Kinder Morgan's $18 Billion in U.S. Projects Cover Permian, East Coast Buildouts

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Researched by Industrial Info Resources (Sugar Land, Texas)--Kinder Morgan Incorporated's (NYSE:KMI) (Houston, Texas) natural gas pipeline business is fueling the company's expansion plans, with two high-profile midstream projects in the Permian Basin now possibly welcoming a third. The oil and gas midstream giant notched up a 14% increase in transported natural gas volumes during the first quarter. Industrial Info is tracking nearly $24 billion in active projects worldwide involving Kinder Morgan, including nearly $18 billion in the U.S.

Click on the image at right to see a graph detailing Kinder Morgan's active U.S. projects, by project type.

Kinder Morgan is ahead of other major midstream companies in facing one of the industry's biggest domestic challenges: the rising demand for takeaway capacity in the Permian Basin. Industry leaders and government officials are eager to see any kind of pipeline construction in the booming shale play, where a glut in natural gas production has caused regional prices to plunge. In a quarterly earnings-related conference call, Steven Kean, the chief executive officer of Kinder Morgan, said the company believes pipeline demand in the Permian could grow by 2 billion cubic feet per day each year over the next few years.

In the fourth quarter, Kinder Morgan expects to see its Gulf Coast Express pipeline begin service, transporting up to 1.98 billion cubic feet per day of gas from the Permian Basin to the Agua Dulce, Texas, area. Roughly one year later, its Permian Highway Pipeline is expected to begin transporting a similar amount from the Permian's Waha Hub to the Texas Gulf Coast, some of which will be exported to Mexican markets. For more information on Gulf Coast Express, see January 18, 2019, article - Kinder Morgan's Pending Kickoffs for Elba Island LNG, Permian Pipeline Among $24 Billion in Projects.

The 430-mile Permian Highway Pipeline is estimated to total $2 billion in investment value, including the $900 million mainline from near Fort Stockton to Katy, which is expected to begin construction around the time Gulf Coast Express begins service. It will be supported by at least four compressor stations, each valued at $75 million, to be located near Fort Stockton, in Sonora, in Ozona and near Columbus, Texas. For more information, see Industrial Info's project reports on the pipeline and the Fort Stockton, Sonora, Ozona and Columbus stations.

"Our customers are anxious to have us get their gas out of the Permian, so they can also get their oil and NGLs [natural gas liquids] out," Kean said in the conference call. "Both are secured by long-term contracts, and both are in execution stage." He added: "Combined they bring 4 billion cubic feet a day of incremental gas to a system that moves about 5 billion cubic feet a day today. Those projects will bring opportunities for downstream expansion and optimization, as we find homes for that incremental gas through our connectivity with LNG [liquefied natural gas] facilities, Mexico exports, utility demand, and Texas Gulf Coast industrial and petrochemical demand."

Kean also acknowledged that there are "some discussions ongoing" for a third pipeline in the Permian, although "there's nothing to announce--and of course it's not the backlog, because we're not under contract or anything."

Also in the Lone Star State, Texas COLT LLC, a joint venture among Kinder Morgan, Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta) and Oiltanking North America (Houston), is proposing to construct, own and operate a deepwater port terminal in the Gulf of Mexico to export domestically produced crude oil. The complex would include an estimated $100 million onshore storage terminal in Jones Creek, which would hold up to 15 million barrels of storage and be capable of loading 2 million-barrel VLCCs (very large crude carriers, or "supertankers") in about 24 hours. For more information, see Industrial Info's project report.

Kinder Morgan also is proposing the Roanoke Expansion Project to increase capacity on the existing Plantation Pipeline system, which delivers roughly 700,000 barrels per day of gasoline, jet fuel, diesel and biodiesel to 90 shipper delivery terminals from origin points in areas surrounding Baton Rouge, Louisiana, and Collins, Mississippi, to an area near Roanoke, Virginia. The full expansion is expected to be operational about one year from now. Among its major components:

• $15 million in additions at the No. 2 Refined Products Terminal in Greensboro, North Carolina; see project report
• $15 million in additions at a pump station in Martinsville, Virginia; see project report
• $5 million rack pump addition at a refined products terminal in Roanoke, Virginia; see project report
• $4 million in additions at the a pump station in Roanoke; see project report

Kinder Morgan's net income for first-quarter 2019 stood at $556 million, a 14.6% increase from the same period last year.

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 https://www.industrialinfo.com/.