T. Boone Pickens, the billionaire oil investor turned-renewable energy champion, also invests in water. Which isn't exactly breaking news. His company Mesa Water has been scooping up water rights in the Texas Panhandle for more than a decade. But it's an often overlooked piece of his energy portfolio -- and it's turning out to be one of his smartest bets yet.
An FT Energy Source post on Pickens reminded me of just how prolific a water investor he's become. Mesa Water owns permits for about 200,000 acre-feet or 65 billion gallons of water a year. To put that in perspective: One acre-foot of water is enough to meet demand of four people for a year. Or looked at another way it's means 124,000 gallons per minute of water. Basically, this means Pickens owns more water than any other person in the U.S.
Mesa Water owns land that sits on top of the Ogallala Aquifer, the largest aquifer in the North America, which extends across eight states. Pickens wants to take that 200,000 acre feet and pipe it to Dallas, some 250 miles away. In short, it's a bet that water will become scarce, and as a result, one valuable commodity.
It may be a rather unseemly bet. But that doesn't make it incorrect, especially these days. Consider author and energy investment banker Matt Simmons' recent take on water and its relationship to oil. Both oil and water are invaluable resources that mankind has plundered in the past century, Simmons said in a presentation to the Marsh's National Oil Companies Conference last month. But water is the most priceless because without it, we can't create modern energy, or food.
Which is problematic, Simmons says, because as the global population grows, water use will have to rise to meet sanitation, food production and modern energy needs. On top of this, most of the world's usable water is now brackish or salty -- and desalination uses a lot of energy.
Water will certainly become more scarce. That doesn't make Pickens' bet a sure thing. He does face some hurdles, including one that helped derail his plans earlier this year to build the world's largest wind farm in Texas. Pickens may own the water rights, but to build the pipeline he needs land. He incorrectly thought state law guaranteed his right to build electric transmission lines by obtaining property rights through eminent domain.
And then there's the 'rule of capture' law in Texas -- a landowner's right to the sky and the soil (including the water) below if they capture it. The case that could change that law is currently before the Texas Supreme Court. Finally, Pickens hasn't found a buyer for his water. But that will change -- and rapidly -- as the pressure on water supplies continue.
Photo of water drop from faucet from Flickr user Snap, CC 2.0 See additional BNET coverage of T. Boone Pickens:
- T. Boone Pickens Adjusts His Famous Plan
- The New Pickens Plan: Scare People With Arabic Ads and Sell Natural Gas
- Pickens Ditches Texas Wind Project, Cozies Up to Natural Gas
- A Bill for T. Boone Pickens: Doubling Natural Gas Car Subsidies
- Pickens: $300 Oil is Still On Its Way
- T. Boone Pickens Courts American Indians
- T. Boone Pickens' Wind Plans Experience Setback