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Released October 18, 2019 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Midstream operator Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) has plans afoot. In the just-passed third quarter, the company announced that it would be selling its 70% interest in Canadian branch, Kinder Morgan Limited (KML) (TSX:KML), (Calgary, Alberta) as well as the U.S. portion of the Cochin multi-product pipeline system to Pembina Pipeline Corporation (NYSE:PBA) (Calgary) for more than $1.5 billion. Kinder Morgan plans to use the funds to reduce debt, but also "to invest in attractive projects," according to Chief Executive Officer Steve Kean. The company's backlog of projects is situated squarely in the U.S. natural gas sector. Industrial Info is tracking more than $15 billion in active Kinder Morgan projects.
It is unsurprising that Kinder Morgan wants to abandon its share of KML, which was largely created to facilitate the Trans Mountain crude oil pipeline expansion from Alberta to British Columbia. The project would expand the pipeline's capacity from 300,000 barrels per day (BBL/d) to 890,000 BBL/d. However, the project faced stiff opposition from environmentalists and First Nations groups, and last year the pipeline was sold to the Canadian government. For more information, see Industrial info's project reports on the Alberta and British Columbia segments of the pipeline expansion.
As Kinder Morgan gives up on oil pipeline aspirations in Canada, it sees the future in U.S. natural gas, in both pipelines and liquefied natural gas (LNG) production facilities. In the company's third-quarter earnings conference call, Executive Chairman Rich Kinder touted the future of the commodity, saying that the company moved about 40% of all natural gas in the U.S. through its pipelines and that the Kinder Morgan continued to have a positive outlook on the future of natural gas. Kinder said, "Incidentally, that positive outlook was reinforced in the September report of the U.S. Energy Information Administration, which projects that natural gas consumption will increase by 40% between now and 2050, even in a case where renewable energy rises dramatically." With this in mind, the company is wrapping up existing natural gas projects and entering new ones.
Among the projects wrapped up in the just-passed quarter was the first production unit at the company's Elba Island LNG production and export facility in Georgia. The facility will have a total of 10 production units to produce a combined 4 million tons per year of LNG for export. Chief Executive Kean said, "The remaining nine units are on the island, and we are expected to place three more in service this year, with the remaining six coming online next year in the first half of the year." For more information, see Industrial Info's project reports on units 1-6 and units 7-10.
Also completed in the quarter was the Gulf Coast Express Pipeline, a natural gas pipeline running from the Permian Basin to the Texas Gulf Coast. Kean said, "We also placed Gulf Coast Express, or GCX, in service in September. This project was a few days early. It's full. We need another one. The market needs another one." For more information, see Industrial Info's project reports on Spread 1, Spread 2 and spreads 3 and 4.
Among these other pipelines in development is Kinder Morgan's Permian Highway natural gas pipeline, which also will deliver Permian gas to the Gulf Coast. The 450-mile pipeline will transport up to 2 billion cubic feet (Bcf) per day of natural gas from the Waha Hub to Katy, Texas. Speaking of the project, Kean said, "We have about 85% of the right-of-way acquired and currently expect that we're going to timely acquire the easements we need. We've also made good progress on the permitting front. However, we are still obtaining some of the regulatory authorizations that we need, and that has progressed a little more slowly than what we put in our plan. ... That means in order to do efficient construction, we'll kick off the construction a little bit later, and that means that instead of a fourth-quarter 2020 in-service, we currently anticipate early 2021." For more information, see Industrial Info's project reports on the Fort Stockton and Coyanosa sections of the pipeline.
However, the project may be facing other delays. On Wednesday, the Texas cities of Austin, San Marcos and Kyle joined two groups in filing a notice of their intent to sue regarding the path of the pipeline in order to protect various species of salamander, fish and beetles as well as an endangered songbird. Despite this impending hurdle, Kinder Morgan is already considering a third natural gas pipeline. Kean said, "We are still working with customers on a third 2 Bcf-a-day pipeline called Permian Pass. This is a work in progress. It's not in the backlog at this point. ... With a total of three new 2 Bcf-a-day projects coming online over the 2019 to 2021 period, both of ours as well as [a] third-party pipeline, the Permian Pass Pipeline may not be needed in 2022."
