Kinder Morgan Sees High Demand for U.S. Natural Gas Infrastructure

Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

Summary

Global supplies of liquefied natural gas (LNG) are under pressure because of damage to infrastructure in Qatar during the war. In its second-quarter earnings report, Kinder Morgan said demand for that infrastructure is soaring.

Kinder Sees Value in Natural Gas

Riding the momentum from a strong second quarter, Kinder Morgan Incorporated said it was bolstered by increasing demand for natural gas infrastructure and LNG exports.

According to Industrial Info Resources data, there are 176 active U.S. Kinder Morgan projects with a total investment value of nearly $18.3 billion.

The largest project is the proposed Pascagoula terminal for exports of LNG from Louisiana.

Led by Gulf LNG Energy, the plant would have a design capacity of 5.75 million metric tons per annum of gas in the liquid form if it's completed as planned.

Amid a period of tight supplies, driven by the war in the Middle East, Richard Kinder, the company's executive chairman, said demand for gas infrastructure was on the rise during the second quarter.

"Increasing LNG exports, rising power demand, and industrial expansion make our existing highly-utilized assets more valuable and create significant opportunities for investment across our footprint," he said in a statement on Wednesday.

Kinder already said earlier this year that war-related outages in the Middle East were impacting the sector, though the United States continued to do much of the heavy lifting to shore up global supplies.

Several liquefaction units, or trains, in Qatar were knocked offline by Iranian missile strikes in March. Some 12.8 million tons of LNG per year may be offline for as long as five years due to damage that could cost QatarEnergy $26 billion to repair.

Industrial Info Resources data show those 12.8 million tons represent almost 20% of the 77 million metric tons per annum (MTPA) of LNG export capacity from the overall Ras Laffan North and Ras Laffan South facilities.

At home, Kinder Morgan is working on an optimization project at the Elba Island LNG export terminal in Savannah, Georgia. The company is constructing a new condensate plant and installing three new liquid nitrogen vaporizers, which are expected to boost the facility's liquefaction capacity by 400,000 metric tons per year to 2.9 MTPA.

Shell plc, which emerged as a natural gas powerhouse with the 2015 merger with BG Group, said earlier this year the conflict in the Middle East has created widespread supply shocks across the energy sector, but the LNG industry has shown its ability to withstand the pressure.

"The ramp up of new liquefaction facilities in North America, improved performance at existing plants and slower Asian imports of LNG have partially offset the impact of reduced supply from the Middle East," Shell's report read.

Kinder Morgan Has Huge Gas-Project Backlog

Kinder Morgan added that it was backing the industry surge with capital expansions. Some $660 million in expansion projects were placed into service during the second quarter, including the Gulf Coast Express pipeline that will send gas from the Permian shale basin to the South Texas coast.

"Natural gas projects account for approximately 92% of our project backlog, and more than 60% of the backlog is associated with projects supporting power generation and local distribution company demand," Kinder said. "Even beyond the backlog, we continue to see strong interest from our customers in developing additional natural gas infrastructure."

The United States, the world leader in exports of LNG, helped support global energy security during the initial stages of the Russian invasion of Ukraine in 2022, when global sanctions on Moscow curtailed its ability to send natural gas to European economies.

U.S. LNG exports are on pace to increase 8.1% annually from 2026 levels.

Kinder Morgan, meanwhile, reported net income for the second quarter of $867 million, an all-time high for the period.

By the Numbers

• 92% of Kinder's project backlog tied to natural gas
• 8.1% annual increase in U.S. LNG exports to 2027

Key Takeaways

• Gas is king, according to Kinder Morgan.
• Global supplies are limited by the war, but there's a huge project backlog.

About Industrial Info Resources

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).