Energy Transfer began as a natural gas pipeline company, and for a time that was enough. Then gas prices dropped, and Kelcy Warren concluded the business could not depend on one commodity. The decisions that followed turned a regional gas transporter into a company handling natural gas liquids and crude oil as well.
Warren discussed that shift with Hart Energy in a 2023 Hall of Fame profile.
Building the Gas Foundation
The company launched in 1996 with roughly 200 miles of East Texas gas pipelines. Its early expansion came largely through assets that surfaced after Enron’s collapse. Energy Transfer acquired much of Aquila Inc., the TUFCO System, the Houston Pipeline System and Transwestern Pipeline. Warren has described that period as a stroke of good fortune, crediting “pure luck” along with necessity and business acumen.
Moving Into Liquids and Crude
Weak gas prices forced the next step. Energy Transfer expanded into NGLs by purchasing Louis Dreyfus Highbridge Energy, a deal it pursued after another bid fell through.
Crude oil was next on Kelcy Warren’s list. While in New York, he received a call suggesting Sunoco might be for sale. He reached Philadelphia within a few hours to start putting a deal together. The resulting $5.3 billion transaction closed in 2012. “This is just too good to be true,” Warren recalled thinking at the time.
That purchase held special meaning because his father had worked at Sunoco for his entire career as a pipeline field hand.
Several years of organic growth and fractionation construction followed. Energy Transfer then pursued another round of consolidation, starting with Susser Holdings in 2014 and continuing with Regency Energy Partners, PennTex Midstream Partners, USA Compression Partners and SemGroup.
The diversification continues. Kelcy Warren told Hart Energy he wants Energy Transfer to grow further in LNG and petrochemicals and to extend its reach across North and South America. The company has also bulked up in the Permian Basin and Bakken Shale through its $7.1 billion Crestwood Equity Partners acquisition. Read this article for additional information.
More about Kelcy Warren on https://www.bloomberg.com/billionaires/profiles/kelcy-l-warren/