Tycoon wants to pipe his water across Texas

November 09, 2007

Water Technology Magazine

DALLAS — Texas oil and gas tycoon T. Boone Pickens, now pursuing an interest in water, has obtained authority, through an unusual but apparently legal approach, to issue tax-exempt bonds, use eminent domain and become a public water supplier.

On a Pickens-owned 8 acres of ranchland in Roberts County, TX, near the Panhandle city of Amarillo, the manager of his nearby ranch and the manager’s wife, who live there, constitute a two-person electorate on the property. Those two people were empowered by Texas law to vote in the elections earlier this week on whether to establish a water district there, according to a November 6 Bloomberg News article and a November 7 San Antonio Express-News report.

Sure enough, the vote was 2-0 in favor, the district was created, and it is apparently now able to issue tax-exempt bonds to carry out a Pickens plan to build a 328-mile, $2.2 billion pipeline to bring water from the Panhandle to the suburbs of Dallas and San Antonio, the reports said. Three other Pickens employees serve on the new water district’s board.

Pickens has also bought up groundwater rights beneath thousands of acres of other land throughout the Panhandle, where water is drawn from the huge Ogallala Aquifer.

Phillip Smith, a rancher who serves on a local water conservation board, called Pickens’ move “a shenanigan.” Smith told Bloomberg, “He’s obtained the right of eminent domain like he was a big city. It’s supposed to be for the public good, not a private company.”

However, Pickens, 79, appears to be serious. His water district will issue bonds to finance the construction of his planned pipeline. If there are no bond buyers, Pickens might buy them himself to jumpstart the project, said his Dallas-based lawyer, Monty Humble of Vinson & Elkins.

The board will spend about $110 million to buy the right-of-way for the pipeline, using the power of eminent domain to acquire property if necessary, he said in the article.

Pickens, whose net worth has been estimated in the billions, also has big plans to set up a network of wind farms across the Panhandle to generate electricity.