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Texas to build first offshore wind-energy project in the country

Austin, TX –

Jerry Patterson, Commissioner of the Texas General Land Office, today announced the Lone Star State has signed an agreement to allow the first offshore wind-energy project in the United States to be built off Galveston Island.

"Today marks a new era for energy development in America, and what better place to begin than Texas," Patterson said. "Texas knows energy, and we're ready to lead the nation toward establishing clean, reliable coastal wind power as an energy reality."

The multi-million dollar lease, signed with Galveston-Offshore Wind, LLC, allows work to begin immediately on the construction of two meteorological towers. Galveston-Offshore Wind is a division of Louisiana-based Wind Energy Systems Technologies (W.E.S.T., LLC).

These towers will help gather data to determine exactly where the 150 MW wind energy development will be built on an 11,355-acre lease about seven miles off the coast of Galveston Island. Revenue from the agreement - expected to be at least $26.5 million, but possibly much more - will be deposited in the state's Permanent School Fund, which helps pay for public education.

Other states, like New York and Massachusetts, have pursued offshore wind projects that got bogged down, making the lease a first for Texas and the nation.

"Coastal wind power has come to the United States," Patterson said, "and found a home in Texas."

The lease, Patterson said, will be remembered in the future as an important - and crucial - step in Gulf energy exploration.

Herman Schellstede, W.E.S.T. President, said, "Ask yourself this simple question: Are Texas and Louisiana in the energy business or the oil business? If we're in the oil business, we're all going to go out of business eventually, but if we're in the energy business, these wind turbines will operate forever and furnish viable sources of energy."

W.E.S.T. is an industry leader in energy development, and the company has decades of experience building offshore oil production platforms. Galveston-Offshore Wind, LLC, a division of W.E.S.T., is the signatory on the lease.

LEASE DETAILS

W.E.S.T. has agreed to put up its own money to test the Gulf waters in this three-phase lease agreement. During the first phase of the lease, W.E.S.T. will spend $3 million to $5 million to build and operate two, 80-meter meteorological towers designed to collect wind data in the Gulf of Mexico. W.E.S.T. will also pay the state a lease rent of $10,000 a year, every year, until actual wind energy production begins.

Wind speed data will be gathered from these scientific research towers, which will be used to show the site's potential. Concurrently, studies of bird migration patterns will be done and information required for state and federal permits will be gathered. This valuable meteorological data may then be used by the Texas General Land Office to prove the Gulf's wind possibilities.

Once the research is complete, the second phase of the lease - the construction phase - will begin. Construction is expected to cost as much as $300 million and could take as long as five years. W.E.S.T. plans to build a field of about 50 wind turbines to produce an expected 150 MW. The hub of each turbine will rise 260 feet above sea level. The turbine blades will be up to 55 yards long, giving each turbine a diameter approximately the length of a football field.

FINANCIAL WINDFALL

Once construction is complete, the 30-year production phase will begin. The lease royalty structure is designed to encourage early production of energy and will create an entirely new stream of revenue from state-owned, submerged lands.

For the first eight years of production, W.E.S.T. will pay the Land Office a 3.5 percent royalty from the wind energy development's total production. Years nine through 16 of the 30-year lease will earn the state a 4.5 percent royalty. Years 17 through 30 will earn a 5.5 percent royalty.

The state should earn a minimum of $26.5 million in royalties over the 30-year lease. Like royalties from oil and gas produced on state lands, this money will flow into the state's Permanent School Fund.

Since taking office in 2003, Patterson has pushed to make Texas a leader in sustainable energy. Already, the Land Office has earned more than $782,000 in royalties from the Delaware Mountains wind farm in West Texas.

"This is important, because while oil and gas have been good for Texas, we need to think long-term and find new ways to put money into the Permanent School Fund," Patterson said. "Oil and gas won't last forever."

ENERGY BENEFITS

Once completed, the offshore wind farm can produce enough electricity to power about 40,000 homes. In comparison, an equal amount of electricity would require about 20.7 million barrels of oil, or 6.5 million tons of coal, over the 30-year lease. If burned to generate electricity, that much fossil fuel would release 270,000 tons of carbon dioxide each year. About 150 square miles of forest would have to be planted to absorb that much carbon dioxide.

Similarly, a 150 MW wind energy development could prevent 21,000 tons of sulfur dioxide and almost 10,000 tons of nitrogen oxides from being emitted over the life of the lease.