Among Kinder Morgan's other big-ticket projects is the Gulf LNG facility in Pascagoula, Mississippi, which also reached some milestones in the third quarter. In July, the U.S. Federal Energy Regulatory Commission gave permission for construction of the facility, and in August, the U.S. Department of Energy granted approval for it to export LNG to countries without a free trade agreement with the U.S. The facility would produce 11.5 million metric tons per year of LNG once both trains are fully operational. Kinder Morgan has not made a final investment decision on the project. For more information, see Industrial Info's project reports on Train 1 and Train 2.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
It is unsurprising that Kinder Morgan wants to abandon its share of KML, which was largely created to facilitate the Trans Mountain crude oil pipeline expansion from Alberta to British Columbia. The project would expand the pipeline's capacity from 300,000 barrels per day (BBL/d) to 890,000 BBL/d. However, the project faced stiff opposition from environmentalists and First Nations groups, and last year the pipeline was sold to the Canadian government. For more information, see Industrial info's project reports on the Alberta and British Columbia segments of the pipeline expansion.
As Kinder Morgan gives up on oil pipeline aspirations in Canada, it sees the future in U.S. natural gas, in both pipelines and liquefied natural gas (LNG) production facilities. In the company's third-quarter earnings conference call, Executive Chairman Rich Kinder touted the future of the commodity, saying that the company moved about 40% of all natural gas in the U.S. through its pipelines and that the Kinder Morgan continued to have a positive outlook on the future of natural gas. Kinder said, "Incidentally, that positive outlook was reinforced in the September report of the U.S. Energy Information Administration, which projects that natural gas consumption will increase by 40% between now and 2050, even in a case where renewable energy rises dramatically." With this in mind, the company is wrapping up existing natural gas projects and entering new ones.
Among the projects wrapped up in the just-passed quarter was the first production unit at the company's Elba Island LNG production and export facility in Georgia. The facility will have a total of 10 production units to produce a combined 4 million tons per year of LNG for export. Chief Executive Kean said, "The remaining nine units are on the island, and we are expected to place three more in service this year, with the remaining six coming online next year in the first half of the year." For more information, see Industrial Info's project reports on units 1-6 and units 7-10.
Also completed in the quarter was the Gulf Coast Express Pipeline, a natural gas pipeline running from the Permian Basin to the Texas Gulf Coast. Kean said, "We also placed Gulf Coast Express, or GCX, in service in September. This project was a few days early. It's full. We need another one. The market needs another one." For more information, see Industrial Info's project reports on Spread 1, Spread 2 and spreads 3 and 4.
Among these other pipelines in development is Kinder Morgan's Permian Highway natural gas pipeline, which also will deliver Permian gas to the Gulf Coast. The 450-mile pipeline will transport up to 2 billion cubic feet (Bcf) per day of natural gas from the Waha Hub to Katy, Texas. Speaking of the project, Kean said, "We have about 85% of the right-of-way acquired and currently expect that we're going to timely acquire the easements we need. We've also made good progress on the permitting front. However, we are still obtaining some of the regulatory authorizations that we need, and that has progressed a little more slowly than what we put in our plan. ... That means in order to do efficient construction, we'll kick off the construction a little bit later, and that means that instead of a fourth-quarter 2020 in-service, we currently anticipate early 2021." For more information, see Industrial Info's project reports on the Fort Stockton and Coyanosa sections of the pipeline.
However, the project may be facing other delays. On Wednesday, the Texas cities of Austin, San Marcos and Kyle joined two groups in filing a notice of their intent to sue regarding the path of the pipeline in order to protect various species of salamander, fish and beetles as well as an endangered songbird. Despite this impending hurdle, Kinder Morgan is already considering a third natural gas pipeline. Kean said, "We are still working with customers on a third 2 Bcf-a-day pipeline called Permian Pass. This is a work in progress. It's not in the backlog at this point. ... With a total of three new 2 Bcf-a-day projects coming online over the 2019 to 2021 period, both of ours as well as [a] third-party pipeline, the Permian Pass Pipeline may not be needed in 2022."
Among Kinder Morgan's other big-ticket projects is the Gulf LNG facility in Pascagoula, Mississippi, which also reached some milestones in the third quarter. In July, the U.S. Federal Energy Regulatory Commission gave permission for construction of the facility, and in August, the U.S. Department of Energy granted approval for it to export LNG to countries without a free trade agreement with the U.S. The facility would produce 11.5 million metric tons per year of LNG once both trains are fully operational. Kinder Morgan has not made a final investment decision on the project. For more information, see Industrial Info's project reports on Train 1 and Train 2.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
