look now, but T. Boone Pickens is in the news again.
Before, that often meant bad news in some quarters.
Pickens, an AAPG member since 1954, was branded a corporate raider
by newspapers, magazines, networks and opposing managements back
in the 1980s when his firm, Mesa Petroleum, made hostile takeover
bids for companies he felt were undervalued and mismanaged.
It's not a stretch to suggest that Pickens, as much
as any person connected to the oil industry, is largely responsible
for the look and structure of today's corporate America -- and of
But today Pickens is dealing with something other
than undervalued companies.
Or oil, for that matter.
Today, Boone Pickens is dealing with water.
Ironically, Pickens Mesa Vista Ranch on the high
plains of the Texas Panhandle is in danger of being raided -- raided
of the water that lies beneath the rugged land.
And Pickens knows all too well that in today's Texas,
water is as potentially valuable as oil.
Rules of Capture
In 1997 the Canadian River Municipal Water Authority
announced it had purchased 43,000 acres of water rights in the area
just south of Pickens' ranch in Roberts County, Texas, and planned
to develop the water field. Then, the city of Amarillo bought 71,000
acres of water adjacent to Pickens' ranch, with plans to develop
the resource in 25 years.
"These developments got my attention," Pickens recently
told the EXPLORER. "The CRMWA and Amarillo basically put other landowners
on notice they were going to start draining us. I felt we had no
choice but to start selling our surplus water or lose it to drainage.
"Under the rule of capture we would have no recourse
to prevent CRMWA and Amarillo from draining the reservoir under
In Texas all surface water is considered public,
but groundwater is privately owned. Under the rule of capture a
landowner can pump water without regard for his neighbors.
The region of the Texas Panhandle that encompasses
Roberts, Lipscomb, Hemphill and Ochiltree counties is one of the
last remaining untapped portions of the Ogallala Aquifer, the largest
aquifer in the United States. In other regions -- from just south
of Lubbock all the way to the South Dakota border -- the aquifer
has been tapped for over 50 years, primarily for irrigation.
This four-county section of the Texas Panhandle,
however, is too rough to farm, and the aquifer has remained untouched.
Of the total 2.22 million acres in the four counties, only about
100,000 acres have been irrigated.
Initially, Pickens approached CRMWA, which provides
water to 11 communities in the Texas Panhandle and south plains,
and the city of Amarillo, and offered his water rights for sale
as well. They declined, however, so Pickens then went to his neighbors
to ask if they would join in his efforts to market and sell the
water rights under their land.
He formed Mesa Water Inc., and currently has about
150,000 acres with 3.3 million acre-feet of usable groundwater under
lease -- twice as much water as CRMWA and Amarillo.
In addition to banning together with neighboring
ranchers, Pickens has purchased an agency agreement covering 65,000
acres of land from Quixx, a subsidiary of Southwestern Public Service
Company -- the same firm that sold 43,000 acres of water rights
Under the agreement Pickens' group will market water
from the Quixx land.
Although several months ago it looked as though Mesa
Water would run into some problems with the area's governing Panhandle
Groundwater Conservation District (permit applications were tabled
earlier this year), Pickens' group and the district reached an agreement
in early April that allows Mesa Water the same deal as CRMWA.
According to reports, the permits issued to CRMWA
and Amarillo allowed those operators to pump one-acre foot of water
annually per acre owned.
At the time of Pickens' application, a study based
on a hydrologist's report was used regarding regional conditions
and ramifications of the proposed activity. A subsequent study,
however, indicated that the increased projected pumping would deplete
the aquifer faster than the water district's original study indicated.
Pickens then insisted that all parties be treated
equitably, and after weeks of negotiations the two sides reached
an agreement. Now the permits allow one acre-foot of water for each
acre owned -- with provisions that pumping rates can be adjusted
if depletion proves to be at a higher rate than initially estimated.
Under the water district rules, half the water that
was stored in the aquifer in 1998 must still be available in the
aquifer in the year 2050.
Pickens has indicated he is in full agreement with
those guidelines, and that his project will not endanger the aquifer.
He said his proposal represents only a fraction of
the amount of water already pumped by farmers for irrigation in
Is It Competitive?
Pickens isn't the only Panhandle resident trying
to cash in on the untapped water. An Amarillo attorney has reportedly
compiled water rights on a 190,000-acre block in Roberts County
and plans to sell the water.
"Today I have the volume I need for this project
to make sense," Pickens said. "I'm currently not leasing additional
land until we determine if we can economically sell water to one
of the larger cities of Texas.
"I already have $2 million invested in this deal
in land costs, engineering studies, legal costs and lobbying efforts,"
he added. "Now we need to make a sale for the water."
Pickens said several cities are looking at the situation,
but no municipalities have actually made an offer.
