El Paso

El Paso Corporation was a U.S. energy company built around natural-gas transportation. Established in 1928 by Houston partners Paul Kayser and H. Gordon Frost Sr., it began with a regional pipeline plan to carry gas from New Mexico to the growing market around El Paso, Texas. Over time, the company expanded its pipeline network to connect southwestern gas-producing areas with customers across the western and southern United States. Its corporate identity and reach changed repeatedly as it moved from a focused gas-transmission business to a broad energy conglomerate, then retrenched around pipelines and exploration and production before its acquisition by Kinder Morgan. Pipeline infrastructure remained El Paso’s defining business. Its portfolio included El Paso Natural Gas, Tennessee Gas Pipeline, Southern Natural Gas, Colorado Interstate Gas, and other transmission, storage, gathering, and processing assets. These systems linked producing regions to large consuming markets, including California, the Gulf Coast, the Southwest, and the Southeast. The company also developed and operated pipeline expansions and associated infrastructure, including projects connected to liquefied natural gas imports. At the time of its sale, its gas transportation and gathering footprint comprised tens of thousands of miles of pipelines and related systems. This made the company a strategically significant owner of U.S. energy infrastructure, rather than a consumer-facing product brand. El Paso’s ownership and scope shifted substantially during the late twentieth century. It operated as part of Burlington Resources before being returned to public ownership in 1992. Through acquisitions and expansion, the company broadened beyond transmission into gas production, field services, power generation, petroleum-related activities, energy marketing and trading, and other ventures. Its 2000 acquisition of Coastal Corporation, completed in 2001, accelerated that transformation and added a substantial set of businesses and assets. The enlarged group was exposed to commodity and trading risks as well as the capital demands of operating a diverse portfolio. The early 2000s were a period of financial strain, scrutiny, and strategic change. El Paso faced investigations and litigation connected to the 2000–2001 Western energy crisis, including allegations that it withheld pipeline capacity and contributed to higher natural-gas prices in California. The company and other parties reached settlements addressing claims arising from the crisis. Separately, El Paso restated financial statements after problems were identified in its reporting of oil and gas reserves and related measures. These controversies, alongside heavy debt and losses in some non-pipeline activities, damaged confidence and prompted leadership changes and a restructuring. William A. Wise left the chief executive role in 2003; after Ronald L. Kuehn Jr. served as interim chief executive, Douglas L. Foshee took over in September 2003. Under Foshee, El Paso focused on rebuilding its finances and narrowing its business around pipelines and exploration and production. It sold or wound down various non-core assets and activities, while pursuing selected pipeline growth projects and strengthening its core transmission position. The company remained a major natural-gas producer as well as a pipeline operator, and continued to develop storage, gathering, processing, and LNG-related infrastructure. Its business was therefore broader than a single pipeline system, but increasingly centered on natural gas and the infrastructure needed to move it to market. In October 2011, Kinder Morgan agreed to acquire El Paso in a transaction announced at approximately $38 billion including assumed debt. Kinder Morgan described the combination as a way to create a larger North American midstream business with an expanded natural-gas pipeline network. The acquisition closed on May 24, 2012, ending El Paso Corporation’s existence as an independently traded public company. Kinder Morgan took ownership of the acquired businesses and infrastructure, while El Paso’s former pipeline assets continued within the buyer’s portfolio. The corporate brand is consequently historical as an independent company; its legacy is most visible in the pipelines and energy infrastructure that became part of Kinder Morgan.

