Kinder Morgan, Inc. (KMI, formerly Kinder Morgan Holdco) is the top layer of a large oil and gas cake. The company owns Kinder Morgan Management, which manages the general partner of Kinder Morgan Energy Partners (KMP). KMP operates pipeline that transport natural gas, crude oil, gasoline, and other products, along with terminals used to store chemicals and petroleum products and other items (including coal and steel). It produces carbon dioxide (CO2), which is used in oil field production. KMI owns stakes in or operates 84,000 miles of pipelines and 180 terminals. It also holds 51% of El Paso Pipeline Partners.
KMI has operations in the US, Canada. and Mexico. The US accounted for 96% of the company's revenues in 2014.
The company is a leader in petroleum product transportation, terminal operations, and coke and CO2 transportation.
It holds 48,000 miles of natural gas transmission pipelines and gathering lines, plus natural gas storage, treating and processing facilities, and through KMP 9,000 miles of refined petroleum products pipelines and 1,500 miles of CO2 pipelines. It also owns or operates seven oil fields in West Texas and a 450-mile crude oil pipeline system in West Texas.
Its terminal business owns or operates 122 liquids and bulk terminal facilities and 10 rail transloading and materials handling facilities in the US and Canada. The business transloads and store refined petroleum products, crude oil, condensate, and bulk products, including coal, petroleum coke, cement, alumina, salt and other bulk chemicals. The segment also owns and operates Jones Act tankers.
Kinder Morgan Canada transports crude oil and refined petroleum products through across 713 miles of pipelines (and five associated product terminal facilities) from Alberta, Canada to marketing terminals and refineries in British Columbia, Washington State, the Rockies, and the Central US.
KMI also owns 51% of El Paso Pipeline Partners, and about 20% of natural gas pipeline NGPL PipeCo.
Sales and Marketing
The Texas intrastate natural gas pipeline group buys and sells significant volumes of natural gas in Texas; the CO2 business segment also sells natural gas. Total revenues from the sales of natural gas from the Natural Gas Pipelines and CO2 business segments in 2014 accounted for 25% KMI's total revenues.
KMI's revenues have increased consistently over the past few years. In 2014 revenues grew by 15%, driven by Natural Gas Pipelines sales (mainly from external customers in both natural gas and CO2 business segments). Terminal segment revenues grew thanks to increased volumes.
In 2014 KMI's net income decreased by 14% due to higher sales costs and other operating expenses related to major acquisitions.
Cash from operating activities increased by 8% in 2014 due to higher net income, a decline in case reserve payments, and net changes in working capital items and non-current assets and liabilities.
KMI's strategy is focused on building and maintaining energy transportation and storage assets, which are central components to a growing natural gas and petroleum products infrastructure across North America. Its business strategy includes acquiring additional businesses, expanding existing assets and constructing new facilities
In 2015 KMI's joint venture with Keyera agreed to build a new crude oil storage terminal (4.8 million barrels of crude oil capacity) in Edmonton, Alberta. KMI’s investment in the joint venture terminal is approximately C$342 million ($385 million) for an initial 12 tank build.
In 2014 El Paso Pipeline Partners, agreed to buy KMI’s 50% stake in Ruby Pipeline, 50% interest in Gulf LNG and 47.5% stake in Young Gas Storage for $2 billion. As a result KMI plans to reduce its debt while continuing to participate in the cash flows from these assets through its general and limited partner interests in El Paso Pipeline Partners.
That year KMI also announced plans to invest $671 million to grow its carbon dioxide infrastructure in southwestern Colorado and New Mexico.
Mergers and Acquisitions
Growing its assets, in 2015 KMI acquired Hiland Partners for an aggregate consideration of more than $3 billion. That year it also purchased three Vopak terminals and one undeveloped site for $158 Million. The acquisition, which covers a 36-acre storage complex at Galena Park, Texas, will increase KMI's liquids storage capacity by more than 2.2 million barrels and 115 tanks while adding critical dock capacity on the Houston Ship Channel and in Wilmington.
In 2014 the company consolidated its oil-and-gas pipeline holdings into a single company, with KMI acquiring KMP, Kinder Morgan Management and El Paso Pipeline Partners in a $44 billion deal.
Significantly expanding its midstream services portfolio, in 2013 KMI acquired Houston-based Copano Energy for $5 billion.
In a major move to become the largest natural gas pipeline and midstream enterprise in North America (with about 75,000 miles of natural gas pipeline and 180 terminals) in 2012 KMI acquired El Paso Corp. (which had 44,000 miles of natural gas pipeline) for about $38 billion. To comply with FTC requirements in completing the deal, in 2012 KMI sold KMP's FTC Natural Gas Pipelines disposal group to Tallgrass Energy Partners, L.P. for $1.8 billion.
Apart from greatly expanding the company's size and scope, the El Paso Corp. deal is expected to save KMI more than $400 million of cost savings per year through the integration of the two organizations and the elimination of redundancies.
In mid-2013 it paid $5 billion for Copano Energy, a midstream company with interests in almost 7,000 miles of natural gas pipeline in Oklahoma, Texas, and Wyoming. The acquisition expands Kinder Morgan's operations in the Eagle Ford shale and Barnett shale in Texas, and the Mississippi Lime and Woodford shales in Oklahoma.
Growing its operations in other shale areas, in 2013 Kinder Morgan Energy Partners, L.P. and MarkWest Utica EMG, L.L.C. agreed to form a joint venture to build a cryogenic processing complex and the infrastructure to support producers in the Utica and Marcellus shales in Ohio, Pennsylvania and West Virginia.
Chairman and CEO Richard D. Kinder led a group of investors in taking KMI private in 2007. It then adopted the Knight name. To take advantage of its better-known brand, it reverted to the Kinder Morgan name in 2009. Kinder Morgan went public in 2011 and changed its name to Kinder Morgan, Inc (KMI). IPO proceeds went to the aforementioned selling shareholders.