Kelcy Warren’s Path From Natural Gas to Crude Oil
Energy Transfer did not start as a diversified energy company. It began in 1996 with about 200 miles of natural gas pipelines in East Texas. Today it moves gas, natural gas liquids and crude oil, and Kelcy Warren says much of that range grew out of necessity.
Hart Energy profiled Warren, the company’s co-founder and executive chairman, for its 50th anniversary Hall of Fame series. The piece lays out a sequence of moves that took the business well beyond its original footprint.
When Gas Prices Fell
During the 2000s, Energy Transfer assembled a large gas network by buying assets that came up for sale after Enron’s collapse. Those purchases included much of Aquila Inc., the TUFCO System, the Houston Pipeline System and Transwestern Pipeline. Then natural gas prices tanked. Warren recognized the company needed to diversify.
The first step was natural gas liquids. Energy Transfer had pursued another target, but that bid fell through. The company turned instead to Louis Dreyfus Highbridge Energy and grew its NGL business through that acquisition.
A Phone Call About Sunoco
Crude oil came next. Kelcy Warren was in New York when he got word that Sunoco might be looking to sell. He flew to Philadelphia within a few hours to help assemble a deal, which closed in 2012 at a value of $5.3 billion. “I couldn’t believe I was doing it,” he said. “I was like, ‘This is just too good to be true.’”
The purchase carried personal weight, since Warren’s father had spent his career at Sunoco as a pipeline field hand. It also gave Energy Transfer a solid position in the crude oil sector.
Several years of organic growth followed, including heavy construction of fractionation facilities. The company also built the Dakota Access Pipeline, one of its best-known projects.
Warren is candid that none of this followed a perfect master plan. “We’ve been very reactive here, but I think our reactions have been pretty good,” Kelcy Warren said. See related link for more information.
Find more information about Warren on https://www.bloomberg.com/billionaires/profiles/kelcy-l-warren/