El Paso Corporation originated in 1928, when Houston partners Paul Kayser and H. Gordon Frost Sr. organized a natural-gas enterprise around the opportunity to transport gas from New Mexico to the El Paso market. The company’s initial identity was closely tied to pipeline construction and the development of supply connections in the Southwest. As demand grew, it built and acquired infrastructure linking producing fields with markets farther west and south. Its natural-gas transmission business became the foundation on which later corporate growth was built. During the mid-twentieth century, increasing demand for gas in California encouraged El Paso to develop supply and transportation arrangements tied to producing areas such as the San Juan Basin. The company expanded its network and developed a lasting role connecting southwestern production to consumers in California and neighboring states. Its footprint grew through new construction, acquisitions, and connections with other pipeline systems. Over time, El Paso operated through a collection of pipeline subsidiaries and related businesses rather than a single line. El Paso spent a period as a subsidiary of Burlington Resources. Burlington began returning the company to public shareholders in 1992, completing the separation that year. The independent company then broadened substantially. Through acquisitions and other growth initiatives, it moved beyond its historic transmission focus into exploration and production, field services, power generation, energy marketing and trading, and other businesses. Its acquisition of Coastal Corporation, completed in January 2001, was a major step in that expansion and made the company a much more diversified energy enterprise. The diversification coincided with a difficult period for the company and the wider U.S. energy industry. In 2000 and 2001, the Western energy crisis brought scrutiny to market participants, including El Paso. California regulators and other parties challenged the company’s conduct in gas markets and its use of pipeline capacity. A FERC administrative law judge issued findings in 2002 regarding withheld capacity and market power. El Paso subsequently settled claims with states and other parties; settlement records describe the resolution of allegations concerning the company’s role in the crisis. The findings and allegations should be understood in the context of those regulatory and settlement proceedings. El Paso also faced financial and accounting problems. In 2004, it restated prior financial reports, including figures related to proved oil and gas reserves and associated measures. In 2008, the SEC announced that El Paso, subsidiaries, and several former employees had agreed to settle a securities case concerning alleged reserve inflation and reporting and internal-control violations, without admitting or denying the allegations. These matters added to the pressure on a company already managing debt, restructuring costs, and difficulties in parts of its broader portfolio. Leadership changed as the company responded. William A. Wise, who had led El Paso for many years, left the chief executive position in 2003. Ronald L. Kuehn Jr. served as interim chief executive, and Douglas L. Foshee became president and chief executive officer in September 2003. Foshee’s assignment was to stabilize the company and restore its focus. El Paso reorganized around pipelines and exploration and production, sold or exited a number of non-core businesses and assets, and worked to reduce debt and improve operating performance. By the middle of the decade, the pipeline business was again the company’s central strategic platform. In its later years, El Paso combined extensive pipeline operations with exploration and production and continued investing in selected infrastructure. Its system included El Paso Natural Gas, Tennessee Gas Pipeline, Southern Natural Gas, Colorado Interstate Gas, and other pipelines and related assets. Projects associated with the Elba Island LNG terminal and pipeline expansions illustrate the company’s continuing investment in gas transportation and delivery infrastructure. Its geographic reach centered on the United States, with some cross-border connections and operations associated with Mexico. Kinder Morgan announced an agreement to acquire El Paso in October 2011. The announced transaction, including assumed debt, was valued at approximately $38 billion. The deal closed on May 24, 2012, after which El Paso ceased to be an independent public corporation. Kinder Morgan incorporated the acquired businesses and pipeline assets into its own midstream network. El Paso is therefore defunct as a standalone company, although its name and infrastructure remain part of the history of North American natural-gas transportation.

• 2012

  Acquisition closes and standalone company ends

  [2]Kinder Morgan completes acquisition of El Paso Corporationir.kindermorgan.com

  Kinder Morgan completed the acquisition on May 24, ending El Paso’s independent public-company status.

• 2011

  Kinder Morgan acquisition agreement announced

  [6]SEC merger filing and transaction announcementsec.gov

  Kinder Morgan and El Paso signed a definitive agreement for Kinder Morgan to acquire El Paso, combining their pipeline and midstream businesses.

• 2008

  SEC announces settlement concerning reserve reporting

  [3]SEC: settlement concerning El Paso reserve reportingsec.gov

  The SEC announced settlements with El Paso, subsidiaries, and former employees over allegations involving proved reserves and related reporting.

• 2004

  Company restates prior financial statements

  [3]SEC: settlement concerning El Paso reserve reportingsec.gov

  El Paso restated prior reports, including reserve-related figures for oil and gas operations, an issue that later formed part of the SEC’s 2008 settlement announcement.

• 2003

  Douglas Foshee becomes president and chief executive

  [7]SEC proxy statement describing leadership and company turnaroundsec.gov

  Foshee took over after William Wise’s departure and a period with Ronald L. Kuehn Jr. as interim chief executive, beginning a company turnaround and strategic refocus.

• 2003

  Multistate settlement addresses energy-crisis claims

  [5]Washington Attorney General: energy-investigation settlementatg.wa.gov

  El Paso and other parties reached a settlement resolving claims related to the company’s conduct in natural-gas markets during the 2000–2001 Western energy crisis.

• 2002

  California gas-market decision intensifies scrutiny

  [4]California Public Utilities Commission decision discussing El Paso proceedingsdocs.cpuc.ca.gov

  A FERC administrative law judge concluded that El Paso had exercised market power by withholding pipeline capacity that could have served California.

• 2001

  Coastal Corporation combination expands the company

  [10]Coastal Corporation combination expands the companysec.gov

  El Paso completed its merger with Coastal Corporation, adding to its scale and extending its activities across a wider range of energy businesses.

• 1992

  El Paso returns to independent public ownership

  [9]El Paso returns to independent public ownershipocdimage.emnrd.nm.gov

  Burlington Resources distributed its remaining El Paso shares to Burlington shareholders, completing the separation of the pipeline company.

• 1928

  El Paso natural-gas company founded

  [1]El Paso Corporation reference articleen.wikipedia.org

  Paul Kayser and H. Gordon Frost Sr. established the company to develop natural-gas pipeline transportation serving the Southwest.

A large North American natural-gas infrastructure and energy company, with pipeline transportation as its central business and additional activities in gas production, storage, gathering, processing, and related energy services.

