El Paso CEO Says Coal to Play Bigger Role
Even though natural gas is and will remain the company's
backbone, El Paso Corp. CEO William Wise told energy executives
last week that coal will play an increasingly "preferable" role as
the Houston-based company works to sustain its leadership position
into the future.
Wise, speaking at the natural gas plenary session of Cambridge
Energy Research Associates' CERAWeek 2001 in Houston, shared a
panel with J. Larry Nichols, CEO of Devon Energy, Linda Z. Cook,
CEO of Shell Gas & Power, and Bernard de Combret, director
general of TotalFinaElf. Wise, however, was not the only CEO to
mention coal as a viable option, however. Several generators at the
CERA meeting also mentioned the possibility of considering more
coal plants in the future (see related story).
Even though El Paso's production is growing, Wise said that
overall, the company's production, like other producers, has been
flat the past few years. Because of the flat production level, the
company wants to remain flexible about its options to serve the
marketplace, and coal would be just more thing to put into the
"We are up and that's the exception," Wise said. "We are seeing
an infrastructure response because of the tight supplies, but we
have not yet seen the production up. We went up '99 to '00, but
we're not sure about '01."
Just last week, El Paso announced it would spend $1.5 billion in
the next five years to build six liquefied natural gas terminals
for North American markets (see NGI, Feb. 12). Building up the LNG
base and diversifying its energy products are all part of a larger
plan for El Paso, and because of the "pressure on the incremental
supply" of natural gas and the uncertainty of adequate natural gas
supplies in the future, Wise said looking at coal as an option only
"If you take clean coal technology and apply it to waste coal
you will have an environmentally efficient energy that is
economically sound," Wise said. He listed coal's disadvantages:
more capital intensive, more labor intensive and not as "clean and
neat" as natural gas. But coal has tax advantages and can be a
"very attractively priced power product," that actually costs less
to produce overall than natural gas, he said.
Of course, El Paso would not have to go far to increase its coal
production. When it merged with The Coastal Corp., it picked up
coal mines, processing plants and coal loadout facilities from
holdings in Central Appalachia. The resources are located on major
rail lines with access to the large eastern utility market,
industrial customers and cogeneration facilities. Coastal had been
marketing steam and metallurgical coal from the operations and was
leasing coal reserves for development by independent producers.
"Coal would provide a significant solution to some short-term
supply," said Wise.
Carolyn Davis, Houston