Friday, March 13, 2009

Texas oilmen going green

Four or five years ago I attended a workshop on offshore wind sponsored by the U.S. Department of Energy in Washington, D.C. Most of the speakers were addressing the technological challenges facing potential developers of offshore wind energy. Only two actual projects were being pursued at that time: Cape Wind, the nation's first proposed offshore wind project and one proposed by the Long Island Power Authority off the coast of New York.

The workshop was held in the ballroom of a DC hotel. Participants sat at tables. My colleague from Massachusetts and I sat at a table next to a gentlemen from Iberia, Louisiana named Herman Schellstede. He told us that he was planning to build wind turbines atop abandoned oil platforms in the Gulf of Mexico. It sounded like a wild idea, but the look of determinationon in his eyes and the quiet, confident tone of his voice convinced me that Mr. Schellsted was indeed very serious. (GW)

Texas oilmen lead charge of 'green' energy exploration

By Rick Jervis
USA Today
March 12, 2009

HOUSTON — George Alcorn is a third-generation Texas oilman. His grandfather drilled for oil in the 1930s, then his father and his uncles followed suit.

When Alcorn, 51, looks into the future of his business, though, he doesn't see black oil gushing from a well — he sees steam. Alcorn recently revamped his business strategy from traditional oil exploration to using abandoned wells and drilling technology to generate geothermal energy as a way to power cities.

The rough-and-tumble image of the Texas oilman may be turning "green." An increasing number of Texas oilmen and companies are following Alcorn's lead and swapping oil and gas production for cleaner, renewable-energy strategies.

"We're trying to catch the new wave, not get swamped by it," Alcorn says. "You're going to see more oil companies doing this. There's a great opportunity to make some money here."

With mounting national interest in renewable energy, oil companies are starting to think in renewable terms. President Obama's $800 billion economic stimulus, which contains incentives for renewable projects, has helped push the swing.

The most visible example of the shift has been T. Boone Pickens, the iconic Texas oil tycoon who has been promoting his plan to turn the country toward alternatives such as natural gas, wind and solar energies.

But there are others, including:

•Hunt Oil, a well-known name in Texas oil production, which has a subsidiary researching opportunities in renewable energies.

•Shell Oil, which has teamed with Dallas-based Luminant to build a giant, 3,000-megawatt wind farm in the Texas panhandle.

•Herman Schellstede, a venerable offshore oil explorer and "wildcatter" from Louisiana who is developing a wind farm off Texas' eastern coast.

Texas leads the charge

The exploration of renewable energy sources by Texas oil executives could have a significant impact on the budding industry, says Michael Webber of the Center for International Energy and Environmental Policy at the University of Texas-Austin.

Texas oil companies have the distribution pipelines, deep pockets and subsurface technology needed to quickly ramp up the country's renewable energy supplies, he says.

"There's this Texas wildcatter attitude: these people 60 years ago would go out looking for oil and just find it," Webber says. "That attitude still exists and now they're trying to build wind farms and solar power pants and geothermal fields. It could really change things in this country."

Texas has been the epicenter of the country's oil and gas production since oil first bubbled up in 1901. Today, even Texas lawmakers are readying for a seismic switch from fossil fuels to renewable energy production.

There are currently more than 30 bills related to renewable energy, including 18 solar power bills, in the Texas Legislature that would give incentives to renewable projects, says state Sen. Troy Fraser, chairman of the Senate Committee on Business and Commerce.

Texas' vast open land, oil infrastructure and miles of distribution lines make it ideal for it to be at the forefront of developing the country's renewable energy industry, he says. According to state benchmarks, by 2020, Texas should be getting 20% of its energy from renewable sources — leading the nation and much of the world, Fraser says.

"The train has left the station," he says. "We're past the point of arguing of whether you agree or not. Texas has to focus on capitalizing on its strengths."

He adds: "We're doing this because it's good public policy and it allows the industry to make money doing so."

Alcorn says he got the idea to switch his oil company, Alcorn Development Co., to renewable energy while flying over western Texas late last year and saw hundreds of abandoned oil wells dotting the landscape below. Later, a friend and eventual partner from New Mexico, a physicist, suggested using the wells to generate geothermal energy.

An 'inevitable' switch

The plan solidified in December when Obama announced his economic stimulus package, Alcorn says. Federal and state incentives make the $600 million project economically doable. More oil and gas companies will soon be looking to switch to renewables, he says. "It's inevitable," he says.

Schellstede, the Louisiana "wildcatter," says he has nearly raised the $311 million needed to install 62 wind turbines on offshore platforms about 7 miles off Galveston's coast.

His plan is to install around 900 turbines along the eastern seaboard of Texas at a cost of about $4.6 billion, using existing offshore oil platforms and pipelines.

The transition from oil and gas exploration to wind turbines was an easy one, because much of the oil in the Gulf of Mexico has been tapped, he says. His one regret: not doing it sooner.

"We're about 15 years behind," he said.


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