion.
Pickens' proposal is further evidence that Texas' economy no longer booms or busts simply on a change in the price of a barrel of oil.
Of course, Exxon Mobil Corp., ConocoPhillips and others continue to make headlines with massive, even record, profits. But amid global supply concerns, environmental issues and other factors, Texas saw significant developments in 2007 on wind, nuclear, biofuels and other new frontiers.
The state may have missed out on the $1.8 billion FutureGen coal plant, which will be built in Illinois, but most observers predict more advancements in power production in 2008 and beyond.
"Any alternative fuel has a chance," Pickens said in a recent interview.
Texas already leads the nation in wind-energy production, and more is on the way.
Two wind farms are in the works on the Gulf Coast adjacent to the famed King Ranch, though conservationists have gone to court to stop development. Still, one of the developers has said it hopes to have the massive turbines up and spinning sometime in 2008.
The state's nuclear capabilities could be growing too in the next few years.
In September, power producer NRG Energy Inc. made public its plans to add two reactors at its plant near Bay City, where two existing reactors have produced energy since the late 1980s. It marked the first new application to build and operate new reactors in the U.S. in about 30 years.
Before construction can begin, however, federal officials must review the 20,000-page application, conduct site inspections and gauge public sentiment – a process expected to consume the next couple of years, said NRG spokesman Dave Knox.
"If everything moves forward the way we expect, we hope to get the application approved and ... have a license to start building in 2010," Knox said.
On the biofuels front, Gov. Rick Perry has said the state's strategy for developing such alternative energy sources will focus on using nonfood products so the effort doesn't conflict with the state's multibillion-dollar cattle industry.
Biofuels, such as ethanol, are often made from corn and other agricultural products, which ranchers also use to feed their cattle. Perry said Texas will focus on creating biofuels from cellulosic products such as switchgrass, wood chips and corn stems.
Already, Texas A&M University and Chevron Corp. are teaming up on such a project.
Ray Perryman, chief executive of The Perryman Group, an economic research firm in Waco, said one of Texas' biggest energy assets is what he calls "intellectual capital."
"We have people who understand the industry, who hold patents in the industry, who understand fuel concepts and that sort of thing," Perryman said. "That intellectual property lends itself to diversification."
Despite advancements in alternative fuels, Southern Methodist University finance professor Michael Davis said it's vitally important for Exxon Mobil, ConocoPhillips and others to continue their aggressive exploration for and production of oil and natural gas.
The Paris-based International Energy Agency – an energy policy adviser for its 26 member countries, including the United States – has said global energy needs will surge by 53 percent over the next quarter century.
And fossil fuels will continue to be the primary source. At present, for example, renewable energy sources such as wind and solar supply about 6 percent of America's energy needs, according to the U.S. Energy Information Administration. That figure is expected to grow only to about 7 percent in the next 20 years, the EIA forecasts.
"I wish I could say there's this huge reservoir of energy out there and all we've got to do is put up wind mills and cut our carbon footprint and still live the way we want to live," Davis said. "But I don't think that's true."