El Paso Corp.'s natural gas pipeline unit is strong and growing, and gas production is trending up, but it's still tough to find enough top quality, talented employees, CEO Doug Foshee said last week.

Speaking at the Bank of America's 37th Annual Investment Conference in San Francisco, Foshee said that after four years of rebuilding, El Paso's debt reduction and capital spending programs are on target, and its two businesses, the gas pipeline and exploration and production (E&P) units, are solid and growing. Now, he said, the company has another challenge before it: finding and retaining talented people.

"That's the big question that everybody's going to answer in the next four years," Foshee said.

When he took over in 2003, El Paso was a mere shell of what it had been a few years before. Among other things, the 15,000-member worldwide workforce had been reduced to around 5,000, and it was partly Foshee's job, he said, to "convince the 5,000 to hang around."

El Paso's "existing portfolio is unique," said the CEO. "As we move forward on a big project...the ability to execute is what's the big differentiator...There are constraints everywhere in the pipeline business, just like the E&P business. Contractors are stretched, and they are short their own labor, welders in particular. And we have the same kinds of constraints in our own internal staff. We're really focused on that."

Foshee said that "as a country, we have not graduated enough engineers, enough geoscientists," and the labor shortage is affecting energy companies across the board.

El Paso's pipeline business unit is a "different kettle of fish" because it has long had a solid reputation.

"We're the biggest, and if you want to be in the pipeline business, this is a company you will naturally consider," he said. "It doesn't mean we get the best. It's still a challenge in the pipeline business, but it's more manageable."

Building the labor pool within its emerging E&P business has been a lot more difficult. "We've fought that battle now all four years I've been with the company," Foshee said. "There's a talent war, but we're now starting to win more than we're losing. We're performing well, and it's become a more exciting place to be...It's a much easier argument to make now" in convincing someone to join El Paso.

"In E&P, the constraint has been human capacity and service capacity," Foshee said. "How much can we grow without degrading performance? How many good crews can we get from the service companies, how many talented people do we have, and how can we spread them around?"

The CEO said "everybody has wage inflation right now, and if they [say they] don't, they're not telling the truth." But Foshee noted that a company won't win new employees on high salaries alone. "That's not the number one reason to stay in a company. The whole rest of it has to do with the culture. Now we've got a good shot."

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