El Paso Natural Gas Company owns and operates one of the largest natural gas transmission systems in North America. Its more than 17,000 miles of pipeline connected major gas supply regions throughout the American West and Mexico in the early 1990s and supplied about seven percent of U.S. natural gas demand. In 1992, El Paso was spun off from Burlington Resources, Inc., which had operated the company as a subsidiary since 1983.
Paul Kayser, a young Houston attorney, founded El Paso Natural Gas in 1928. In 1929, Kayser obtained a franchise from the El Paso City Council to sell natural gas to the city. He proposed construction of a 200-mile pipeline that linked El Paso with natural gas wells located near the city of Jal, New Mexico. After obtaining financing for the ambitious project, he immediately began hiring work crews and securing equipment and supplies. Pipeline construction methods at the time were crude in comparison to techniques developed during the mid-1900s. The lines were built by hand and the men who worked on the lines had to be extremely tough. Difficulties related to building Kayser's pipeline were amplified by the fact that his pipes would cross some of the most difficult terrain in the southwestern United States. The pipeline had to cross 200 miles of rivers, mountains, and deserts and it had to be built to withstand all types of natural disasters. Although the work was tedious and time consuming, Kayser's crews pioneered new methods of welding, ditching, and crossing unique terrain. The line was finished and put into service in 1930.
Unfortunately for Kayser and his fledgling start-up, the Great Depression began shortly after the building of the pipeline. El Paso generated profits of $283,000 during the pipeline's first year of operation but the Depression-era economy threatened to quash the venture. Fortunately, the city of El Paso continued to buy Kayser's gas. The company was able to pay its debts and to expand its pipeline system during the early 1930s. The company built new lines extending to the copper mining areas of southern Arizona and northern Mexico and in 1934 extended service to Tucson and Phoenix, Arizona.
During the late 1930s, El Paso enjoyed steady growth. It built new pipeline systems extending throughout the oil and gas rich Permian Basin in south Texas and extended lines north and west to accommodate growing regional demand.
El Paso experienced explosive growth in the late 1940s. Gains during that period were due in part to the completion of a 700-mile pipeline reaching from El Paso's Permian Basin operations to California. El Paso began supplying gas through a 26-inch pipeline and also began construction of new, larger pipelines aimed at the burgeoning California market.
During the early 1950s, El Paso continued to post steady gains as demand for its natural gas increased. It built or purchased pipes reaching as far north as Ignacio, a small town in southern Colorado, and continued its westward expansion, bolstering its feeder pipes going to California and increasing sales throughout Arizona and New Mexico.
El Paso's big gains during the late 1950s were partially attributed to its 1957 acquisition of part of the operations of Pacific Northwest Pipeline Corporation. The acquisition gave El Paso a presence in several western and northwestern states, with pipelines reaching as far as Washington and connecting to other companies' networks in Canada. In addition to geographic expansion, El Paso began to diversify during the 1950s into related oil and chemical businesses. It created El Paso Products Company as a subsidiary to manufacture chemicals from natural gas derivatives. Despite forays into other industries, El Paso remained focused on buying, transporting, and selling natural gas.
After 35 years of leadership, El Paso's founder left his chief executive duties during the early 1960s. The company's president, Howard Boyd (whose printed signature appears on this piece), replaced Kayser. Kayser had transformed his company from a tiny start-up supplier with 200 miles of pipeline to a $500 million corporation with 20,000 miles of pipe delivering gas throughout the western United States.
El Paso continued to grow at a rapid pace during the late 1960s and early 1970s. Although natural gas industry profits were generally cyclical, El Paso's overall sales and earnings grew during the period. By the early 1970s, El Paso operated one of the nation's largest pipeline systems. It stretched from northern Mexico to the northeast tip of Washington, with extensions throughout the Southwest and reaching into Wyoming, Idaho, and Oregon. Partly in an effort to minimize its exposure to cyclical gas markets, El Paso diversified during the late 1960s and 1970s. The company's largest non-gas division was its petrochemical business, which manufactured a variety of chemicals used in the growing synthetics industry. El Paso also became heavily involved in the fiber and textile industries, particularly nylon, rayon, and other synthetics. Other of El Paso's subsidiaries were involved with mining, gas and oil exploration, insurance, copper wire, and real estate development.
One of El Paso's most intriguing and promising ventures during the 1970s was a venture into liquefied natural gas. In 1969, El Paso reached what it termed a "historic agreement" with Sonatrach, an Algerian national oil and gas company. Under the arrangement, the Algerian company would deliver a billion cubic feet of natural gas in liquid form daily to El Paso Natural Gas. El Paso would then distribute the low-cost gas through its pipeline network. The ambitious project required the construction of a nine-ship fleet of special tankers to be owned and operated by El Paso, as well as the construction of storage terminals on the East Coast and in Algeria. El Paso moved 230 employees to Algeria for the project. Liquified gas deliveries commenced in 1978 and made a significant contribution to El Paso's bottom line.
During the late 1970s and early 1980s, industry competitors had hustled to boost natural gas output capacity with expectations of strong demand. But a weak economy and a newfound emphasis on energy conservation slowed market growth. Supply outstripped demand in 1982 and natural gas prices dropped. Furthermore, El Paso's chemical businesses suffered major setbacks in 1982. The El Paso Company, as it became known in the 1970s, ceased to exist as an independent corporation in 1983. The company was purchased by Burlington Northern Inc. and became a 100-percent-owned subsidiary. Burlington was a $9 billion conglomerate active in mineral development, timber and forest products, and rail carrier systems. Although El Paso was experiencing some problems at the time, Burlington viewed the company as an excellent complement to its existing mineral development operations.
El Paso prospered under Burlington's management. Over the next few years, Burlington spun off or sold several of El Paso's non-performing divisions and streamlined the company's natural gas operations. El Paso's conversion to transportation services, moreover, was well timed. During the late 1980s, gas prices remained suppressed. While many of Burlington's competitors went deep into debt buying up reserves, Burlington emphasized the service end of the industry through El Paso.
In the early 1990s, Burlington changed its business strategy. After shunning the natural gas exploration and production business for several years, it decided to shift its focus to take advantage of a projected upturn in natural gas prices. During the early 1990s, Burlington sold most of its subsidiaries and reinvested the proceeds into natural gas reserves. Burlington completed the spin-off of El Paso Natural Gas Company on June 30, 1992.
Close Up of Vignette:
Cumulative Preferred Stock Certificate, specimen, 1970’sPrinter: Security-Columbian Bank Note Company Dimensions:
8” (h) x 12” (w)State: TX-Texas Subject Matter: Utility Companies
| Gas Companies
| Pipelines and Related
| Specimen Pieces Vignette Topic(s): Allegorical Featured
| Allegorical Liberty
| Refinery Scene
| Aerial View
| Mountain Scene Condition:
No fold lines, punch hole cancels in the signature areas and body, and some toning from age.