When Enron collapsed in the early 2000s, most of the energy industry saw disaster. Kelcy Warren saw opportunity. The Energy Transfer co-founder has described the fallout from Enron’s failure as a turning point that reshaped his company’s trajectory for years to come.
“Enron was a gift from God, and we took advantage of that,” Warren said. The collapse triggered a wave of asset sales across the pipeline sector as companies that had copied Enron’s business model scrambled to raise cash. “Because of the Enron collapse, many assets that would’ve never been for sale came on the market very quickly,” Kelcy Warren said. “There was a dumping of assets because, people forget, it wasn’t just Enron that had this business plan. There were a lot of Enron wannabes that had copied their plan and were doing a very similar type of approach to business.”
Buying at the Right Moment
Energy Transfer moved quickly during this period, acquiring much of Aquila Inc., the TUFCO System, Houston Pipeline System and Transwestern Pipeline. Each purchase expanded the company’s natural gas footprint at a time when few competitors had the appetite or the capital to compete for distressed assets.
Necessity Drives the Next Pivot
The buying spree eventually gave way to a new challenge. When natural gas prices fell, Kelcy Warren recognized that Energy Transfer needed to diversify beyond its core business. That realization led the company into the natural gas liquids space through the acquisition of Louis Dreyfus Highbridge Energy, after an earlier bid for a different target fell through.
Warren has been candid about how much of this growth came from circumstance rather than a master plan. “I’d like to tell you that we saw everything in advance and we’re smarter than everybody else, but that’s just not true,” he said. “We’ve been very reactive here, but I think our reactions have been pretty good.” Visit this page for related information.
Learn more about Warren on https://utsystem.edu/board-of-regents/current-regents/kelcy-l-warren