New Energy at Tenneco

Shortly after the Tennessee Gas and Transmission Co. went into business in 1943 as a pipeline carrier of natural gas, its founder and longtime boss, Gardiner Symonds, decided that the company had to diversify to survive. Reason: rates and profits on the transmission of natural gas are strictly regulated by state and federal governments, leaving Symonds little hope for fast growth. Before his death last year at age 67, Symonds had turned the utility into a vast conglomerate named Tenneco that does $2.8 billion worth of business annually and reaches into land development, farm machinery, auto parts and shipbuilding. Now his hand-picked successor, Nelson ("Dick") Freeman, is pulling just the kind of surprise about-face that used to delight Symonds' Houston cronies. In an age of power shortages, Tenneco is turning back to supplying energy on a grand scale.

With little fanfare, Freeman recently announced that Tenneco and two other Houston firms (Texas Eastern and Brown & Root) are carrying on negotiations with the Soviet Union for rights to the vast natural-gas fields of central Siberia. The cartel is bargaining for a 25-year deal to transport, in liquid form, some 2 billion cu. ft. of natural gas daily --about three times as much as all of New England now uses every 24 hours. U.S. demand for imported natural gas is expected to skyrocket in the near future, since projected needs far outstrip the available supply at home. Final agreement on the deal may be some time off; it undoubtedly depends on a settlement of broad trade questions between the U.S. and Russia, including Moscow's demand for most-favored-nation status. But Freeman is optimistic about the eventual outcome. Says he: "The Russians have accepted our concept."

The gas would be hauled in a fleet of 20 LNG (for liquefied natural gas) supertankers, a new class of vessels that will cost as much as $100 million each. They are known among shipbuilders as "super thermos bottles" for the mountains of insulation encircling their holds to keep the gas at -259DEG F., its liquefying point. Tenneco stands to be cut in as contractor for at least several of those vessels: it happens to own the nation's largest shipbuilding operation, Newport News Shipbuilding and Dry Dock Co.

Tenneco's other step into the future is a venture in cooperation with Westinghouse to build nuclear power stations that generate electricity on floating platforms at sea--far from radiation-wary cities, whose residents have blocked one nuclear power project after another. Although some ecologists have objected to the thermal pollution that such power stations would spread, Freeman maintains that its effect on the entire Atlantic would be negligible. Tenneco has begun building a new $200 million construction center in Jacksonville, from which the first power platform is expected to be launched in 1979.

For all its new work with energy sources, such business accounts for less than half of Tenneco's overall sales. The conglomerate's six divisions operate no fewer than 123 subsidiaries in 18 countries, including a string of several hundred service stations in Europe, oil and gas drilling operations in 14 countries, chemical producers, the Walker Manufacturing Co., which makes auto parts, J.I. Case, a farm and construction equipment manufacturer, and Hegg-blade-Marguleas-Tenneco, one of the country's largest brokers of fresh fruits and vegetables. The company has acquired 26 firms in the past seven years alone. Yet unlike many other conglomerates, which overextended in the late '60s, Tenneco seems to be absorbing its purchases easily. Last year after-tax profits rose 17% to $184 million, and Tenneco's after-tax earnings of $46.6 million in the first quarter of 1972 were 18% higher than a year ago.

Freeman, 63, joined Tenneco in the company's infancy and soon became a favorite of Founder Symonds. Since his elevation to chairman last year, he has logged some 300,000 miles of travel keeping track of Tenneco's operations. "I trust everyone--it's just that I want to see things for myself," he says wryly in his chain-smoker's husky voice. These days Freeman finds little opportunity to visit his 600-acre ranch near Houston, where he keeps his collection of bronze equestrian miniatures.

For all its acquisitive spirit, Tenneco has gained something of a reputation as a slow-paced outfit looking forward to a comfortable if unexciting middle age. Its stock, which last week sold at 23 1/2, has barely changed price since the early '60s. Now, if the natural-gas and power-station projects are an indication, Tenneco's future will be anything but dull.

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