El Paso Corporation is a provider of natural gas and related energy products and is one of the largest natural gas producers in North America until it was acquired by Kinder Morgan in 2012. Its headquarters in Houston, Texas. United States of America.
Prior to the takeover by Kinder Morgan, the company had the largest natural gas pipeline system in North America that traveled from border to border and from coast to coast. Pipe systems include Colorado Interstate Gas; El Paso Natural Gas; Natural Gas South; Tennessee Gas Pipeline; Pipeline Cheyenne Plains; Mojave Pipeline; Elba Express Pipeline; Storage of Young Gas; Wyoming Interstate Company; and Ruby Pipeline. El Paso Corporation also has a fifty percent Transmission Large Lake and Gas Transmission of Florida and employs 6,000 people. Florida Gas is part of Southern Natural Gas. In 1999 the company grew larger when it joined Birmingham, Alabama, the natural gas giant Sonat. The company later acquired Coastal Corporation in 2001.
The company's main offices are located in Houston, Texas; Birmingham, Alabama; and Colorado Springs, Colorado. The company's CEO at the time of sale to Kinder Morgan was Douglas L. Foshee.
Video El Paso Corp.
Histori
The company was founded in 1928 by Houston lawyer, Paul Kayser, who identified the city of El Paso, Texas as a good market for natural gas transported through pipes from Jal, New Mexico.
El Paso owns and operates one of the largest natural gas transmission systems in North America. Over 17,000 miles of pipelines linked major gas supply areas throughout West America and Mexico in the early 1990s and supplied about seven percent of US natural gas demand. In 1992, El Paso was separated from Burlington Resources, Inc., which has operated the company as a subsidiary since 1983.
Paul Kayser, a young Houston lawyer, founded El Paso Natural Gas in 1928. In 1929, Kayser obtained a franchise from the El Paso Municipal Council to sell natural gas to the city. He proposed the construction of a 200-mile pipeline connecting El Paso with a natural gas well located near the town of Jal, New Mexico. After obtaining financing for the ambitious project, he immediately began hiring work crews and securing equipment and supplies.
The pipeline construction method at the time was coarse compared to the techniques developed during the mid-1900s. The lines are built by hand and the people working on the line must be very tough. The difficulties associated with the construction of the Kayser pipeline are reinforced by the fact that the pipes will traverse some of the most difficult terrain in the southwestern United States. The pipeline must cross 200 miles of rivers, mountains and deserts and it must be built to withstand all types of natural disasters. Although the work was tedious and time consuming, the Kayser crew pioneered new methods of welding, ditching, and traversing a unique field. The line was completed and operated in 1930.
Unfortunately for Kayser and his first start-up, the Great Depression began shortly after the construction of the pipeline. El Paso made a profit of $ 283,000 during the first year of the pipeline operation but the Depression-era economy threatened to cancel the venture. Fortunately, the city of El Paso continues to buy Kayser gas. The company was able to pay its debts and expand its piping system during the early 1930s. The company built a new line extending to copper mining areas in southern Arizona and northern Mexico and in 1934 expanded services to Tucson and Phoenix, Arizona.
During the 1930s, El Paso enjoyed steady growth. It builds a new pipeline system that extends across the oil-rich Permian Basin in southern Texas and extends the north and west lines to accommodate the increasingly growing regional demand. In the late 1930s, the company generated revenues of about $ 5 million per year and began posting strong profits. Expansion slowed during World War II when the nation's workforce and resources were directed toward war effort. After the war, El Paso benefited from the strong demand for natural gas in the expanding southwest United States. As the postwar economies and populations soar, cities across the region are demanding energy resources to drive growth and development.
El Paso experienced explosive growth in the late 1940s. The gains during that period were partly due to the completion of a 700-mile pipeline reaching from El Paso's Permian Basin operation to California. El Paso began supplying gas through a 26-inch pipeline and also started construction of larger new pipes aimed at the burgeoning California market. As a result of these efforts, El Paso's assets increased from about $ 23.5 million in 1945 to $ 285 million in 1950. Meanwhile, sales increased from $ 9 million to $ 41 million and net income rose to a record $ 9 million in 1950.
During the early 1950s, El Paso continued to post steady increases as demand for natural gas increased. This built or purchased pipeline reaches as far north as Ignacio, a small town in southern Colorado, and continues its westward expansion, strengthening feeder pipelines going into California and increasing sales throughout Arizona and New Mexico. In 1955, El Paso earned nearly $ 30 million in profits annually from about $ 180 million in sales. By the early 1960s, the numbers had risen to over $ 40 million and $ 400 million, respectively.
