El Paso

The El Paso Political Power Rise of Paul L Foster – Part 1

The book, Who Rules El Paso? argued that Paul L. Foster and Woody Hunt are the power brokers of El Paso. To understand the evolving political power center of El Paso, the El Paso Politics is exploring the different players that are involved in El Paso’s evolving political power centers. As previously reported by the El Paso Politics, political power in El Paso emanated from about a dozen banks soon after the arrival of the railroad that propelled El Paso’s growth. From the dozen, or so banks, the political power whittled down to two banks over time until it centered around Jonathon Rogers.

From Rogers, a new political power base in El Paso began to evolve. The two most recently named political power brokers are Woody Hunt and Paul Foster. In today’s article, the El Paso Politics explores the rise of Foster in El Paso.

In 1929, Texaco built an oil refinery in El Paso. Texaco operated the refinery until 1984, when it spun off “most of its refineries, including the El Paso Refinery.” The Texaco subsidiary that ended up with El Paso Refinery was named Texaco Refining and Marketing, Inc. It later changed its name to TRMI Holding, Inc. In 1986, TRMI sold the refinery to El Paso Refinery, L.P. Through various company transfers the refinery finally ended at El Paso Refining, Inc. [2]

Although there were two oil refineries that were operating near each other in 2000, most El Pasoans considered them to be the Chevron refinery. One was owned and operated by El Paso Refining and the other by Chevron. Separating the two was “economically infeasible”. In 1992, El Paso Refining filed for bankruptcy. [6] Paul Foster lost his job in 1993 because of the bankruptcy, which forced the refinery to close. [7]

Paul Foster Hired to Market Oil

Paul Foster, who was born in Snyder, Texas, graduated from Baylor University in 1979. [7, 8] In 1986, Foster became a certified public accountant. [7]

As the result of the bankruptcy, Refining Holding Co. was formed by three creditors of the defunct El Paso Refining. The three creditors were CIT Group, John Hancock Mutual Life Insurance Co. and New York Life Insurance Co. Refining Holding entered into an agreement with Chevron in 1993 that tied both refineries together. [7]

Under the agreement, one-quarter of “about 25,000 barrels a day” of oil produced by Chevron and the creditor-owned refinery went to the creditor’s holding company. [7] To market the creditor’s oil, a company was formed. It was the Border Refining & Marketing Co. Foster was hired to manage it. [7] Foster was named Vice President and General Manager of Border Refining [5] but, according to the owner, Foster’s only involvement in the company was the marketing of the creditor oil. [7]

Malcolm Turner, president of Dallas-based Turner, Mason and Co., hired Paul Foster to market the holding company’s petroleum because Foster was “unemployed and was familiar with the El Paso and Arizona (petroleum) markets,” Turner told the newspaper. Turner owned Border. [7]

Four years later, Foster left Border. Turner told the El Paso Times in 2001 that his view of Paul Foster “soured” after Foster left the company. Turner added that he “found out things about him [Foster] later that were disappointing.” [7]

Paul Foster Launches Western Refinery

In 1997, Foster founded Western Refining in Dallas, along with Jeff Stevens, Scott Weaver and Ralph Schmidt. [1] Foster was named President and Chief Executive Officer. [5] [7] Western Refining “was formed to manage a portion of the crude oil supply for, and, the refined product produced by, the legacy Texaco refinery located in El Paso.” [1] The funding sources for Western Refining did not come from Foster. According to a statement Foster gave to the El Paso Times in 2001, Foster said he had “no significant money” when he embarked on building Western Refining. Foster told the newspaper that “he was able to put together financing from undisclosed sources”. [7]

In 2000, he assumed full ownership of Western Refining. [5]

Foster Rises To Political Power

In 2002, Paul Foster emerged as a leading voice for the public-private partnership funding for the renovations of the Plaza Theater. In 2003, Foster was also part of an effort to get funding for an El Paso medical school. Texas Tech University System Board of Regents J. Robert Brown, Ted Houghton, Woody Hunt, Rick Francis and Foster were lobbying then Texas governor Rick Perry for $12 million from Perry’s recently created $295 million enterprise fund to fund an El Paso medical school. [9]

In 2004, Jonathon Rogers, Chairman of the Board for Bank of the West announced that Paul Foster had been elected to the bank’s board of directors. [4] The El Paso Politics has chronicled how the political power center of El Paso rose from several banks eventually consolidating on one individual – Jonathon Rogers in the 1990’s.

Foster was then involved in another political controversy in 2009 when he was publicly feuding with his brother-in-law, Artemio de la Vega, over tax incentives for building Las Palmas Marketplace in the vacant Farah building along Interstate 10.

However, Paul Foster, during this time, was also cultivating a rich philanthropy public face by donating substantially to projects, including to the El Paso medical school and contributing heavily on state political campaigns. Foster was also investing substantial amounts in El Paso downtown properties.

It was the downtown investments that figured substantially in the public controversies involving Foster that led to Foster’s increased in involvement in local politics.

On May 31, 2007, Western Refinery completed its purchase of Giant Industries, Inc. making it the fourth largest publicly traded independent refiner and marketer in the country. [3] Western and Giant had announced the merger on August 26, 2006. However, on April 10, 2007, the Federal Trade Commission objected to the merger and filed suit against Western Refining and Paul Foster. The FTC argued that the merger would stifle competition. [10] The FTC lost in court and the sale was finalized.

In June of 2017, Tesoro Corp., a San Antonio refiner, purchased Western Refinery for $5.8 billion. Tesoro renamed itself Andeavor in August 1, 2017. [11]

However, it was the state political contributions and board appointments that brought Woody Hunt and Paul Foster closer together. Their work in Texas politics allowed them to begin consolidating their El Paso political power base. The El Paso Politics will explore how their political power base evolved and who the other players are in upcoming articles.

Footnotes:

  1. Franklin Mountain Capital website accessed on September 23, 2020. [https://www.franklinmountaincapital.com]
  2. “Refining Holding Co. v. TRMI Holdings, Inc. (In re El Paso Refinery, LP),” United States Court of Appeals, Fifth Circuit No: 01-50107, August 22, 2002.
  3. “Western Refining Completes Acquisition of Giant Industries,” Western Refinery Press Release, May 31, 2007.
  4. “Western Refining CEO picked for bank board,” El Paso Times, May 2, 2004.
  5. “Form S-1, Amendment No. 1, Registration Statement Under Securities Act of 1933,” Western Refining, Inc., November 3, 2005.
  6. Vic Kolenc, “Economies of scale keep plants together,” El Paso Times, March 4, 2001.
  7. Vic Lolenc, “New refinery owner wants Chevron, too,” El Paso Times, March 4, 2001.
  8. Regina Dennis, “Baylor alumnus gives record $35 million gift,” Waco Tribune-Herald, June 5, 2013.
  9. Gary Scharrer, “El Pasoans push more for border med school,” El Paso Times, June 21, 2003.
  10. “Federal Trade Commission v. Paul L. Foster, et al.,” United States District Court, D. New Mexico, CIV 07-352 JB/ACT, May 29, 2007.
  11. Vic Kolenc, “Tesoro completes $5.8 billion purchase of Western Refining,” El Paso Times, June 2, 2017.

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