Pickens has commissioned a study, now under way,
to compare his project's water costs to about 10 other water sources
around the state.
"We have to find out if this project is competitive,"
Pickens said. "If it's not, then we can forget it."
However, he did say he thinks there is a better than
50 percent chance that he will be successful in selling the water
-- the odds of a wildcatter's dreams.
"This is a sizable supply of water for some city,"
he said. "We have 200,000 acre feet of water per year to sell, and
while it won't meet all the needs of a major city, it can service
about one million people. The water meets all drinking water standards,
and treatment costs for the water are very low.
"Studies looking at the water situation in Texas
for the next 50 years shows that everything west of I-35, which
is about two-thirds of the state, will have some water supply problems
to varying degrees," he continued. "Water is becoming a huge issue
in this state.
"The legislature is mandated to develop a 50-year
water plan for the state by January, so important decisions are
going to be made in the next year -- and we need to be in a position
to profit from those decisions."
Finding the Markets
Texas' population is about 20.8 million, second only
to California, and studies indicate that it could double in 50 years.
El Paso is already looking for new water sources. The Rio Grande,
a primary source of water for the city, is so dry after several
years of drought that earlier this spring the river failed to reach
the Gulf of Mexico for the first time in 50 years.
Pickens said he was told El Paso is studying a desalination
project to provide water at about $1,400 per acre-foot.
Mesa Water currently is focusing on Dallas-Fort Worth,
San Antonio and El Paso as potential buyers. Engineering studies
conducted by the company indicate that water can be piped from Roberts
County to the Dallas-Fort Worth area in a 108-inch, 385-mile long
pipeline for less than $800 an acre-foot.
After selling water to smaller communities along
the way, about 150,000 acre-feet would reach the metropolitan area.
Delivering the water to San Antonio would run about
$1,170 an acre-foot through a 614-mile line, and to El Paso -- the
least likely alternative -- the costs would be about $1,773 an acre-foot.
Pickens recognizes it will be up to Mesa Water to
build the pipeline to market the water.
"Nobody's going to buy my water up here and lay a
pipeline from Roberts County," he said. "I'm going to have to get
a price on the other end and a contract, and I'm going to have to
arrange for the financing and build a pipeline."
Pickens points out that CRMWA has a 325-mile pipeline
that takes water away from Lake Meredith just north of Amarillo
down to Lubbock and Lamesa, Texas. That pipeline is 96 inches in
diameter -- not much different than the proposed line to Dallas-Fort
Worth -- and it was built 30 years ago.
"Whatever the outcome of this project in the short-term,
reliable water sources will continue to be a growing issue for expanding
cities, and eventually surplus water from these Panhandle counties
will become a valuable commodity," he said.
"I think that over a long period of time water will
be continually bought, in Roberts and continuing east to Lipscomb,
Hemphill and north to Ochiltree counties, and brought into the infrastructure
that goes south."
Minimal Long-Term Effects
Of course, there are concerns in the area about the
long-term effects of the proposed groundwater projects.
According to state statistics, the Ogallala aquifer
beneath the entire Texas Panhandle is stressed and with dry conditions
and the current consumption rate the aquifer could be depleted in
70 years. That's a more dire prediction than the Panhandle Groundwater
Conservation District's estimates, which indicate that these projects
would reduce the water in the aquifer beneath Roberts, Hemphill,
Lipscomb and Ochiltree counties by 50 percent over the next 100
At a recent meeting of area ranchers Pickens told
the group, "When you hear people say Boone Pickens is going to turn
Roberts County into a Dust Bowl, well, that's wrong. We're never
going to be without water."
The EXPLORER told Pickens that "in the overall scheme
of things we aren't impacting the reservoir dramatically."
The Ogallala aquifer, he said, "has been mined for
years," adding that the upper 21 counties of the Texas Panhandle
extracted 1.8 million-acre feet of water in the year 2000 -- and
90 percent of that was for irrigation.
"We're going to take out 200,000 acre-feet of water,
or about 10 percent of the total," Pickens said. "These four counties
that have been relatively untouched in the past represent a 100-year
supply of water with 20 million-acre feet. The regulations dictate
that you can only draw down to 50 percent of the saturated thickness
of the reservoir, and that leaves plenty of water for ever after
for all generations.
"All we're doing is selling our surplus water to
realize additional value from our land."
Pickens said landowners in the four county region
could realize additional revenue of about a billion dollars over
the 100-year life of the surplus water supply.
"This is a very important issue to ranchers in these
four counties," he said. "If we don't sell our water, it's going
to be drained out from under us. That's a sizeable asset to just
give away. Land in these northeast Panhandle counties is only worth
about $250 per acre. Irrigated land just 50 miles west is worth
$600 to $800 per acre.
"Selling the surplus water is our only chance to
upgrade the value of our land. It's imperative that we do it."