LNG

Kinder Morgan Inc. (KMI), the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure operator and developer, reported solid earnings and revenues for the fourth quarter and full year as pipeline projects and expansions advanced.

Kinder Morgan Inc. (KMI) the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure developer, increased first-quarter net income and cash flow with more natural gas from the US Gulf Coast shale-gas basins.

The company reported first-quarter net income attributable to KMI of $679 million compared with $667M in the first three months of 2022.

Cash flow for the quarter from operations amounted to $1.33 billion versus $1.08Bln in the prior-year quarter.

“Our natural gas pipeline network is composed of some 70,000 miles of interstate and intrastate pipelines that move about 40 percent of US natural gas production, along with 700 billion cubic feet of natural gas storage, comprising 15 percent of total US natural gas storage capacity,” explained Steve Kean, KMI Chief Executive.

“While the US Congress debates much-needed infrastructure permitting reform, the system we operate under today makes it difficult to permit new natural gas pipelines in much of the country,” Kean stated.

Value added

“That in turn increases the value of our existing natural gas pipeline systems, which results in a favorable recontracting environment,” the CEO added.

“With a large portion of our existing natural gas pipeline network in Texas and Louisiana, we also benefit from our ability to expand to meet growing demand in the most infrastructure-friendly region of the country,” Kean said.

KMI said it was continuing to execute expansions of its existing natural gas pipeline systems.

“During the first quarter we made good progress on two such expansions. One will add approximately 550 million cubic feet per day of capacity to the Permian Highway Pipeline (PHP) system through additional compression with minimal new pipeline build,” said KMI.

“The other will increase capacity and reliability of services to Con Edison, a key business partner, by upgrading and adding compression facilities on the Tennessee Gas Pipeline (TGP) system in a critical region of the country,” the company added.

Gas gathering

KMI President Kim Dang gave an overview and praised the gas gathering systems for keeping the natural gas business on track.

“The Natural Gas Pipelines business segment’s financial performance was up in the first quarter of 2023 relative to the first quarter of 2022, primarily on higher contributions from our Texas Intrastate system, from Midcontinent Express Pipeline, from El Paso Natural Gas (EPNG) and from most of our gathering system assets,” explained Dang.

“Natural gas transport volumes were up 3 percent compared to the first quarter of 2022, primarily from increases on EPNG due to returning a pipeline to service, cooler weather, and the retirement of a coal-fired power plant,” she added.

“Natural gas gathering volumes were up 18 percent from the first quarter of 2022 primarily from our Haynesville and Eagle Ford systems,” Dang said.

Moody's Investors Service, the US credit ratings agency, said that increasing global demand for natural gas is a growth opportunity for US LNG producers, though delivery depends more on the timely construction of natural gas pipeline infrastructure to support new US LNG supplies.

Moody’s said in a research note than Europe's energy crisis, led by the cut-off of Russian supplies to Germany, should keep the LNG market tight until 2025-2026, supporting cash flow generation for US LNG producers.

The report also noted the potential recovery in Chinese domestic demand in 2023 that will bring more competition to the market.

“European demand might accelerate LNG capacity expansion in the US, but that would require long-term offtake commitments from European buyers, even as they are working to reconcile new energy security needs,” said Moody’s.

Most of the announced US LNG growth projects through 2025-2026 have long-term commitments from Asian buyers, the original source of the US LNG boom since the mid-2010s, and international commodity traders stepped up their LNG purchases in 2022.

However, LNG producers require long-term offtake commitments to underpin financing of new LNG infrastructure projects.

Capital allocation

The report stated that LNG projects should in turn spur further capital allocation for constructing new pipeline capacity to connect the largest US gas producing regions and new export infrastructure.

These new pipeline projects will need to win permitting approvals from the US Federal Energy Regulatory Commission.

“Today's peak nameplate capacity of nearly 14 billion cubic feet per day reflects only about one-quarter of the capacity of all announced LNG projects, including several with partial or full FERC approval and 10 bcf per day under construction,” the report added.

The LNG projects include the Corpus Christi plant expansion in Texas and the Port Arthur project as well as others on the Mississippi River and the Brownsville Ship Channel.

Moody’s noted that the Marcellus and Utica shale basins together contributed roughly one-third of US dry gas production, though limited pipeline takeaway capacity has constrained growth for those regions.

In the fourth quarter of 2022, US dry natural gas production stood at 100 bcf, exceeding year-earlier production by 3 percent.

Moody’s said that this was largely due to increased drilling and pipeline expansions in the Haynesville Shale and rising volumes of associated natural gas delivered by oil producers in the Permian Basin.

Several large US LNG projects now under construction will add significant new capacity by the mid-2020s.

Several of the US pipeline giants have already announced projects that will supply gas to LNG infrastructure. They include Williams Company’s Louisiana Energy Gateway, Energy Transfer’s Gulf Run and Kinder Morgan’s Permian Highway Pipeline expansion.

Kinder Morgan Inc., the US pipeline giant transporting natural gas to LNG plants and to customers around America, said it now provided 50 percent of the feed-gas used by US LNG export plants and was planning more pipeline expansions to serve liquefaction facilities.

Kinder Morgan Inc., the US pipeline giant transporting natural gas to LNG plants and to customers around America, has taken a positive investment decision to expand the Permian Highway Pipeline (PHP) expansion project after securing binding firm transportation agreements for all available capacity.

Kinder Morgan Inc., the US pipeline company, reported a small decline in fourth-quarter net income as revenues were underpinned by the growing LNG feed-gas requirements on the Gulf Coast and praised the performance of the Texas Intrastate systems, Natural Gas Pipeline of America (NGPL) and Elba Island LNG.

US pipeline and storage company Kinder Morgan said it expected the first Train of its Elba Island LNG export plant near Savannah in Georgia to come on stream in the first quarter of 2019 while the company was also benefitting from the feed-gas needs at other liquefaction ventures.