Old Enron Units Thrive as Skilling Is Free -- WSJ
February 25 2019 - 3:02AM
Dow Jones News
By Rebecca Elliott
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 25, 2019).
Former Enron Corp. Chief Executive Jeffrey Skilling has been
released from federal custody after serving more than 12 years in
prison for his role in one of the biggest business scandals in
American history. He re-enters a world in which some of the
businesses built from his old company's less appreciated assets
have become formidable in their own right.
Enron is a symbol of corporate fraud and excess since the
Houston-based energy conglomerate collapsed nearly two decades ago
amid questions about its accounting practices. Mr. Skilling, who
was released Thursday according to the Federal Bureau of Prisons,
was among several executives who faced criminal charges after the
company filed for bankruptcy in 2001.
A lawyer who represented Mr. Skilling didn't immediately return
requests for comment, nor did the Federal Bureau of Prisons. He was
convicted in 2006 on counts of fraud, conspiracy and insider
trading, and after the verdict, continued to maintain his
innocence.
A former McKinsey & Co. consultant, Mr. Skilling, 65, joined
Enron in 1990 and helped transform the natural gas pipeline company
into a trading behemoth before assuming the top job in early 2001.
While Enron proved to be worth far less than it claimed after its
finances came under scrutiny later that same year, many of the
assets Enron cast aside over the years became valuable building
blocks for some of today's top energy firms, from leading shale
driller EOG Resources Inc. to pipeline giant Kinder Morgan Inc. to
the wind arm of General Electric Co.
EOG Resources Inc.
EOG has emerged as a leading oil and gas exploration and
production company since being spun off from Enron in 1999. The
Houston-based driller once known as Enron Oil & Gas Co. was
among the pioneers of horizontal drilling and hydraulic fracturing,
the techniques that have allowed shale drillers to extract a bounty
of oil and gas from dense rock formations.
While shale companies primarily used these methods to unlock
natural gas early on, EOG recognized that the same approach could
be used to economically extract crude as well, a pivot that has
helped drive domestic oil production to an all-time high of 12
million barrels a day this month, according to the Energy
Information Administration. EOG now drills in basins from West
Texas to Wyoming.
Kinder Morgan Inc.
After being passed over for the top job at Enron, Richard Kinder
left the company in 1996, going on to start a pipeline business
that would grow into Kinder Morgan. The former Enron chief
operating officer, along with energy lawyer William Morgan, bought
Enron Liquids Pipeline L.P. for about $40 million, and subsequently
expanded the pipeline system, ultimately developing a vast network
of conduits that crisscrosses the U.S.
The Houston-based company now has an interest in roughly 84,000
miles of pipelines that transport oil, natural gas and other
products, regulatory filings show, making it one of the largest
pipeline firms in the U.S.
GE Renewable Energy
A subsidiary of General Electric Co. bought Enron's wind power
assets out of bankruptcy in 2002, marking the company's foray into
what would become a leading form of renewable energy generation. GE
has since become one of the largest wind turbine manufacturers,
joining companies such as Vestas Wind Systems AS and Siemens Gamesa
Renewable Energy SA. The company sold 2,825 wind turbines in 2017,
when its renewable energy business generated $10.3 billion in
revenue, regulatory filings show.
Mr. Skilling's plans now that he has become a free man are
unclear. But he told The Wall Street Journal in an interview
shortly after his 2006 conviction that he might eventually want to
share more of Enron's story.
"At some point, people will ask what really happened [at
Enron]," he said at the time. "It would be good if they had someone
there who could tell them."
--Russell Gold and
Katherine Blunt
contributed to this article.
Write to Rebecca Elliott at rebecca.elliott@wsj.com
(END) Dow Jones Newswires
February 25, 2019 02:47 ET (07:47 GMT)
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