As co-founder and current Executive Chairman of Energy Transfer Partners, it’s no secret that Kelcy Warren is a major player in the oil and gas industry. Yet, rather than simply roll with ebbs and tides of business practices, Warren has consistently anticipated the need for change in the industry. As such, he’s driven key shifts that have made Energy Transfer—and, indeed, the United States—take the lead on global crude oil and natural gas production. Here are some of the key moments that helped him pull off this transformation.
Shifting in the Shale
Back in the first decade of the century, much of Energy Transfer’s business model was focused on transporting natural gas from the Barnett Shale in northern Texas. Yet, by 2008, production—and prices—in the region were dropping fast, falling from $8 to $2 per million cubic feet. But instead ofpanicking, Warren sprang into action, focusing on a new area of opportunity—natural gas liquids (NGL). And so, by March of 2011, Energy Transfer Partners was positioned to purchase all of Louis Dreyfus’ Midstream Assets for a whopping $2 billion, setting the stage for Warren’s company to become a leader in NGL storage, transport and refining.
New Connections Lead to Export Evolutions
Today, the US is a top global producer of both natural gas and crude oil, and Energy Transfer transports about a third of what’s produced in the country, via the company’s close to 125,000-mile pipeline network. Yet, back in the early 2000s, that was not the case. In fact, at the time, much of the country’s natural gas supply was imported through Gulf Coast LNG import terminals.In 2008 alone—just when Warren was exploring natural gas liquids—the U.S. was importing 6 million barrels per day (bd) from OPEC—a figure that, today, has fallen to about one million bd, thanks to Kelcy Warren’s visionary leadership.
But how did he do it? Warren recognized the need to evolve the country’s energy supply chain to meet emerging market needs. And so, in 2014, he practiced active listening with Energy Transfer customers such as Pioneer Natural Resources, Diamondback, and XTO Energy, taking note of their needs as they returned to U.S. oil fields after spending years focusing on overseas assets. Quickly, he understood that someone had to create infrastructure to gather and process product from new hydrocarbon streams in the south, directing it to fill customer needs in the north. Just as quickly, he recognized that no one in the industry was rushing to fill this need. So he made moves, purchasing a Gulf Coast LNG terminal and converting it to an export terminal, allowing local producers to move American natural gas to customers as far flung as Europe and Asia.
Calling the opportunity to change the flow of energy assets in this country “a pipeliner’s dream,” Kelcy Warren was able to pull off major successes, such as redirecting the Dakota Access pipeline to deliver crude oil south from the Bakken shale instead of north from the Gulf Coast to Chicago. The idea? Warren stated it simply: he was just “looking at how a pipeline may have a better use.” And, in the process, he not only altered the balance of natural gas imports and exports in the country, he was also able to consolidate the delivery procedure, reducing highway and railway transportation traffic in significant ways.
While Warren and his Energy Transfer team was thus responsible for evolving the entire U.S. natural gas market, he remains humble when discussing the moves he made at the time. He sums up his vision simply, saying, “You have to have a balanced market. If you have imbalance, it’s a disaster.” And so, in seeking to achieve the deceptively simple concept of balance in the market, he helped position his company—and his country—at the forefront of this global industry.