Kinder Morgan Inc. (KMI), the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure developer, reported lower second-quarter net profits amid steady cash flow as it responded to volatile market conditions.
The company said profits declined to $586 million during the three months to the end of June from $635M in the second quarter of 2022.
“The KMI board and management team are fully committed to the use of our strong cash flow to benefit our shareholders,” said Executive Chairman Richard D. Kinder.
“We focus on maintaining a strong balance sheet while internally funding capital projects that produce returns well in excess of our cost of capital - including projects that are part of the ongoing energy evolution,” the Chairman stated,
KMI’s distributable cash flow amounted to $1.07 billion compared with $1.17Bln in the prior-year quarter.
Asset values
“KMI once again saw the value of its existing natural gas transportation and storage assets that are able to respond to volatile market conditions caused by extreme weather events and an increasingly intermittent resource-based electric grid,” said Chief Executive Steve Kean.
“Our 700 billion cubic feet of operated natural gas storage capacity is particularly useful in back-stopping intermittent renewable electricity resources,” Kean explained.
“Financial contributions from the Natural Gas Pipeline business segment were up relative to the second quarter of 2022 and ahead of budget,” added the CEO.
“Our Terminals business segment also over-performed relative to both the second quarter of 2022 and budget,” stated Kean.
KMI President Kim Dang said that the performance of the Natural Gas Pipelines business improved in the second quarter of 2023 versus the prior-year quarter.
Dang cited higher contributions from Midcontinent Express Pipeline, the Texas Intrastate system, El Paso Natural Gas (EPNG), the Stagecoach asset and the Tennessee Gas Pipeline (TGP), partially offset by lower contributions from the company's Eagle Ford gathering system assets.
Natural gas transport volumes were up 5 percent year-over-year, primarily from increases on EPNG due to returning a pipeline to service and the retirement of a coal-fired power plant.
Texas Intrastate
KMI said that the Texas Intrastate system benefited from a variety of existing shippers and new contracts, partially offset by reduced volumes on the Tennessee Gas Pipeline.
“Natural gas gathering volumes were up 19 percent from the second quarter of 2022 across most of our systems,” Dang explained.
Among several new projects, KMI said that the two-phase $678M Evangeline Pass venture will include modifications and enhancements to portions of the TGP and Southern Natural Gas systems in Mississippi and Louisiana, enabling the delivery of the full FERC-certificated project volumes to Venture Global’s proposed Plaquemines LNG facility.
“Construction activities are underway for phase 1 of the project, which includes general operational upgrades enabling TGP to provide approximately 900 million cubic feet per day of natural gas transportation capacity to Venture Global’s facility,” said KMI.
Dang added that contributions from the Products Pipelines business segment were down compared with the second quarter of 2022, saying this was largely due to the impact in the prior-year period of sharply rising commodity prices.
“The crude and condensate business was also impacted by lower re-contracting rates in the Eagle Ford. Total refined products volumes were relatively flat compared to the second quarter of 2022,” Dang said.
