Water in the 21st Century: Conflict and Innovation

Below is an excerpt from part four of The Ripple Effect

Chapter 23: Liquidity: Privatization and the Rise of Big Water


On nearly every continent, groundwater in aquifers is being drained faster than the natural rate of recharge
—National Geographic, April 2010


I drained you dry, you boy. If you have a milkshake, and I have a milkshake, and I have a straw and my straw reaches across the room . . . I drink your milkshake. I drink it up!
—Daniel C. Plainview, There Will Be Blood, 2007


In 1971 the oil and natural-gas entrepreneur T. Boone Pickens bought a 2,960-acre ranch along the Canadian River in the Texas Panhandle. The Panhandle is a rectangular chunk of north Texas that juts up into New Mexico and Oklahoma. The ranch was in Roberts County, a remote area of hills and canyons, prairie grass and mesquite. Although it is roughly forty times the size of Manhattan, the county had only a few hundred residents. Some ranched there, but the topography was too rugged for irrigated agriculture. Pickens didn’t care about that. He loved the area’s scrubby remoteness. He moved a double-wide trailer onto his property and used it as a getaway. Fueled with cheese, crackers, and six-packs of Big Orange soda, he’d spend hours with his dogs hunting quail on the prop- erty, before racing ninety miles back to Amarillo, where he was building Mesa Inc. into the largest independent oil firm in the world.
In the 1980s, Pickens built a reputation as the country’s most fearsome corporate raider. He made hostile bids for companies many times larger than Mesa—including Gulf Oil, Phillips Petroleum, and Unocal—which helped to reconfigure the resource business and made him a billionaire. His enemies referred to Pickens as a “greenmailer,” and in 1985 Time mag- azine depicted him on its cover as a cagey poker player. But over the next decade Mesa was hobbled by a series of legal battles and business rever- sals that let it with a $1.2 billion debt. Pickens fought with nearly every- one around him and underwent two divorces. In 1996, he was forced to resign from the company he had founded in 1956. Angered and humili- ated, he let Amarillo for Dallas, where he started over again, building up an energy hedge fund called BP Capital Management. The one constant for Pickens throughout the tumult was his ranch, Mesa Vista, in the Cana- dian River Valley.
By the 1990s he had built a house there, installed electricity, and expanded his holdings to twenty thousand acres. Echoing Maurice Strong, who insisted he had decided to develop the giant aquifer beneath his Baca Ranch in Colorado only as an aterthought, Pickens declared to me, “I never thought twice about the water” that lay beneath Mesa Vista. At least that was the case until 1997, he said, “when I first saw the pos- sibilities.”
That year the Canadian River Municipal Water Authority (CRMWA), a local utility, bought the rights to forty-three thousand acres of water for $14.5 million. “I could not believe that number,” Pickens said, amazed that people would pay so much for mere water. “I thought it must be a misprint.” Two years later, Pickens’s ranch neighbor, a thirty-two-year- old money manager named Salem Abraham, assembled a seventy-one- thousand-acre parcel and offered Pickens the chance to join in selling the property’s water rights. He declined, but when Abraham sold the water to Amarillo for $20 million, netting a $10 million profit, Pickens was once again stunned.
For a resource specialist, the implications were obvious. Demographers predict the Texas population will leap as much as 43.5 percent by 2030, mostly in urban areas. Texas is the nation’s top producer of cattle and cot- ton and is a leading producer of many other crops. And Texas has suffered a string of drought years, most notably in the early 1950s and again in the mid-2000s.
The former wildcatter had a new mantra: “The hydrocarbon era is over.  Water is the new oil!”

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