The new gold rush 

A new breed of prospector is scouring Montana’s hills, but wind is the resource it seeks.

Before these prospectors harvest that gold in the sky, however, they’ve got to secure the real key to the mother lode – permission from landowners to build towering wind turbines the size of a Boeing 747.

Across the state, from Circle in the east to Ennis in the west, the race is on to lock up the best sites by courting landowners and sealing deals for exclusive rights to explore and develop wind power.

Hundreds of thousands of acres already are under lease to foreign and U.S. wind developers.

“In a way, it’s like a mini-little gold rush,” said Hertha Lund, a Bozeman attorney who has represented landowners in Wyoming and Montana in negotiations with wind developers.

Landowners such as Sandra and Don Broesder are heavily courted.

“That plateau straight across there is the sort of formation they are looking for,” said Sandra Broesder, pointing to a rocky bench on the other side of a narrow valley on the couple’s ranch between Dupuyer and Conrad.

To date, Montana wind farms are producing a paltry 164 megawatts of power, 16th in the nation, but the lack of construction belies a feverish pace of prep work on the ground.

“The Montana market has gone absolutely crazy with leasing the past few months,” said Sarah Hamlen, a Montana State University Extension agent in White Sulphur Springs.

Homegrown wind developers are being joined by companies from Spain to Germany, as well as U.S. companies hailing from Texas to Florida, in courting Hutterite colonies, ranchers and the state government.

Hamlen, who quickly had to bone up on wind after getting call after call from landowners, conducted three recent meetings on the subject in the Golden Triangle, which were attended by a combined 250 people.

Half of those who showed up had leases from wind developers in their hands.

“A lot of landowners are getting hit by a variety of different companies,” she said.

‘Big money’ being made

Hamlen and others liken the pace of leasing activity to past rushes on land by oil and gas developers. But wind developers have come calling on Montanans before.

“They wanted to make me a millionaire,” said Gordon Brittan, director of the Burton K. Wheeler Center for Public Policy at Montana State University.

The state’s first wind rush came in the 1980s, when U.S. Wind Power leased tens of thousands of acres, much of it around Livingston, where Brittan lives.

Back then, Brittan said, the state had “wind fever.”

U.S. Wind Power went away and leases lapsed. The bottom fell out of the wholesale energy market.

This time, he said, the wind power industry is matured and is far healthier, thanks to a federal tax break encouraging development and better prices for wholesale electricity. The wind boom also is driven by the passage of laws across the West calling for the use of more renewable energy.

“Some big money is being made,” Brittan said.

In 2007, a record 5,244 megawatts of wind power were installed nationwide, injecting $9 billion into the economy, according to the American Wind Energy Association.

“Rest assured, if there’s development, there’s profitability,” said Tom Halverson, an investment banker with Piper-Jaffray Co. in Minneapolis, which assists companies in raising capital and provides financial advice. “And this is a growing industry.”

Developers range from two guys in an office park to global multi-billion-dollar entities, Halverson said. How much companies stand to profit depends on a range of factors, including proximity to available transmission and prices in power purchase agreements.

Paul Cartwright, an energy analyst with the state Department of Environmental Quality, remembers 10 years ago, when there were just two companies holding their finger to the wind here.

Today, there’s at least 11 “solid” companies prospecting in Montana, and those are only the ones he knows about. New transmission projects, such as the proposed Montana Alberta Tie Ltd. Line between Great Falls and Lethbridge, will only intensify interest.

Developers, Cartwright said, are positioning themselves on the landscape and awaiting construction of the lines, which he believes could catapult Montana to No. 1 in the country in wind production.

“If the transmission gets built, we’ll be providing low-carbon, green energy to the West,” Cartwright said.

That’s a big “if.” Developers of wind projects in Stillwater, Wheatland, Pondera, Meagher, Liberty, Sweet Grass, Madison, Rosebud, Glacier and Chouteau counties have requested space in the transmission queue of NorthWestern Energy, but there’s currently little available capacity.

Van Jamison, a wind developer who serves on the state’s Wind Working Group, which promotes the industry, compares the state’s wind development potential to a bright student who never opens a book.

“It will have a positive effect, but it’s not going to be like some sort of gold rush, where everywhere you look there’s a wind farm going up,” Jamison said. “It’s going to be slow. It’s going to be steady.”

Spain-based NaturEner, which has constructed 14 wind farms in Europe, is on the verge of single-handedly boosting the state’s ranking for wind power.

Last month, it broke ground on the Glacier Wind Project, a 210-megawatt wind farm on the border of Toole and Glacier counties north of Great Falls. It will be the state’s largest wind farm, bigger than the 135-megawatt wind farm at Judith Gap.

NaturEner’s investment in the Glacier project is $400 million.

“Not only do we make an impact to the landowners where the project is built, we make quite an impact to the taxpayers in the counties, and that helps everybody,” said Bill Alexander, the company’s chief development officer.

For the Glacier project, 24,000 acres of private land are under lease. Alexander said the company has lease rights to another 100,000 acres of private land at several sites across Central Montana.

“We could build 750 megawatts today,” if the transmission was available, he said.