The huge profits of El Paso during the late 1950s were partly due to the 1957 acquisition of the Pacific Northwest Pipeline Corporation operations section. This acquisition gives El Paso a presence in several western and northwestern states, with pipelines reaching as far as Washington and connecting to other Canadian companies' networks. In addition to geographical expansion, El Paso began diversifying during the 1950s into a related oil and chemical business. This created the El Paso Products Company as a subsidiary to produce chemicals from natural gas derivatives. Despite entering into other industries, El Paso remains focused on purchasing, transporting, and selling natural gas.
After 35 years, the founder of El Paso left his chief executive duties during the early 1960s. The company's president, Howard Boyd, replaces Kayser. Kayser has transformed his company from a small start supplier with a 200-mile pipeline to a $ 500 million company with 20,000 miles of pipeline delivering gas to the entire western United States. Throughout his reign, he remains committed to the development of pragmatic natural resources and sound business practices. "Nothing is more important to our economy than the use of our valuable, wise, and free natural resources developed under a practical and intelligent conservation policy," Kayser said in 1954.
El Paso continued to grow rapidly during the late 1960s and early 1970s. Although the natural gas industry's profit generally circulates, El Paso's overall sales and revenues increased over the period. In the early 1970s, El Paso operated one of the largest pipe systems in the country. It stretches from northern Mexico to the northeastern end of Washington, with extensions throughout the Southwest and reaches to Wyoming, Idaho, and Oregon.
Although the federal regulator keeps El Paso operating its own pipeline in certain areas, its lanes are connected with other operators to grant El Paso access to markets in California, Kansas, Oklahoma and Nevada. Partly in an effort to minimize its exposure to the cyclic gas market, El Paso diversified during the late 1960s and 1970s. In 1974, non-gas operations accounted for about a third of El Paso's annual revenue of $ 1.3 billion. The company's largest non-gas division is a petrochemical business, producing various chemicals used in the growing synthetic industry. El Paso has also become deeply involved in the fiber and textile industries, especially nylon, rayon, and other synthetics. Other subsidiaries of El Paso are involved with mining, gas and oil exploration, insurance, copper wire, and real estate development.
One of the most exciting and promising businesses of El Paso during the 1970s was the liquefied natural gas business. In 1969, El Paso achieved what it called a "historic agreement" with Sonatrach, the national oil and gas company of Algeria. Under the arrangement, the Algerian company will deliver one billion cubic feet of natural gas in liquid form each day to El Paso Natural Gas. El Paso will then distribute cheap gas through its piping network. The ambitious project requires the construction of a special nine-ship tanker fleet to be owned and operated by El Paso, as well as construction of storage terminals on the East Coast and in Algeria. El Paso moved 230 employees to Algeria for the project. Delivery of liquefied gas began in 1978 and contributed significantly to El Paso's bottom line.
Although El Paso's liquid gas business represents important success during the 1970s, non-gas related operations are generally less useful. El Paso discards some of these operations and records losses from major activities such as chemical and fiber manufacturing. To make matters worse, El Paso was disadvantaged by a Supreme Court decision in 1974. Over the years, the federal regulators have been trying to deny their decision in the late 1950s to allow El Paso to acquire northern operations. El Paso fought hard, but was defeated. In 1974, El Paso was forced to release ownership, effectively stopping its natural gas operations north of New Mexico and Arizona.
Despite some setbacks, El Paso managed to sustain long-term growth during the 1970s. Sales slumped following the 1974 divestment but surged back to $ 1.15 billion in 1975, rising to over $ 2 billion in 1978. However, revenues fluctuated by about $ 50 million to $ 60 million annually. The great income of El Paso during the late 1970s reflects turbulence in the energy market.
El Paso benefited from the Natural Gas Policy Act passed in 1978. The move basically allowed El Paso to start competing with other Texas companies for the purchase of natural gas reserves. El Paso increased its reserves after the action was passed, building a substantial reserve base near the Permian Basin pipeline operations as well as elsewhere in the country. This simultaneously increased its production capacity to meet the expected surge in demand during the 1980s.
As a result of the strong natural gas market and El Paso's increased production capacity, sales reached $ 2 billion in 1978, rising above $ 3 billion in 1980, and then increasing to nearly $ 4 billion in 1981. In 1981, El Paso reported record earnings of $ 147 million. Unfortunately, El Paso's profit is only short-lived. During the late 1970s and early 1980s, industrial competitors rushed to increase natural gas production capacity with strong demand expectations. But the weak economy and the newly found emphasis on energy conservation slow the growth of the market. Supply surpassed demand in 1982 and natural gas prices fell. Furthermore, El Paso's chemical business suffered a major setback in 1982. Although El Paso's sales increased to $ 4.3 billion in 1982, its net income fell to $ 53 million.
