When the Barnett Shale natural gas boom in North Texas started losing momentum after the 2008–09 financial downturn, natural gas prices fell from $8 to $2 per million cubic feet and Kelcy Warren knew Energy Transfer needed to change course. The company was, at that point, almost entirely dependent on natural gas transport. What followed was a quiet but sweeping reinvention.
The turning point came in March 2011, when Energy Transfer acquired the Louis Dreyfus natural gas liquids assets for $2 billion. Warren called an emergency board meeting on a Friday night to approve the deal before the market opened Monday his preferred brand of decision-making: fast, decisive, and firm on conviction. The acquisition gave Energy Transfer its first real foothold in natural gas liquids, a business then dominated by Enterprise Products.
Diversification as Survival
Kelcy Warren has described the company’s pre-reinvention state as being “99.9 percent natural gas driven.” Over the following years, that changed entirely. Energy Transfer acquired Sunoco in 2012, giving the company exposure to multiple hydrocarbon streams and a foothold in the Appalachian Marcellus formation. It went from a “one-trick pony,” in Kelcy Warren’s words, to a diversified midstream operator moving oil, natural gas liquids, refined products, and dry natural gas.
That diversification turned out to be a kind of natural hedge. Warren has noted that when natural gas liquids prices run high, natural gas prices tend to be low, and vice versa. Having all streams under one roof smoothed out volatility and positioned the company for long-term stability. Energy Transfer now exports natural gas liquids to 93 countries and is the country’s largest exporter of ethane markets Warren points out barely existed before the shale era. Refer to this article for related information.
Find more about Kelcy Warren on https://www.hartenergy.com/hall-fame/2023/kelcy-warren/