• Energy infrastructure service

  Natural-gas pipeline transportation

  Pipeline transportation was El Paso’s principal business and its defining corporate activity. The company owned and operated interstate systems connecting gas-producing areas with utilities, industrial users, local distribution companies, and other pipeline networks. Its assets linked major supply regions with consuming markets across the western, southern, and eastern United States. The pipeline business included multiple operating companies and systems, rather than a single branded line, and remained central to the company even after it expanded into other energy sectors.

• Energy infrastructure service

  Natural-gas storage

  El Paso provided natural-gas storage as part of its broader transportation and infrastructure portfolio. Storage supported the movement and seasonal management of gas across connected pipeline systems, helping customers balance supply with demand. The company’s storage activities complemented transmission, gathering, and related pipeline services, rather than constituting a consumer-facing product line.

• Upstream energy

  Natural-gas exploration and production

  El Paso expanded into exploration and production as it broadened from a regional pipeline operator into a diversified energy company. Its production business supplied natural gas and other hydrocarbons, with properties in U.S. producing regions. After the company’s early-2000s retrenchment, exploration and production remained one of its two principal business areas alongside pipelines.

• Midstream energy service

  Gas gathering and processing

  Gathering and processing connected gas wells and producing areas to larger transmission networks. These services supported El Paso’s integrated natural-gas business, complementing production and long-distance transportation. The activities were conducted through operating subsidiaries and assets that formed part of the company’s broader natural-gas portfolio.

• LNG terminal and pipeline service

  Liquefied natural gas infrastructure

  El Paso participated in LNG-related infrastructure, including the Elba Island terminal in Georgia and associated pipeline takeaway projects. The company developed expansions intended to connect LNG import facilities with its wider gas transportation network. These assets and projects complemented its conventional pipeline business by adding receiving, delivery, and interconnection capacity.

• Energy services

  Energy marketing and trading

  During its period of diversification, El Paso conducted energy marketing and trading in addition to owning physical infrastructure and producing gas. These activities exposed the company to market, credit, and commodity risks and became part of the wider restructuring and scrutiny that followed the early-2000s energy crisis. El Paso later reduced or reorganized non-core marketing and trading activities as it focused its business more closely on pipelines and production.

• 2008

  SEC case concerning oil and gas reserve disclosures

  The SEC alleged that El Paso and subsidiaries overstated proved oil and gas reserves and related financial measures in prior reporting. El Paso had restated financial statements, and the company and other defendants settled the SEC charges without admitting or denying the allegations.

  Source

• 2002

  Western energy crisis and pipeline-capacity allegations

  California regulators and other parties challenged El Paso’s conduct during the 2000–2001 Western energy crisis. A FERC administrative law judge concluded in 2002 that the company exercised market power by withholding pipeline capacity that could have flowed to California. The company later settled claims connected to the crisis; the initial findings and the settlement should not be conflated with a final judgment after trial.

  Source

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• 2011

  Agree to be acquired by Kinder MorganM&A

  Background

  Kinder Morgan sought to expand its North American midstream footprint, while El Paso’s extensive natural-gas pipeline assets offered a major addition to its network.

  Action taken

  El Paso and Kinder Morgan entered a definitive merger agreement on October 16, 2011. The announced transaction contemplated cash, Kinder Morgan securities, and the assumption of El Paso debt.

  Aftermath

  The transaction closed on May 24, 2012. El Paso ceased to be a separately traded public company, and its acquired pipeline and energy businesses became part of Kinder Morgan’s portfolio.

  Announced total transaction value, including assumed debt. Approximately $38 billion (Announced October 16, 2011; acquisition completed May 24, 2012)

  Source

• 2003

  Refocus the business on pipelines and exploration and productionStrategy

  Background

  After expanding into multiple energy sectors, El Paso faced financial pressure, restructuring needs, and underperforming or non-core activities. Douglas Foshee took over as chief executive in September 2003 with a mandate to lead a turnaround.

  Action taken

  The company reorganized around its pipeline and exploration-and-production businesses, while reducing or selling selected non-core operations and assets.

  Aftermath

  The refocus restored pipelines to the center of El Paso’s strategy and shaped the company through its eventual acquisition by Kinder Morgan.

  Source

1. 1El Paso Corporation reference articleen.wikipedia.org
2. 2Kinder Morgan completes acquisition of El Paso Corporationir.kindermorgan.com
3. 3SEC: settlement concerning El Paso reserve reportingsec.gov
4. 4California Public Utilities Commission decision discussing El Paso proceedingsdocs.cpuc.ca.gov
5. 5Washington Attorney General: energy-investigation settlementatg.wa.gov
6. 6SEC merger filing and transaction announcementsec.gov
7. 7SEC proxy statement describing leadership and company turnaroundsec.gov
8. 8Rice University archives: El Paso Corporation collectionarchives.library.rice.edu
9. 9El Paso returns to independent public ownershipocdimage.emnrd.nm.gov
10. 10Coastal Corporation combination expands the companysec.gov