Most of the green power the company will produce at the Glacier Wind Project is under contract to a U.S. company in another state. Alexander won’t say where.

Electricity prices are low in Montana, so producers are faced with either selling it at a lower price here or paying for transmission service to move it to another market where the price is more attractive, he said.

NaturEner has plenty of foreign and domestic competition in the wind power market.

Gaelectric, based in Ireland, has opened an office in Great Falls, and a German company, Wind Kraft Nord, is interested in leasing 800 acres of state school trust land near Geyser, east of Great Falls.

Mike Sullivan, a supervisor in the state Department of Natural Resources and Conservation’s Real Estate Management Bureau, said another 6,000 acres of school trust land tied to four proposed wind farms are being eyed by developers.

“There’s so much competition in this marketplace,” said Greg Worden of Maine-based RSE Wind, which is prospecting in Cascade County.

The largest U.S. companies prospecting Montana’s wind are Texas-based Horizon Wind, Illinois-based Invenergy and Florida Power and Light. The trio is among the top 10 wind energy owners in the country. Other companies looking here are from California, Minnesota and Oregon. Two Dot Wind and Coyote Energy are among the Montana-based companies in the mix.

Developers go gaga over consistent, strong wind, which is the biggest reason they’re setting up shop in Montana.

The Chinook Zone, which stretches from the Canadian border to Great Falls, is hopping with leasing activity. A third of Cascade County’s 2,700 square miles is ranked “Class 4,” which is more than capable of supporting utility scale wind farms.

“It’s no good to have 70 mile per hour one day and zero the next,” RSE’s Gorden said.

In southwest Montana, leasing action is hottest around Ennis, while in the east, developers have been active near Glendive, Baker and Circle, Hamlen and Cartwright said.

The Musselshell Valley in southcentral Montana is garnering interest, too.

“What is interesting is they’re prospecting across the state,” Cartwright said.

Local government officials are just as excited about the prospect of new economic development as the developers are about lining up leases.

“It’s real jobs,” Cascade County Commissioner Peggy Beltrone said. “It’s a tax base increase in areas that have had declining tax base.”

Beltrone said she’s been told by one developer that 200,000 acres are under lease for wind power in Cascade County.

Besides the governor, Beltrone may be the industry’s biggest crusader in Montana. In her office, an “I love wind” sign and a picture of a turbine grace the walls.

She holds up a study and map showing the 20 poorest counties in the United States. Located in Montana, the Dakotas and Nebraska, they also happen to be the windiest counties in the country. To Beltrone, wind development is an anti-poverty plan.

“I could absolutely see the correlation between areas in poverty and windy areas,” she said.

In 2007, the Judith Gap wind farm, owned by Invenergy, paid $522,473 in property taxes – $157,000 went to the state, $142,000 to Wheatland County and $224,000 to the school district.

Wheatland County also gets a $65,000 monthly impact fee that phases out this year.

The extra money infused into the county means less of a burden on taxpayers, said Rosemarie Steele, the county’s treasurer.

“The mill levy went down considerably,” she said.

Wheatland County is not the only local government that stands to benefit from the wind boom. Alexander said NaturEner will pay $2 million a year in taxes to Glacier and Toole counties from the Glacier Wind Project.

Landowners stand to benefit, too, but Hamlen advises them to seek legal advice and investigate companies before signing on the dotted line.

Lund, the Bozeman attorney, said that not every company has the money and expertise to develop a wind farm. The intent of some brokers is to tie up land with the aim of making a profit later by turning it over to legitimate developers.

“These small companies see there’s a market, and they are trying to play in it, but they probably aren’t big enough to amass the money and get in line for the turbines,” she said.

One out-of-state company recently mailed a flier to residents of Martinsdale seeking land to develop wind in the area about 130 miles south of Great Falls, Jamison said.

“You might as well figure out who you are going to marry,” he said in advising landowners to be cautious. “And make sure it’s the right person.”

Landowners typically get a signing bonus plus an annual payment based on the gross production of turbines on their property.

Upon signing, Lund said she’s seen $20,000 and $50,000 checks handed out.

In neighboring states, she said, a 70,000-acre ranch with good wind can bring in up to $350,000 a year during the development phase and several million dollars annually, depending on the terms of the agreement and gross production of electricity.

Peter Wipf of the Martinsdale Hutterite Colony said the colony received an excellent deal in leasing 15,000 acres for a wind farm that Horizon Wind is planning. He also spoke with companies he described as “fly-by-nighters,” but sent them on their way.

Broesder, who also is a Pondera County commissioner, said four or five different companies are talking to area landowners. With its high ridges and consistent wind, she said, the area is built for wind farms.

As a commissioner, she’s eager to see the influx of tax revenue and jobs, she said. As a landowner, the wind-generated revenue would be enough to take an early retirement.

A three-year exploration lease covers the mid-sized cattle ranch and farm, but the terms would be renegotiated if the developer proceeds with a wind farm.

“It would have a significant impact on our livelihood, put it that way,” Broesder said.

By Karl Puckett
Tribune Staff Writer

Great Falls Tribune

20 April 2008