Publish date:

Wind Power Making Headway in Oil Country

Texas is well known for crude, but alternative energy is on the rise in the Lone Star State.

When you think of Texas and energy, green alternatives are probably the last thing that comes to mind.

But the land of big trucks and big oil is emerging as the leader in wind energy, an alternative technology that could become an important power source.

Last week, the state awarded a Louisiana company the right to build large wind farms in the Gulf of Mexico through what was the nation's first competitive lease auction for the generation of offshore wind energy.

The company,

Wind Energy Systems Technology

, or WEST, will pay Texas a minimum of $132 million over 30 years for the rights to four tracts totaling more than 73,000 acres. In a best-case scenario, Texas could get as much as $433 million during that time.

The leases stipulate that the wind farms will ultimately produce at least 250 megawatts of power per tract, according to Jim Suydam, press secretary for the Texas General Land Office. That's enough to supply 300,000 homes with electricity.

Texas is proving to be a welcoming partner for proposed wind energy projects, with 367 miles of coastline open for possible development. "The Texas wind rush is on, and pioneers are staking their claims," said Jerry Patterson, Commissioner of the Texas General Land Office, in a statement.

According to Susan Sloan, communications specialist at the American Wind Energy Association, Texas has more wind power than any other state.

"The political leadership has made Texas friendly for wind power, and an open and competitive marketplace there allows wind generators easy access to the power grid," she says. Why Texas?

Texas has a number of attributes that make it an excellent draw for wind energy companies.

TheStreet Recommends

For one, Texas is thoroughly familiar with the way that natural resource leases work because of its longstanding relationship with the local oil and gas industry. The leases that the General Land Office has signed with WEST are similar to the leases signed with oil companies, with a rent for operations plus a royalty interest on revenue that's generated.

That allows for a smooth process when the state wants to sign an energy deal.

Additionally, the waters offshore Texas are already sprinkled with oil rigs and shipping corridors. Thus, many coastal residents are acclimatized to rigs and tankers along their coast and are less likely to protest against major infrastructure in the water that would be deemed unsightly elsewhere.

This issue recently proved problematic when a company proposed a wind farm called the Cape Wind Project in Nantucket Sound off of Cape Cod, Mass. Residents of the exclusive area, including U.S. Sen. Ted Kennedy, joined forces to try to halt its construction.

The next factor results from a quirk in the agreement by which the Republic of Texas joined the U.S. in 1845. That pact allowed Texas to retain sovereign authority of its waters 10 miles out from its coast, as opposed to other coastal states that control their waters only three miles out.

Because of this, WEST just needs to work with the state of Texas while preparing to construct its wind farms, significantly reducing the federal bureaucratic hurdles that companies face elsewhere.

WEST already had a stake in the wind business in Texas before this week's lease auction. The company won a contract to build a wind farm near Galveston in 2005. The new agreement will expand the firm's presence to Brazoria, Calhoun, Cameron and Jefferson counties.

WEST was founded by a dynamic pair of entrepreneurs from New Iberia, La. One, Harold Schoeffler, is the leader of a chapter of the Sierra Club. Ironically, he also owns the largest Cadillac dealership in town.

The other founder, Herman Schellestede, runs a company that builds drilling rigs. Schellestede says that there isn't much difference between building an oil rig and building a wind turbine.

Although WEST's Galveston project was delayed by hurricanes Katrina and Rita in 2005, it is now making good headway. The firm has constructed a meteorological tower that analyzes wind patterns. It is also conducting a study of bird flight patterns and other environmental issues. The company hopes to have a test wind turbine operating by 2008, with the rest of its turbines coming online in 2010.

WEST's proposed projects for the leases acquired last week will follow the same path as its Galveston project. After passing the approval and testing phases, the new turbines could inject electricity into the Texas power grid by 2011.