Kinder Morgan, Inc. (KMI, formerly Kinder Morgan Holdco) is the top layer of a large oil and gas transportation and storage enterprise. The company owns Kinder Morgan Management, which manages the general partner of Kinder Morgan Energy Partners (KMP). KMP operates pipelines 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 controls El Paso Pipeline Partners.
The company is a leader in petroleum product transportation, terminal operations, and coke and CO2 transportation, and operates through the following segments: Natural Gas Pipelines (60% of total revenues in 2015); CO2; Terminals; Products Pipelines; and Other.
The Natural Gas Pipelines segment (60% of total revenues in 2015) includes interstate and intrastate pipelines and LNG terminals. It owns 52,000 miles of natural gas pipelines and holds stakes in entities with 19,000 miles of natural gas pipelines, along with associated storage and supply lines for these transportation networks. 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.
CO2 produces, transports (via 1,300 miles of CO2 pipelines), and markets CO2 for use in enhanced oil recovery projects as a flooding medium for recovering crude oil from mature oil fields.
Terminals (122 liquids and bulk terminal facilities and 8 rail transloading and materials handling facilities in the US and Canada) includes petroleum, chemical, ethanol and other liquids terminal facilities and coal, petroleum coke, fertilizer, steel, ores and other dry-bulk material services facilities, including all transload, engineering, conveying and other in-plant services.
Products Pipelines consists of 9,000 miles of refined petroleum products pipelines, crude oil and condensate, and NGL pipelines and associated terminals, Southeast terminals, and the company's transmix processing facilities.
The Other segment has miscellaneous assets and liabilities including KMI's corporate headquarters in Houston, Texas; several physical natural gas contracts with power plants associated with legacy trading activities; and other miscellaneous assets and liabilities.
KMI has operations in the US, Canada, and Mexico. The US accounted for 96% of the company's revenues in 2015.
Kinder Morgan Canada transports crude oil and refined petroleum products across 713 miles of pipelines (and five associated product terminal facilities) from Alberta, Canada to marketing terminals and refineries in British Columbia, and Washington State, plus the Jet Fuel aviation turbine fuel pipeline that serves the Vancouver (Canada) International Airport.
Sales and Marketing
The company’s customers include major oil companies, energy producers and shippers, local distribution companies, and companies representing a range of industries.
In 2015 the company’s net revenues decreased by 11% to $14.4 billion due to lower revenues from Natural Gas Pipelines, CO2 and Terminals.
KMI's net income decreased by 75% to $253 million in 2015, mainly due to lower net revenues and the presence of loss on impairment of goodwill related to Natural Gas Pipelines' Non-Regulated operations.
The company’s operating cash inflows increased by 19% to $5.3 billion, mainly due to changes in working capital as a result of changes in accounts receivable and income tax receivable.
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.
To raise cash, in 2016 the company sold Southern Company a 50% stake in its Southern Natural Gas pipeline for $1.47 billion.
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 planned 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 planned to invest $671 million to grow its CO2 infrastructure in southwestern Colorado and New Mexico.
Mergers and Acquisitions
Growing its assets, in 2016 the company acquired 15 products terminals and associated infrastructure from BP for $349 million.
In 2015 the company and Brookfield Infrastructure Partners L.P. signed a deal whereby they will jointly acquire, from Myria Holdings, Inc., the 53% stake in Natural Gas Pipeline Company of America LLC not already owned by them for $242 million.
In 2015 KMI acquired Hiland Partners for 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, increased 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.