Pipeline protests put CEO in bull’s-eye
Energy Transfer’s Warren isn’t likely to back down, associates say
A stream of protesters broke a quiet afternoon last week in Preston Hollow, one of Dallas’ most exclusive neighborhoods, shaking their fists and shouting through bullhorns as they marched toward a turreted, ivy-covered mansion.
The target of their ire was Kelcy Warren, the billionaire co-founder and chief executive of Energy Transfer Partners. Their cause: stopping the company’s Dakota Access Pipeline, which, they said, would desecrate sacred sites of the Standing Rock Sioux tribe and add to the quickening pace of climate change.
Warren, 61, scoffed. How did the protesters get to their demonstrations? Drove. They couldn’t even ride bikes without fossil fuels since rubber tires and composite materials are made from oil and gas products. “Do you want to ride wooden bicycles?” he asked.
Warren has become public enemy No. 1 for Native American and environ-
mental activists, who have clashed repeatedly with police and security guards in a remote part of North Dakota to block construction of the $3.8 billion pipeline. On Sunday, police used tear gas, rubber bullets, and fire hoses while protesters hurled rocks and burning logs in a violent confrontation that left at least 17 protesters and one police officer injured, according to protest organizers and authorities.
Protesters have marched on Warren’s home twice in the past two months and held demonstrations in Washington, Houston and almost anywhere Energy Transfer has operations. They have picketed Warren’s office, the Dallas park named for his son, and meetings of the Texas Parks and Wildlife Commission, demanding that Warren, who was named to the panel last year, resign or be removed.
“There are certainly folks who would like to make Kelcy Warren’s name synonymous with evil,” said Coyne Gibson, a member of the Big Bend Conservation Alliance, which is seeking to block another Energy Transfer pipeline in West Texas. “It’s a very personal situation when someone’s home is run over by one of Kelcy Warren’s infrastructure projects.”
For Warren, an affable Texan known for extravagant real estate deals, generous political contributions, and a guy-next-door friendliness, the battle of Dakota Access is another setback in a year that saw what he admits was one of biggest disappointments of his career — the unraveling of Energy Transfer’s $33 billion takeover of Williams Cos.
But those who know Warren say he is unlikely to back down. He rose from modest circumstances in a small East Texas town and built Energy Transfer from next-to-nothing into one of the nation’s biggest pipeline companies, operating a 75,000-mile network.
Dakota Access is 85 percent complete. Rather than wait for the Army Corps of Engineers to finish an extended review, Warren recently ordered a mobilization of construction crews to finish the final sections in anticipation of approval. And when the Corps balked again last week, Energy Transfer filed suit in federal court seeking to proceed.
“You’re spending all this money on projects, but you’re not showing anything for it,” Warren said. “But we will.”
Birth of an empire
Warren grew up in White Oak, where his father worked as a pipeline field hand. Warren got his start as a welder’s assistant at the same company.
He went to the University of Texas at Arlington, dropped out, but later reenrolled. After graduating with a civil engineering degree, he went to work for the pipeline and refining company Endevco of Dallas. He rose to become president and got to know natural gas investor Ray C. Davis, now co-owner of the Texas Rangers baseball team.
In 1993, he and Davis bought Endevco at a bargain price, renamed it Cornerstone Natural Gas, and flipped it two years later in a $115 million sale. “It was really the first good money I’d made in my career,” Warren said.
Soon after, the partners reinvested their earnings to form Energy Transfer. Davis liked their chemistry. He handled the dollars and cents, while Warren, whom Davis described as a natural leader, forged grand plans and growth ideas, envisioning the nation’s best network of oil and gas pipelines.
“Kelcy doesn’t think like other people,” Davis said. “He sees possibilities where others don’t.”
One of those possibilities caught Warren’s attention in 2001. As Enron, which began as a pipeline company, collapsed, so did other firms that followed Enron into risky energy trading. Warren recognized that pipeline assets, which wouldn’t ordinarily be available to buy, would suddenly sell for cheap.
Energy Transfer bought pipeline networks from Aquila Inc. of Kansas City and other firms, becoming a player in the industry. Davis retired in 2007, but the company kept growing.
In 2011, Energy Transfer bought the pipelines of a Connecticut company, Louis Dreyfus Highbridge Energy, for $2 billion. In 2012, it scooped up the Southern Union Co., of Houston, and Sunoco of Pennsylvania in separate deals that totaled more than $10 billlion and added 28,000 miles of pipelines and gathering systems (and Sunoco’s 5,000 gas stations) .
