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The story of the Lone Star State'senchantment with the energy sectoris marked by at least three impor-

tant dates: 29 December 1845; 10 January1901; and 24 October 2005. The signifi-cance of the 1901 date is widely known. Onthat day, an oil gusher erupted 100 feet highin the small town of Spindletop, which islocated between Houston and the Louisianaborder in southeast Texas. From that dayforward, the oil and gas industry replacedagriculture as the driving force of the state'seconomy. On the other hand, while the1845 and 2005 dates are perhaps less wellknown, they are no less important - andindeed they are linked - in the context ofwhat may be the state's next energy boom.In December 1845, the former Republic ofTexas was annexed as the 28th state of theUnited States. Texas entered the U.S. withits boundaries intact, boundaries thatincluded sovereignty over all submergedlands in the Gulf of Mexico out to 10.36miles, or three marine leagues. That sover-eignty had been secured by the first presi-dent of the Republic of Texas, SamHouston, after Texas won its independencefrom Mexico. Subsequently, the statedefeated an attempt at federal control of thetidelands in the 1950s.

Less federal red tape As a consequence of Texas' control overthese submerged waters there is only oneentity in Texas for an offshore wind

developer to deal with - the Texas GeneralLand Office (GLO) headed by LandCommissioner Jerry Patterson. The GLO isthe constitutionally charged state agencyresponsible for helping fund public educa-tion by maximizing yields from the statelands it oversees. Revenue generated fromthe GLO's efforts - an amount of nearly $9billion over the course of time - goes intothe state's Permanent School Fund that pro-vides public school funding. The signifi-cance of the third date, 24 October 2005, isthat on that day Mr. Patterson announcedthat Texas had signed an agreement to allowthe first offshore wind energy project in theU.S. to be built off Galveston Island, Texas.As Mr. Patterson said on that day, "WhenTexas entered the Union in 1845, we camein our own terms. Because of SamHouston's foresight [with regard to insistingthat Texas' 10.36 mile boundary be recog-nized and accepted by the U.S.] we nowhave the regulatory authority to move forward with less federal red tape."

Lease agreement signedThe lease, which was signed withGalveston-Offshore Wind, LLC. (a sub-sidiary of Louisiana-based Wind EnergySystems Technologies or WEST, LLC.)allows construction to begin on two meteo-rological towers. Construction of the tow-ers has been approved by the U.S. ArmyCorps of Engineers. The towers will helpWEST determine exactly where the fifty

3MW turbines should be built on an11,355 acre lease about seven miles off thecoast of Galveston Island. The revenuefrom the lease agreement - expected to be asmuch as $26.5 million - will be depositedin the Permanent School Fund. In manyrespects, Mr. Patterson seems an unlikelyproponent of renewable energy. Whileserving in the state senate before beingelected Land Commissioner in 2002, heauthored the state's historic concealedhandgun law. However, when it comes tothe role that renewables may play in Texas'future, he is an unabashed and unapologeticadvocate. Describing the offshore leaseagreement as "a new era for energy develop-ment in America," Mr Patterson says,"Texas knows energy, and we're ready tolead the nation toward establishing clean,reliable coastal wind power as an energyreality." In fact, Mr. Patterson has pro-claimed, "Coastal wind power has come tothe United States and found a home inTexas."

Declining oil reserves WEST's president, Herman Schellstede,shares Mr. Patterson's philosophy that thisproject fits well into the Gulf Coast's long-time support of and involvement with ener-gy projects. And this is something that Mr.Schellstede, an ocean engineer practicing inthe field of naval architecture and marineengineering and owner of a developmentcompany providing specialized equipmentfor the oil, gas, and marine industry, clearlyunderstands. He has said, "Ask yourselfthis simple question: Are Texas and

Historically the state of Texas - which Texans proudly refer to asthe Lone Star State - has been known for its enthusiasticembrace of the oil and gas industry. In recent years however itsurprised many perhaps by installing over 1000MW of onshorewind. Now it looks as if Texas may be poised to reassert itselfagain in the renewable energy sector with an ambitious offshorewind development plan off the coast of Texas. U.S.Correspondent Don C. Smith reports.