The El Paso Company, which became known in the 1970s, ceased to exist as an independent company in 1983. The company was purchased by Burlington Northern Inc. and become a 100 percent owned subsidiary. Burlington is a $ 9 billion conglomerate active in the development of minerals, timber and forest products, and the rail system. Although El Paso is experiencing some problems at the time, Burlington views the company as an excellent complement to existing mineral development operations.
This acquisition seemed like a good move, especially given the new federal law that was scheduled for force during the mid-1980s. The law effectively deregulates certain aspects of the natural gas industry. Prior to the mid-1980s, El Paso, in accordance with the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978, was in the business of purchasing gas from other producers, transporting gas, and then selling it to a local distribution company. The business began to change in 1984. The federal legislation passed in 1984 had a turbulent effect on pricing, transportation, and contractual relationships between customers and suppliers. The net effect is that the industry and natural gas market are becoming more competitive. As a result, El Paso shifted from merchants to distributors during the late 1980s and early 1990s. Instead of owning transported natural gas, it only provides transportation services for fees charged to owners and/or buyers.
In the 1980s and early 1990s, El Paso prospered under the management of Burlington. Over the next few years, Burlington spun or sold some of El Paso's nonperforming divisions and simplified the company's natural gas operations.
In the early 1990s, Burlington changed its business strategy. After avoiding natural gas exploration and production business for several years, he decided to shift his focus to take advantage of the projected rise in natural gas prices. During the early 1990s, Burlington sold most of its subsidiaries and reinvested the proceeds to natural gas reserves.
Burlington completed the spin-off of El Paso Natural Gas Company on June 30, 1992. William A. Wise was elected to serve as president and independent El Paso chief executive again. The 45-year-old Wise has been with El Paso since 1970, working as a lawyer and then serving in various management positions. Wise is credited with helping the company make the transition to transportation services during the late 1980s and by helping El Paso create low-cost industry leaders. When El Paso regained its independence, its channel consisted of a 20,000-mile network connecting three oil producing regions in Texas, Oklahoma, and New Mexico to buyers mainly in California, Arizona, New Mexico and Texas. Sales during 1993, the first year of operations, reached $ 900 million, about $ 90 million of which was net income.
El Paso was in a relatively strong position in the industry in the mid-1990s. It is the largest natural gas supplier to the state of California and has successfully transformed from merchant to transporter in accordance with the new federal regulations (1992). But it also faces obstacles. Especially, the California gas market is starting to get mad, dampening earnings in the most important El Paso area. Nevertheless, investors are enthusiastic about El Paso's chances, as evidenced by the doubling of the company's stock price between 1992 and early 1994. El Paso puts its long-term expectations on a rapidly growing Mexican market, which has unparalleled access. It is also involved in an ambitious effort to improve its access to the northern California natural gas market.
Coastal acquisitions, legal issues and proxy battles
In 2001, El Paso purchased the Coastal Corporation owned by Oscar Wyatt, a diversified energy company. It has an oil refinery, a gas station, and markets oil, natural gas and electricity.
In 2003, Oscar Wyatt and other shareholders sued El Paso Corporation for allegedly misrepresenting his intentions for Coastal assets before the merger in 2000. After the merger of Coastal and El Paso Corporation, the latter began to break away from Coastal assets beginning in 2001. El Paso needed cash to repay the debt it gained from following the same business model as Enron Ken Lay. El Paso has taken great advantage of herself to drive sales into new markets for electricity, and hide its increasing debt from its balance sheet by erasing debt to overseas subsidiaries. In June 2003, Oscar Wyatt, along with El Paso Selim Zilkha's investors, initiated a proxy fight to seize control of the El Paso Corporation and to wrestle control of the remaining assets, including natural gas pipelines, exploration, and production assets. Since the incorporation and disclosure of corporate irregularities by El Paso management, its shares have fallen 87% from February's high of $ 75 per share. El Paso has $ 25 billion in debt and is sued by shareholders and investigated by state and federal regulators.
In October 2011, Kinder Morgan acquired El Paso Corp. in a deal worth $ 21.1 billion.
Maps El Paso Corp.
Criticism
Tax evasion
In December 2011, the Public Campaign of non-partisan organizations criticized El Paso for spending $ 2.94 million on lobbying and not paying income taxes during 2008-2010 instead of earning $ 41 million in income tax deductions, despite making a profit of $ 4, 1 billion and increased executive salaries by 47%.
Price settings
On September 27, 2002, El Paso Corporation's shares fell after an administrative legal judge at the Federal Energy Regulatory Commission ruled that the company helped illegally push energy prices to record highs in California between 2000 and 2001 by manipulating gas supplies. El Paso Geiger gas dealer is sued by FERC for miscalculating 48 gas trade. El Paso is now out of energy trading business.
Notes and references
External links
- The El Paso Corporation website
Source of the article : Wikipedia
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