Warren tacked on Corpus Christi-based Susser Holdings, with its 630 more Stripes and Sac-NPac brand gas stations and convenience stores, for another $2 billion in 2014. In less than five years, Energy Transfer’s revenues had jumped nearly tenfold, reaching $55 billion from $6 billion in 2010.
Golf resorts, koi ponds
As Warren gathered wealth — he’s now worth almost $4 billion — he became a force in real estate and politics.
In the mid-2000s, Warren purchased Isla Barbareta, an island off the coast of Honduras. In 2007, he bought the 25,000-acre Lajitas Golf Resort near the Rio Grande out of bankruptcy for $13.5 million.
Two years later, Warren picked up tech executive Larry Lacerte’s 9-acre estate on Park Lane, one of Dallas’ toniest streets, for about $30 million, at the time the highest price ever paid for a previously owned Dallas home. The house is more than 20,000 square feet; the grounds feature a baseball diamond, natatorium, tennis court and network of koi-filled ponds.
In 2010, he paid more than $46 million for the 3,500-acre Bootjack Ranch near Pagosa Springs, Colo., the second-most expensive residential real-estate transaction in the country that year. In 2012, he donated as much as $10 million to name a 5-acre downtown Dallas park in honor of his then-9-year-old son, Klyde.
Warren’s holdings also include 8,000-acre Los Valles Ranch, northwest of Austin, where he hosts his annual Cherokee Creek Music Festival.
A player in politics
Since 2010, Warren, Energy Transfer and its executives have given $2.7 million to candidates for state office, primarily Republicans who support fewer regulations for pipelines, according to campaign finance data compiled by the watchdog group Texans for Public Justice. Warren himself gave $2 million of that money, including more than $800,000 to Gov. Greg Abbott, who last year appointed him to the Texas Parks and Wildlife Commission.
Warren and his wife, Amy, also donated $6 million to the presidential campaign and political action committee of former Texas Gov. Rick Perry. Perry returned $4.4 million after dropping out of the race last year.
Warren is described by friends as a regular guy with whom you’d like to have a beer. Over the years, he moved easily between business, politics and his personal pursuits, experiencing few setbacks. Then his ambitions brought him to Oklahoma-based Williams Cos.
Warren doggedly pursued Williams and a chance to create the nation’s biggest pipeline operator, but by the time he snared the company, oil and gas prices had begun their collapse. Facing the prospect of taking on a massive amount of new debt amid falling revenues, Energy Transfer employed a loophole in the
U.S. tax code to end the acrimonious merger and court battle.
“That will be one of the truly dark spots of my career,” Warren said.
The Dakota Access Pipeline is casting another shadow. The project, slated to run from North Dakota’s Bakken shale fields to Gulf Coast connections in Illinois, was supposed to be in service by Jan. 1, but Energy Transfer is still awaiting approval from the Army Corps of Engineers to drill under Lake Oahe, a reservoir on the Missouri River. Hundreds of protesters have joined the Standing Rock Sioux encampment attempting to stop the work.
“If you grow as large and as aggressively as he has,” said Ethan Bellamy, an energy analyst at Robert W. Baird & Co., “you’re bound to end up in some fist fights.”
Protests get personal
More than a year before Dakota Access and the Standing Rock Sioux grabbed the nation’s attention, protests against Energy Transfer were underway in the small West Texas city of Alpine.
Area residents banded together to fight Energy Transfer’s Trans-Pecos pipeline, which would move natural gas from West Texas to Mexico. They said the project would threaten their way of life and mar high desert land. One group, the Big Bend Conservation Alliance, opposed the original application, and then unsuccessfully appealed its approval.
Alpine activists had all but given up when the Dakota Access controversy went viral. Reinvigorated, the West Texas group connected with those in North Dakota and settled on a strategy to target Warren himself.
“I had always said, if there was an opportunity to protest Kelcy Warren right there at the Energy Transfer Partners headquarters, I’d go,” said Lori Glover, an early Alliance member who formed another opposition group, Defend Big Bend.
Earlier this month, more than 100 protesters, including Glover, descended on a Texas Parks and Wildlife Commission meeting in Austin, demanding that Warren step down. He has an inherent conflict, they argued; his pipelines might not run through Texas parks, but they still damage unspoiled wildlands. Environmental activists, including the Sierra Club, have launched a long-shot effort to persuade the Texas Senate, which still must confirm Warren, to reject the appointment once the biennial session begins in January.
Warren, meanwhile, says he won’t step down.
“Absolutely not,” he said. “Our pipelines are extremely safe. All the bias — this has been so disappointing.”