Carnahan’s Wind Capital faces legal fight in Oklahoma 

In one Northern Oklahoma county, oil and wind don’t mix.

That’s where plans by St. Louisan Tom Carnahan’s Wind Capital Group LLC for a large wind farm have run into a roadblock – claims by the Osage Nation that it would interfere with the tribe’s rights to tap oil and gas deposits.

The 15,600-member tribe sued Wind Capital in federal court in October to block the project, which would consist of 94 turbines spread across 15 square miles in Osage County, just northwest of Pawhuska. Power would supply Springfield (Mo.)-based Associated Electric Cooperative Inc., which provides power to regional and local electric cooperative systems in Missouri, Iowa and Oklahoma.

The case is scheduled for trial in 10 days. On one level, it pits green power versus fossil fuels. More specifically, it’s a contest between Wind Capital’s rights to erect 400-foot towers on a piece of the tall grass prairie in northern Oklahoma and the tribe’s rights to tap petroleum deposits beneath it.

“The crux of the case rests on the legal standing of the mineral estate and the tribe’s right to develop the minerals as they see fit,” Chris White, Osage Nation’s executive director of governmental affairs, said in an interview.

The dispute exists because Oklahoma is among the states where surface ownership of the land can be separated from rights to oil, natural gas and minerals deposits. Today, some states today are looking at whether to make wind rights separate from surface rights.

The Osage Nation, a tribe whose heritage reaches back hundreds of years, has controlled mineral rights to the 1.5 million acres in Osage County since 1906. Last year, oil and gas companies who lease mineral rights from the tribe produced $360 million worth of petroleum, White said.

Millions of dollars in royalties are distributed to some 4,000-plus tribal members, which own shares in the mineral estate that have been passed down for more than a century. Payments also help finance roads and schools in the county, according to the lawsuit.

Osage Nation officials claim the wind farm will interfere with development of oil and gas properties, which involves installing a network of pipes to gather the petroleum that’s produced.

St. Louis-based Wind Capital, which has leased 8,500 privately-owned acres for the Osage wind farm, disagrees.

In its legal filings and public comments, Wind Capital says it believes petroleum production and wind power can co-exist in the area. The company has promised to comply with the law that gives Osage Nation reasonable access to as much of the surface as necessary to produce oil and gas.

Shortly before the lawsuit was filed, the company said in a letter to the tribe that each turbine will require a foundation of only about 50 feet in diameter. In total, the letter said, its equipment would occupy just 1.5 percent of land under lease, leaving plenty of room for oil exploration and production.

“The actual footprint of the wind farm facility is very small in relationship to the total project boundaries,” company executives said in the letter.

Construction was scheduled to begin Nov. 19, according to Wind Capital. A company spokesman said Friday that “pre-construction activities” are underway, but declined additional comment citing the pending lawsuit.

While the Osage Nation had sought an injunction to stop the wind farm, it was Wind Capital that asked the judge to hear the case so quickly.

The company, which operates five wind farms in northwest Missouri, said lenders are reluctant to release funds for construction with the lawsuit pending. And the project hinges on federal production tax credits, so work must be complete by the end of next year. The tax credits, equal to 2.2 cents per kilowatt-hour, were most recently approved as part of the 2009 federal Recovery Act.

Officials said the lawsuit “jeopardizes the very existence of the wind facility.”

The parties disagree on whether the project would interfere with current oil and gas production. The Osage Nation says it will, while Wind Capital believes the matter involves only “possible future oil and gas exploration.”

Clashes between mineral rights and surface rights owners aren’t new in places like Texas, Oklahoma and Kansas. But traditionally they’ve been disputes between oil and gas companies or lease holders and farmers and ranchers. Only more recently have wind companies and the petroleum industry fought over access to the same real estate.

In Oklahoma, the legislature passed a law earlier this year to address the oil industry’s concerns about wind farms on producing properties and existing oil and gas leases.

Among other provisions, the Exploration Rights Act of 2011 requires wind developers to provide oil and gas companies or leaseholders 30 days notice of intent to construct a wind farm.

The Kansas Independent Oil and Gas Association issued a notice to members outlining the industry’s concerns about wind energy development in oil- and gas-producing areas.

Locally, there’s been no conflict between wind and petroleum interests. Missouri has no significant petroleum production. And in Illinois, there’s little, if any, overlap with the oil producing area in southern Illinois and wind farms located in the northern part of the state.