GULF WINDOffshore Wind

Harnessing Offshore Wind off the coast of Texas

About the authorDon C. Smith teaches ComparativeEnvironmental Law at the Universityof Denver College of Law. He canbe reached at: dcsmith@law.du.eduor on tel: +1 720 936 8465.

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Louisiana in the energy business or the oilbusiness? If we're in the oil business, we're allgoing to go out of business eventually, but ifwe're in the energy business, these wind tur-bines will operate forever and furnish viablesources of energy." While acknowledging thatTexas has been "blessed" with an abundanceof hydrocarbons, Mr. Patterson admits theywon't last forever. "The oil and gas reservesare declining at a rapid rate. They have pro-vided a revenue stream that has been aGodsend for pubic education in Texas. Butnow we have to diversify."

Mr. Patterson says that the development ofrenewable energy off the Texas coast or any-where in Texas for that matter - the statealready derives income from a wind farm in

the Delaware Mountains in west Texas - isnot a contentious issue. "It's something thaton its merits stands alone," he says. "Youdon't have to get wrapped around the axle onthe 'greens versus industry' debate," he saysnoting that the price of natural gas - whichpowers 70 percent of the state's electricitygeneration - is unlikely to ever again fallbelow $8.00 per million BTU. "Even at thatprice, wind is cheaper," he says.

ObjectionsWhile offshore wind projects have run intomajor objections in the U.S. - for example inthe northeast where the Cape Wind projectoff Nantucket Sound, Massachusetts, hasfloundered for years - Mr. Patterson says the

objections in Texas can be managed. He notesthat he has faced some negative commentsfrom conservative Republicans about the stateputting money into the offshore project. Buthe quickly adds that in fact the state is notinvesting any money in it. He also notes that how the turbines will look

from the shore is not a major issue bearing inmind that for years Texans have seen oil rigsfrom shore. "What's happened in the NorthSea and the UK where they have wind farms,people have actually gone out to look atthem," he says.

Environmental impactFinally, he believes that the issue of birdsbeing killed by the turbines can be

The Texas offshore wind project involves a three-phase lease agree-ment. During the initial phase, which is likely to begin in theMarch-April timeframe, Louisiana-based Wind Energy SystemsTechnologies (WEST) will spend between $3-$5 million to build andoperate two, 80-meter high meteorological towers designed to col-lect environmental and atmospheric data in the Gulf of Mexico.During the initial phase wind speed data will be gathered fromthese towers. At the same time, bird migration patterns will bestudied and information for state and federal permits will be final-ized. WEST will use the wind data to establish the Gulf's windcharacteristics and patterns. WEST will pay the GLO $10,000 ayear, every year, until actual wind energy production begins.

Assuming the first phase establishes the probable success of gener-ating power from the ocean winds and that WEST obtains the nec-essary federal and state permits and financing, the second phaseinvolving construction will take place. This phase, which may takeas long as five years, is expected to cost $300 million. WEST,which has decades of experience building offshore oil productionplatforms, plans to erect about fifty 3-MW wind turbines. The hubof each turbine will rise 260 feet above sea level. At this point, it'snot certain when construction might begin. Andrew Fielding, abusiness developer for WEST, has pointed out that the developers

"need the production tax credit (PTC) to make this work" from afinancial standpoint. Consequently, if the PTC - which now runsthrough 2007 - is extended through 2008, then he would behappy to see electricity being produced by 1 January 2009.

Once construction is finished the 30-year production phrase willbegin and the project will feed power to the Electricity ReliabilityCouncil of Texas (ERCOT), the organization that operates the elec-tric grid and manages the deregulated electricity market for 75 percent of the state. The lease royalty structure is designed to encour-age early production of energy while creating a new revenuestream for the state. For the first eight years of production, WESTwill pay the GLO a 3.5 per cent royalty from the wind energy devel-opment's total production. Years nine through 16 of the 30-yearlease will earn the state a 4.5 per cent royalty. Years 17 through30 the state will earn a 5.5 per cent royalty.