The wind farm will also conserve more than 6 billion gallons of water over the lifetime of the lease that would have been used in the cooling system of a typical power plant.

That's enough to fill six Olympic-sized swimming pools each week for 30 years, according to calculations provided by the U.S. Department of Energy.

ENVIRONMENTAL BENEFITS

The W.E.S.T. offshore wind farm will also help Texas meet its sustainable energy goals. Senate Bill 20, signed into law this year by Gov. Rick Perry, sets a goal for Texas production of 10,000 MW of energy from renewable sources by 2025. Texas now generates about 2,000 MW from renewable sources, which means this single offshore wind farm will increase the state's sustainable energy production by 7.5 percent.

As a source of energy, wind power is free of many of the traditional environmental concerns associated with fossil fuels, such as transportation and storage leakage, and flammability.

Since there is no fuel cost to rise and fall, compared to oil and gas, wind energy is relatively inflation proof and competitively priced. As technology advances and the generation of wind energy becomes more efficient, wind power will become an increasingly competitive option.

ENVIRONMENTAL CONCERNS

As part of the lease agreement announced Monday, W.E.S.T. will conduct studies on migratory bird patterns and use these in determining turbine placement and operation of the wind farm.

W.E.S.T. has released a detailed plan of how it will address migratory bird concerns. W.E.S.T. will focus on the 2006 spring migration and use the data to plan how best to reduce the wind energy development's potential impact on birds. To help mitigate any impact by the wind energy development, W.E.S.T. may plan, for instance, to shut the turbines down for regularly scheduled maintenance during the neo-tropic migration.

Both meteorological towers have been approved by the U.S. Army Corps of Engineers. The actual wind turbines themselves will also require permitting through the Corps of Engineers. Because of this, the Coastal Coordination Council, which Patterson chairs, will review the proposed wind energy development for consistency with the goals and policies of the Coastal Management Program. Public comment on the project will be accepted at that point.

The wind turbines may or may not be visible from the coast on a clear day. But studies of offshore wind energy developments in Europe show them to have no impact on local tourism. In fact, a 2002 survey of tourists in Scotland found that 91 percent agreed the presence of new wind farms off the country's picturesque coast "would make no difference in whether they would return." Surveys of tourists in Vermont and Australia produced similar results, according to the American Wind Energy Association.

"Wind power is clean and inexhaustible. Wind power reduces our nation's dependence on imported oil and gas. Wind power is inflation proof," Patterson said. "The benefits are great and the drawbacks are few. This is the right step for Texas and the nation."

STATE'S NEXT SPINDLETOP

Worldwide, wind energy is seeing growth, with total generation expected to be about 50,000 MW annually. This growth is due in part to advances in technology, making it cheaper to generate a MW of energy from the wind. In the past 15 years, for example, the cost of generating wind energy has dropped by as much as 50 percent.

Armed with valuable data collected during the research phase of the Land Office's lease with W.E.S.T., Patterson hopes to better market the Texas coast for wind energy development.

Other wind energy companies have expressed an interest in Texas, in part due to the unique benefit the state offers in the competition to secure offshore wind development. In 1836, after securing independence from Mexico, Texas claimed the offshore boundaries observed under Spanish, then Mexican rule. Sam Houston, president of the new republic, successfully maintained sovereignty over all submerged lands in the Gulf out to 10.36 miles, or three marine leagues. Texas entered the Union in 1845 with its boundaries intact, and defeated an attempt at federal control of the tidelands in the 1950s.

For this reason, there is only one entity in Texas for an offshore wind developer to deal with - the Texas General Land Office.

Also, development within the 10.36 miles offers proximity to the state's electrical grid to carry wind-generated power to customers.

Coastal winds also tend to rise during the day when the state's electrical generating capacity faces peak demand, therefore generating power when it's most needed. Plus, the gentle slope of the Texas Gulf Coast makes the development of an offshore wind farm easy.

Texas' natural assets, plus the foresight of its founders, make the Gulf Coast an ideal place to build a wind farm, Patterson said.

"When Texas entered the Union in 1845, we came in on our own terms," Patterson said. "Because of Sam Houston's foresight we now have the regulatory authority to move forward with less federal red tape. Who would have thought that the hero of San Jacinto would help bring wind energy to Texas?"

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