PG&E Woos Kinder Morgan Exec
In a move to strengthen its still under-performing Texas natural
gas assets, PG&E Corp. last week named Thomas B. King president
and COO of unregulated subsidiary PG&E Gas Transmission, which
is based in Houston. King, formerly president of Kinder Morgan
Energy Partners, takes on his new duties Nov. 23. He is filling a
position left vacant by the death of Joseph Kearney, a PG&E
executive who suffered a heart attack in September. King will be
replaced at Kinder Morgan by Vice Chairman Bill Morgan.
"This move recognizes that we needed someone on the ground in
Houston where the bulk of our natural gas assets are now centered,"
said PG&E spokesman Greg Pruett, noting some of the assets have
been "under-performing" so far. "We need someone who can make a
thorough assessment of those assets and develop a strategy that
will result in obtaining the maximum value from them that we can."
King will be responsible for both PG&E's Texas and Pacific
Northwest gas operations. More than a year ago, PG&E bought
Texas' Valero Natural Gas, Teco Pipeline and Energy Source. Since
then, the company has tried to combine the assets and structure
them into efficient operations. However, liquids and gas markets
have not cooperated. Low gas basis differentials between Waha in
West Texas and Katy and the Houston Ship Channel in East Texas,
along with poor liquids prices related to the fall in crude markets
At one point, PG&E management suggested selling off some of
the new Texas assets, but legal and tax considerations precluded
that move. Instead, PG&E Gas Transmission-Texas reorganized into
four major lines of business: field services, transmission and
storage, gas marketing and supply, and natural gas liquids and put
all of its marketing division in Houston and all of its
transmission and storage operations in San Antonio (See NGI Sept.
14). "The big reason we're doing this is to make money," Lynn
Bourdon, senior vice president of commercial operations for
PG&E's Texas gas transmission operations said at the time.
"We're trying to improve our performance."
Valero and Teco have contributed to PG&E revenue. In the
third quarter, PG&E reported operating revenue of $5.3 billion,
compared to $4.1 billion in 3Q 1997. For the first nine months,
revenue was $19.3 billion, up from $13.2 billion during the same
period of 1997. The company credited the majority of the increase
to Valero and Teco. Still, net income for the first three quarters
of 1998 was $617 million, down from $763 million over the same
period of 1997.
PG&E Gas Transmission-Texas owns and operates an 8,000-mile
pipeline system connected to most regions in the country, and
operates nine gas processing plants and 500 miles of gas liquids
pipeline. The division produces more than 100,000 barrels/d of gas
liquids. A PG&E spokesman noted King's transition to PG&E has
yet to occur and said last week he was unavailable to talk about
what the future might hold for the company's Texas assets.
If experience is an indicator, King could very well be the right
man for the job of effectively integrating the assets. He was
responsible for integrating the operations of the $1.4 billion
Santa Fe Pacific Pipeline Partners liquids lines into Kinder
Morgan's products pipelines in the last year. Earlier in his
career, he had a series of senior operating positions with Enron
Liquid Services Corp., and Enron's Northern Natural Gas,
Transwestern Pipeline and Northern Border Pipeline, along with
Cabot Corp.'s natural gas unit.
"Tom King brings an exceptional background in the gas pipeline
and supply business and will be an outstanding leader for this
important component of our national energy strategy," said Robert
D. Glynn Jr., PG&E Corp. CEO.
At Kinder Morgan, King helped run a company experiencing
exponential growth. Kinder third quarter net income of $35.12
million, or 52 cents/unit, grew from $3.75 million, or 20 cents/
unit, in the third quarter of 1997, an increase of 160% per unit.
Bill Morgan, currently Kinder Morgan vice chairman, will assume the
additional title of president. Morgan has been the president of
three major pipeline companies: Florida Gas Transmission,
Transwestern, and Northern Natural. Morgan and Richard Kinder, a
former Enron executive, set up the partnership two years ago with
the purchase of Enron's products pipeline unit.
Joe Fisher, Houston