When in operation, the wind farm will produce enough electricityto power about 40,000 homes while eliminating the need to useabout 20.7 million barrels of oil or burn about 6.5 million tons ofcoal over the 30-year lease. If burned to generate electricity, thatmuch fossil fuel would release 270,000 tons of carbon dioxide eachyear.

Project details

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Offshore Wind

addressed. "I jokingly told the AudubonSociety that we'll have smarter birds afterseveral generations," he says. However, on amore serious note he suggests that furtherstudies on exactly when and where the birdsmigrate will provide sufficient data to deter-mine if and when the turbines will need to beshut down during certain periods. In thisregard, WEST is working with the GulfCoast Bird Observatory, the HoustonAudubon Society, the Lone Star Chapter ofthe Sierra Club, and Public Citizen to studythe bird issue. Donna Hoffman, communi-cations director for the Sierra Club's LoneStar Chapter in Austin, has said, "We wantto ensure that the wind energy producers, onland and offshore, use the best availabletechnology that will protect birds." However,she quickly notes that the local Sierra Clubwas "greatly encouraged" about the potentialof wind energy.

10GW by 2025Meanwhile, the Land Commissioner saysthat while his job isn't to create jobs inTexas although a probable consequence ofoffshore wind may very well be establishment of additional jobs in the state."We would like to see the blades and tur-bines manufactured in Texas," Mr.Patterson says. "If we are in the wind ener-gy business, it makes sense to do the manu-facturing here." He also notes that the proj-ect, while not directly related to Texas'recently strengthened renewable portfoliostandard, will help the state meet its goal ofproducing 10,000 MW of energy fromrenewables by 2025. Currently the stategenerates about 2,000 MW from renewablesources, which means that this single off-shore wind farm will increase the state's sus-tainable energy production by 7.5 per cent.

As far as Mr. Patterson is concerned,there is no downside with the project. "Ifthey build the meteorological towers andfind out there isn't enough wind, thenthey'll have to take them down. But I'mnot all that concerned about that. Becauseas the technology improves, the cost ofinvestment will be less," he says noting thatthe wind turbines on the state land in westTexas are 500kW units while the ones in theGulf will be 3-MW units. Additionally, theGLO would like to enter into other offshore wind energy leases around

Padre Island and further south towards theTexas-Mexico border

.Stealing the show?The fact that Texas is taking the lead on off-shore wind farm development has not beenlost on some northeastern Americans. In aneditorial headlined, "Letting Texas steal theshow," the Massachusetts-based newspaperSouth Coast Standard-Times wrote,"Massachusetts could get upstaged by Texason wind power if the Bay State's leadersdon't come to their senses soon." The edito-rial went on to suggest that Massachusettsstate officials including Gov. Mitt Romney,Attorney General Thomas Reilly, and "vari-ous members of the Kennedy clan, includingenvironmentalist Robert F. Kennedy Jr." aretrying to block Massachusetts from becom-ing the first state to host a major wind farm.Similarly, the Manchester, New Hampshire,Union Leader, has asked, "Which stateappears more likely to become home to thefirst large-scale wind farm on the U.S. coast

- Texas, home of 'big oil,' or Massachusettshome of John Kerry, Ted Kennedy andMichael Dukakis? That's right, it's Texas."

Land Commissioner Patterson has beeneven more direct about the Massachusetts-Texas rivalry to see which will be the locationof the first offshore wind farm. "This isTexas. We don't have Walter Cronkite andTed Kennedy whining about their backyards," Mr. Patterson has told Reuters refer-ring to objections that the Cape Wind proj-ect would cause aesthetic problems in termsof the view. Meanwhile, back in Texas everyday the wind is blowing and electricity is notbeing generated means the burning of additional natural gas and coal, Mr.Patterson says. In a predication - that wouldmake most renewable energy supporterssmile - he confidently says, "I would have asa goal that someday when sufficient wind isblowing and wherever it is blowing, we'll useit and we will take hydrocarbon-based gener-ators off line. That way we can save thosediminishing resources."