Even though natural gas is and will remain the company’sbackbone, El Paso Corp. CEO William Wise told energy executivesyesterday that coal will play an increasingly “preferable” role asthe Houston-based company works to sustain its leadership positioninto the future.

Wise, speaking at the natural gas plenary session of CambridgeEnergy Research Associates’ 20th Annual Executive Conference inHouston yesterday, shared a panel with J. Larry Nichols, CEO ofDevon Energy, Linda Z. Cook, CEO of Shell Gas & Power, andBernard de Combret, director general of TotalFinaElf.

Even though El Paso’s production is growing, Wise said thatoverall, the company’s production has been flat the past few years.Because of the flat production level, the company wants to remainflexible about its options to serve the marketplace, and coal wouldbe just more thing to put into the energy mix.

“We are up and that’s the exception,” Wise said. “We are seeingan infrastructure response because of the tight supplies, but wehave not yet seen the production up. We went up ’99 to ’00, butwe’re not sure about ’01.”

Just last week, El Paso announced it would spend $1.5 billion inthe next five years to build six liquefied natural gas terminalsfor North American markets (see Daily GPI, Feb. 6). Building up theLNG base and diversifying its energy products are all part of alarger plan for El Paso. Because of the “pressure on theincremental supply” of natural gas and the uncertainty of adequatenatural gas supplies in the future, Wise said looking at coal as anoption only made sense.

“If you take clean coal technology and apply it to waste goalyou will have an environmentally efficient energy that iseconomically sound,” Wise said. He listed coal’s disadvantages:more capital intensive, more labor intensive and not as “clean andneat” as natural gas. But coal has tax advantages and can be a”very attractively priced power product,” that actually costs lessto produce overall than natural gas, he said.

Of course, El Paso would not have to go far to increase its coalproduction. When it merged with The Coastal Corp., it picked upcoal mines, processing plants and coal loadout facilities fromholdings in Central Appalachia. The resources are located on majorrail lines with access to the large eastern utility market,industrial customers and cogeneration facilities. Coastal had beenmarketing steam and metallurgical coal from the operations and wasleasing coal reserves for development by independent producers.

“Coal would provide a significant solution to some short-termsupply,” said Wise.

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