El Paso Natural Gas Company, established just before the Great Depression, has withstood momentous regulatory, economic, and social changes in its nearly seven decades to emerge as one of the largest natural gas-transmission companies in the United States. In 1928 Paul Kayser, a Houston lawyer with a talent for business, discovered that El Paso was the only city of size in Texas without natural gas service and acquired a franchise from the El Paso city government. On June 19, 1929, deliveries of natural gas began to the largest community on the Texas-Mexico border. The gas flowed through a 204-mile, sixteen-inch-diameter pipeline from three wells drilled near Jal in southeastern New Mexico. In the company's first full year of operation, 1930, El Paso sold 5.5 million cubic feet of gas.
El Paso expanded even during the depression. Kayser took out construction loans to extend his company's pipelines to serve copper-refining companies in southern Arizona and northern Mexico in the early 1930s. El Paso next added the Tucson and Phoenix markets area, and by the end of the 1930s its pipelines extended to Ajo, Arizona. Further expansion was halted by the entrance of the United States into World War II. With the end of the war and the availability of steel pipe, El Paso Gas began service to California. The initial California contract was with the company that is now Southern California Gas Company. Deliveries began in November 1947, and additional contracts quickly followed, as El Paso sought to meet the state's burgeoning demand for energy.
Gas for El Paso's pipelines came from the Permian Basin of West Texas and southeastern New Mexico and included "casinghead" or residue gas, a by-product of oil production that previously had been burned ("flared") as a waste product. El Paso built the facilities necessary to treat the residue gas to make it suitable for pipeline transmission. El Paso's action in utilizing this natural resource was hailed as a major conservation step by the Railroad Commission.
El Paso Natural Gas Company acquired all of the California market in 1951 under a long-term pact with Pacific Gas and Electric Company, which serves central and northern California. Gas for this expansion came from a new supply source for El Paso, the San Juan Basin of northwestern New Mexico and Southwestern Colorado, in the Four Corners area. El Paso was the first major company in the San Juan Basin, which then and now, has large reserves of natural gas, bolstered in the late 1980s with the production of coal seam gas, largely methane extracted from the coal beds so prevalent in the San Juan Basin.
El Paso has been a pioneer and innovator in natural gas transmission. It was among the first to build high-pressure, long-distance pipelines and develop innovative pipeline-welding methods. With its first units in September 1952 it became the first company to use large gas-turbine-driven centrifugal compressors. They were still operating in 1990. El Paso perfected several methods of treating natural gas to remove impurities, and for many years it had more gas-treating capacity than all other interstate pipelines combined. El Paso joined with the United States Atomic Energy Commission and the Bureau of Mines of the Department of the Interior in 1967 to determine if a nuclear device could be used to "fracture" and thus increase production from a gas-bearing formation in the San Juan Basin. The experiment, Project Gasbuggy, was a technical success, but the procedure was not deemed commercially feasible.
During the 1970s El Paso Gas participated in large-scale importation of liquefied natural gas from Algeria. It contracted for a fleet of nine giant carriers that were to deliver sub-zero liquefied natural gas to specially constructed regasification terminals at Cove Point, Maryland, and Elba Island, Georgia. Initial shipments began in 1978 and eventually six of the LNG carriers were in operation. However, the project was short-lived. A pricing dispute between the Algerian and United States governments halted deliveries in early 1980. After months of fruitless negotiations, El Paso wrote off its $365 million investment in the project in early 1981.
Throughout its existence the company's pipelines have been the foundation of its success. In 1993 more than four billion cubic feet of natural gas flowed daily through the El Paso system to distribution companies and industries in West Texas, New Mexico, Arizona, Nevada, and California. El Paso's pipelines interconnect with lines moving gas into the Midwest, Gulf Coast, and East, and the company has begun deliveries to Mexico, a most promising market with major potential. However, most of the natural gas carried by El Paso is delivered to California. Since the mid-1970s El Paso has delivered more than half of all natural gas used in the nation's most populous state.
In addition to its own interstate system, El Paso Gas partnered with Enron Corporation of Houston in the first interstate natural gas pipeline built in California. The Mojave Pipeline Project began service in February 1992 and delivered natural gas to the enhanced oil-recovery and cogeneration facilities in central California. The gas is delivered into the Mojave system from the El Paso and Enron pipelines at a transfer line near Topock, Arizona.
El Paso once again became a publicly traded company in mid-1992, when it was spun off from Burlington Resources, a successor to Burlington Northern, Incorporated, which had acquired El Paso in 1983. In 1985 the Federal Energy Regulatory Commission made interstate pipelines open-access or common carriers. In essence, the new regulations moved El Paso from its traditional role as a merchant-producing or buying, treating, and selling gas-to that of a transporter. El Paso had a fully computerized system of 20,000 miles of pipeline and delivered 1.1 trillion cubic feet of gas in 1992.