CNG: aiming to be an 'energy' company, not a gas company. (Consolidated Natural Gas Co.)

Long before regulatory changes in the U.S. paved the way for the union of natural gas and electric utility companies, Consolidated Natural Gas Co. (CNG) embarked on a strategy that would serve the company well in the 1990s.

CNG, a Pittsburgh-based utility holding company, in 1984 began emphasizing E&D activities, as well as taking advantage of forecast growth in gas sales and markets (OGJ, Mar. 12, 1984, p. 42). Unwittingly, the strategy may have been a watershed.

CNG's plan enabled it to build up a head of steam 8 years before Federal Energy Regulatory Commission Order 636 fostered new competition in the interstate natural gas pipeline arena and the National Energy Policy Act widened the opportunity window for traditional gas distribution/transmission companies to seek out new energy markets (OGJ, Oct. 23, 1995, p. 33).

By 1994, CNG had the positioning base it needed to take advantage of gas and electric deregulation.

"Where there have been distinctly different oil, gas, and electric markets in the past, we are moving toward a fluid, integrated energy market in the future," George A. Davidson Jr., CNG chairman and CEO, predicted in an OGJ special report (OGJ, Nov. 7, 1994, p. 54). "In some cases," Davidson said, "energy will be converted from one form to another--physically, financially, or both--before being consumed by the end-user."

Now the metamorphosis in world energy markets is occurring at a rapid pace.

In 1995, CNG began a corporate repositioning to meet mounting competition, switching emphasis from its regulated businesses to the non-regulated side. The goal: To become an energy player, not only in the U.S. but internationally.

Davidson, who joined CNG in 1966 from the Federal Power Commission, FERC's progenitor, predicted: "CNG will be a very different company at the turn of the century."

Ultimately, he said, "We want to be an energy company, not a natural gas company."

CNG's progression

CNG, one of the nation's largest producers, transporters, distributors, and marketers of natural gas, is more than 2 years into its corporate repositioning program and less than 1 year into its current 5-year plan.

CNG's strategy is based on capital allocation, not risk. The numbers are telling: 67% of its 1991-95 $2.2 billion capital spending program was dedicated to regulated businesses; 62% of the 1997-2001 $2.7 billion capital spending program is dedicated to unregulated businesses (see chart, p. 47).

Efforts have …