Kinder Morgan's $20 Billion of Projects Point to Hopes, Hurdles Facing U.S. Natural Gas Pipelines

Researched by Industrial Info Resources (Sugar Land, Texas)--Kinder Morgan Incorporated (NYSE:KMI) (Houston, Texas) is reaping rewards from its investment in the Permian Basin. The midstream giant reported a 26% jump in profits for the fourth quarter of 2019, which it attributed to sharp gains in Permian gas takeaway via its Gulf Coast Express pipeline, which started operations in September. But that success doesn't guarantee that at least one of Kinder Morgan's projects in the region will kick off on time. Industrial Info is tracking about $20 billion worth of active projects from Kinder Morgan, more than $13 billion of which is attributed to U.S.-based projects.

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

The Permian Pass Pipeline has been delayed due to permitting issues and scaled-down activity from producers, according to Kinder Morgan executives. The estimated $2 billion mainline would run from the Permian Basin to the Texas Gulf Coast, carrying about 2 billion cubic feet per day. For more information, see Industrial Info's project report.

"We're still working with customers on ... Permian Pass," said Steven Kean, the chief executive officer of Kinder Morgan, in a quarterly earnings-related conference call. "This remains a work in progress. It's not in the backlog. We believe, eventually, this pipeline is needed, but probably not as soon as we thought this time last year."

Construction began last summer on one of Kinder Morgan's most ambitious projects: The Permian Highway Pipeline, which is designed to carry up to 2.1 billion cubic feet per day of natural gas roughly 430 miles, from the Waha Hub in the Permian Basin, to the Texas Gulf Coast. With early-stage construction underway on the some portions of the project, Kinder Morgan is preparing to pick up the pace before the end of March by kicking off work on the estimated $1.6 billion mainline from the Waha Hub in Pecos County to Katy, Texas, as well as a series of compressor stations, each valued at $100 million, near Fort Stockton, near Menard, in Menard and near Fredericksburg, Texas.

The full 2.1 billion cubic feet per day of capacity is fully subscribed under long-term, binding agreements. Allen Fore, vice president of public affairs for Kinder Morgan, told the Midland Reporter Telegram in late December that 99% of land acquisitions had been completed and "we are in the final stages of the permitting process." The full Permian Highway Pipeline is expected to begin service in the first quarter of 2021. For more information, see Industrial Info's project reports on the mainline and compressor stations near Fort Stockton, near Menard, in Menard and near Fredericksburg.

In neighboring Louisiana, Kinder Morgan requested and is expecting to receive approval from the U.S. Federal Energy Regulatory Commission (FERC) for its estimated $145 million Acadiana Project in Eunice, which would add a trio of compressor gas packages to a compressor station, boosting natural gas capacity on the related pipeline by 894 million standard cubic feet per day. The serviced line connects other pipeline systems, via interconnection, with Sabine Pass Liquefaction LLC's liquefied natural gas (LNG) export terminal in Cameron Parish, Louisiana. For more information, see Industrial Info's project report.

Kinder Morgan subsidiary Southern LNG Incorporated completed and started operations at its Elba Island LNG production and export facility in Georgia, in October, following delays that prevented the planned startup in March. The facility, the sixth of its kind in the U.S., announced its first commercial shipment in December and is in the final construction states on a $500 million second train that will convert about 140 million standard cubic feet per day of natural gas into 1.5 million metric tons per year of LNG, bringing the facility's full production capacity to 4 million metric tons per year. It is supported by long term contracts with Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands). For more information, see Industrial Info's project report.

In addition to the above-mentioned capital-spending projects, Kinder Morgan is at work on nearly $130 million in maintenance-related projects across the U.S. and Canada. Click here for a list.

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/.