Kinder Morgan Announces Final Investment Decision on Trans Mountain Pipeline Pending IPO Outcome

Researched by Industrial Info Resources (Sugar Land, Texas)--Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) last week announced that it had made a final investment decision on the expansion of the Trans Mountain Pipeline in Canada. The expansion will increase the pipeline's capacity from 300,000 barrels per day (BBL/d) of crude oil to 890,000 BBL/d, providing producers in Alberta's oil sands more access to Canada's west coast for export, as well as increased access to the United States.

In a press release, Kinder Morgan said it plans to kick off construction construction in September this year, with completion expected in December 2019. The process of starting the project is contingent upon the successful initial public offering (IPO) of Kinder Morgan Canada Limited, Kinder Morgan's planned spinoff of some of its Canadian assets. The IPO is set to raise approximately C$1.75 billion ($1.3 billion) by selling 102.9 million shares in Kinder Morgan Canada with a share price of C$17 ($12.63) each and is scheduled to occur this week.

The crude oil to be carried on the pipeline is 80% committed through 15- and 20-year shipper commitments. Canada's National Energy Board requires that the remaining 20% be reserved for spot volumes.

Accompanying the 715-mile pipeline and pump stations are crude oil tank additions and a dock addition along the route. In Burnaby, British Columbia, in the Vancouver metropolitan area, the company plans to add oil tanks and an addition to the crude export terminal dock. Three new berths will be constructed to accommodate Aframax-class oil tankers, which are oil tankers smaller than 120,000 metric tons that can be used in a majority of the world's ports. In addition, more than 4 million barrels of oil storage are planned to be added in Burnaby. On the receiving end of the pipeline, in Edmonton, Alberta, Kinder Morgan is planning to expand crude oil storage capacity by 1.3 million barrels to a total of 9.25 million barrels.

Industrial Info is tracking $22 billion in active Kinder Morgan projects. The Trans Mountain Pipeline has a total investment value C$7.4 billion ($5.5 billion).

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