In a move to strengthen its still under-performing Texas naturalgas assets, PG&ampE Corp. last week named Thomas B. King presidentand COO of unregulated subsidiary PG&ampE Gas Transmission, whichis based in Houston. King, formerly president of Kinder MorganEnergy Partners, takes on his new duties Nov. 23. He is filling aposition left vacant by the death of Joseph Kearney, a PG&ampEexecutive who suffered a heart attack in September. King will bereplaced at Kinder Morgan by Vice Chairman Bill Morgan.

“This move recognizes that we needed someone on the ground inHouston where the bulk of our natural gas assets are now centered,”said PG&ampE spokesman Greg Pruett, noting some of the assets havebeen “under-performing” so far. “We need someone who can make athorough assessment of those assets and develop a strategy thatwill result in obtaining the maximum value from them that we can.”

King will be responsible for both PG&ampE’s Texas and PacificNorthwest gas operations. More than a year ago, PG&ampE boughtTexas’ Valero Natural Gas, Teco Pipeline and Energy Source. Sincethen, the company has tried to combine the assets and structurethem into efficient operations. However, liquids and gas marketshave not cooperated. Low gas basis differentials between Waha inWest Texas and Katy and the Houston Ship Channel in East Texas,along with poor liquids prices related to the fall in crude marketshindered profitability.

At one point, PG&ampE management suggested selling off some ofthe new Texas assets, but legal and tax considerations precludedthat move. Instead, PG&ampE Gas Transmission-Texas reorganized intofour major lines of business: field services, transmission andstorage, gas marketing and supply, and natural gas liquids and putall of its marketing division in Houston and all of itstransmission and storage operations in San Antonio (See NGI Sept.14). “The big reason we’re doing this is to make money,” LynnBourdon, senior vice president of commercial operations forPG&ampE’s Texas gas transmission operations said at the time.”We’re trying to improve our performance.”

Valero and Teco have contributed to PG&ampE revenue. In thethird quarter, PG&ampE 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 sameperiod of 1997. The company credited the majority of the increaseto Valero and Teco. Still, net income for the first three quartersof 1998 was $617 million, down from $763 million over the sameperiod of 1997.

PG&ampE Gas Transmission-Texas owns and operates an 8,000-milepipeline system connected to most regions in the country, andoperates nine gas processing plants and 500 miles of gas liquidspipeline. The division produces more than 100,000 barrels/d of gasliquids. A PG&ampE spokesman noted King’s transition to PG&ampE hasyet to occur and said last week he was unavailable to talk aboutwhat the future might hold for the company’s Texas assets.

If experience is an indicator, King could very well be the rightman for the job of effectively integrating the assets. He wasresponsible for integrating the operations of the $1.4 billionSanta Fe Pacific Pipeline Partners liquids lines into KinderMorgan’s products pipelines in the last year. Earlier in hiscareer, he had a series of senior operating positions with EnronLiquid Services Corp., and Enron’s Northern Natural Gas,Transwestern Pipeline and Northern Border Pipeline, along withCabot Corp.’s natural gas unit.

“Tom King brings an exceptional background in the gas pipelineand supply business and will be an outstanding leader for thisimportant component of our national energy strategy,” said RobertD. Glynn Jr., PG&ampE Corp. CEO.

At Kinder Morgan, King helped run a company experiencingexponential growth. Kinder third quarter net income of $35.12million, 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 theadditional title of president. Morgan has been the president ofthree major pipeline companies: Florida Gas Transmission,Transwestern, and Northern Natural. Morgan and Richard Kinder, aformer Enron executive, set up the partnership two years ago withthe purchase of Enron’s products pipeline unit.

Joe Fisher, Houston

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