Its collapse affected thousands of employees and shook Wall Stree t to its core.
History of Enron Corporation Before filing for bankruptcy inEnron Corporation was one of the largest integrated natural gas and electricity companies in the world. It marketed natural gas liquids worldwide and operated one of the largest natural gas transmission systems in the world, totaling more than 36, miles.
It was also one of the largest independent developers and producers of electricity in the world, serving both industrial and emerging markets. Enron was also a major supplier of solar and wind renewable energy worldwide, managed the largest portfolio of natural gas-related risk management contracts in the world, and was one of the world's biggest independent oil and gas exploration companies.
In North America, Enron was the largest wholesale marketer of natural gas and electricity. Enron pioneered innovative trading products, such as gas futures and weather futures, significantly modernizing the utilities industry.
After a surge of growth in the early s, the company ran into difficulties. The magnitude of Enron's losses was hidden from stockholders. The company folded after a failed merger deal with Dynegy Inc.
The company had ranked number seven on the Fortuneand its failure was the biggest bankruptcy in American history.
The company's founding came just a few months after the stock market crash ofan inauspicious time to launch a new venture. Several aspects of the Great Depression actually worked in Northern's favor, however.
Consumers initially were not enthusiastic about natural gas as a heating fuel, but its low cost led to its acceptance during tough economic times. High unemployment brought the new company a ready supply of cheap labor to build its pipeline system.
In addition, the inch steel pipe, which could transport six times the amount of gas carried by inch cast iron pipe, had just been developed.
Northern grew rapidly in the s, doubling its system capacity within two years of its incorporation and bringing the first natural gas supply to the state of Minnesota. Public Offering in the s The s brought changes in Northern's regulation and ownership.
The Federal Power Commission, created as a result of the Natural Gas Act ofregulated the natural gas industry's rates and expansion. Northern was listed on the New York Stock Exchange that year. The following year, the Argus properties were consolidated into Peoples Natural Gas Company, a subsidiary of Northern.
InPeoples was dissolved as a subsidiary, its operations henceforth becoming a division of the parent company.
Also inthe company set up another subsidiary, Northern Natural Gas Producing Company, to operate its gas leases and wells. Another subsidiary, Northern Plains Natural Gas Company, was established in and eventually would bring Canadian gas reserves to the continental United States.
Northern created two more subsidiaries in Northern Natural Gas Producing Company was sold to Mobil Corporation inbut the parent company continued expanding on other fronts.
Init formed Hydrocarbon Transportation Inc. Eventually, this system would bring natural gas liquids from plants in the Midwest and Rocky Mountains to upper-Midwest markets, with connections for eastern markets as well.
Growth through Acquisitions Northern made several acquisitions in Also inNorthern created Northern Petrochemical Company to manufacture and market industrial and consumer chemical products.
The petrochemical company acquired Monsanto Corporation's polyethylene marketing business in Northern continued expanding during the s. Init bought Olin Corporation's antifreeze production and marketing business.
It set up UPG Inc. UPG eventually would handle oil and liquid gas products for other companies as well. Northern Border Pipeline Company, a partnership of four energy companies with Northern Plains Natural Gas as managing partner, began construction of the eastern segment of the Alaskan pipeline in This segment, stretching from Ventura, Iowa, to Monchy, Saskatchewan, was completed in About that time, it became apparent that transporting Alaskan gas to the lower 48 states would be prohibitively expensive.Enron secured another $1 billion in loans using the remaining pipelines as collateral, the only asset that Enron had left that was deemed worthy to use as collateral.
In November Enron entered merger negotiations with Houston-based Dynegy, Inc., and Enron's stock rose to about ten dollars. Historical stock price and volume data for every day of trading (pdf) (A) to Enron is the darling of Wall Street; share price rises; Fortune magazine calls Enron “America’s Most Innovative Company” for six consecutive years.
The rise and fall of Enron is an important, complex story. In its early days Enron did the right things for the right reason and garnered substantial credibility. Later successful operations were replaced with the illusion of successful operations. In the last phases Enron milked its credibility to sustain operations through loans.
Enron: The Nature of the Problems. The name Enron has entered the American lexicon as being synonomous with greed and excessive profit by whatever means possible.
Yet Enron was a corporation that went bankrupt and some of the outrageous corporate misdeeds occurred in an effort to .
Enron was founded in by Kenneth Lay in the merger of two natural-gas-transmission companies, Houston Natural Gas Corporation and InterNorth, Inc.; the merged company, HNG InterNorth, was renamed Enron in Enron scandal, series of events that resulted in the bankruptcy of the U.S.
energy, commodities, and services company Enron Corporation and the dissolution of Arthur Andersen LLP, which had been one of the largest auditing and accounting companies in the world.