Kinder Morgan Puts Heavy Focus on Oil Sands Support Projects

Researched by Industrial Info Resources (Sugar Land, Texas)--Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) has more than $8 billion in active capital projects, according to Industrial Info's data. The vast majority--roughly three-quarters--is in the Oil & Gas Transmission Industry. Within this majority, KMI is heavily involved in transporting diluents and condensates. Both are used to lower the viscosity of the highly viscous crude known as bitumen, which is produced in the Alberta oil sands. Without diluents in the mix, bitumen would not flow easily enough to be transported.

With the heavy development of in-situ and steam-assisted gravity drainage oil sands projects in Alberta, the market for condensate and diluents has grown, and Kinder Morgan is pouring its efforts into serving that market. Currently, Industrial Info is tracking more than $11 billion in oil sands development projects. One of the biggest projects on KMI's books is the Cochin pipeline reversal. Post-reversal, this pipeline will ship up to 95,000 barrels per day (BBL/d) of condensate from Kankakee, Illinois, to Fort Saskatchewan, Alberta. The condensate to be shipped is likely to come from the Eagle Ford Shale in south Texas.

Kinder Morgan is also working on an expansion to its Kinder Morgan Crude and Condensate (KMCC) system that would take Eagle Ford condensate from producers in the play to the Houston area, where it could then be shipped up to Illinois via the Explorer Pipeline, which is owned and operated by Explorer Pipeline Company (Tulsa, Oklahoma).

The KMCC system delivers both crude and condensate to the Houston area. Originally completed in June 2012, it has a capacity of 300,000 BBL/d. There are plans to expand the KMCC system with an extension and laterals. One such lateral is nearing completion now: The Sweeny Lateral project is set to begin commissioning next week.

The new tanks built at KMI's DeWitt Pump Station will be commissioned next week. The oil used in their commissioning will be sent down the line to the new tanks at the Wharton facility, which is under construction, and that station will be commissioned next. This operation is set to continue into December, when the line will be placed in service. KMI is also currently building a new condensate splitter in the Houston Ship Channel that can service some of this incoming volume.

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