El Paso Natural Gas' Line 2000 repairs to be complete in January Kinder Morgan

Kinder Morgan Inc. expects to finish repair work on Line 2000 of its El Paso Natural Gas Co. LLC system by the end of January, before asking federal pipeline safety regulators to lift pressure restrictions on the pipeline, executives said Jan. 18.

A key corridor for gas from the Permian Basin to Southern California demand markets, Line 2000's restart would mark a significant development for the market after an August 2021 rupture near Coolidge, Ariz., killed two people and forced the Kinder Morgan unit to shut down Line 2000.

El Paso Natural Gas said in December 2022 that it received federal approval from the U.S. Pipeline and Hazardous Materials Safety Administration to restart the isolated segment affected by the incident but with mandated pressure restrictions remaining in effect.

"[The U.S. Pipeline and Hazardous Materials Safety Administration] will need time to review the information that we provide, but ... we expect [work] to be completed by month-end," Kinder Morgan CEO Steve Kean said during the company's fourth-quarter 2022 earnings call.

Growth outlook

Kinder Morgan addressed the market at a time when lower gas prices have also led to increasing questions from investors about midstream companies' plans for spending and returning money to shareholders. Kinder Morgan announced a 27.75 cent-per-share dividend for the fourth quarter of 2022, representing a 3% increase over the same quarter of 2021.

Kinder Morgan executives said the company would continue pursuing "dozens" of "modest" natural gas pipeline expansion projects as it looks to maintain its market share, delivering half of all feedgas deliveries to U.S. LNG export facilities.

"We definitely believe our volumes are going to continue to grow," Thomas Martin, president of Kinder Morgan's natural gas pipelines group, told investors during the earnings call. "It's hard to call balls and strikes on whether we're going to meet or exceed 50% going forward, but I feel really good about our position to participate in that whole growth story."

Kinder Morgan's projects include steering a 550-MMcf/d expansion of its Permian Highway Pipeline LLC and an expansion of its Gulf Coast Express Pipeline LLC, bringing more Permian Basin gas to export terminals along the U.S. Gulf Coast.

The next need for more incremental capacity from the Permian Basin might not arrive until 2026 or 2027, executives said, as building new LNG export capacity takes years.

"We need to figure out exactly where and when those volumes need to be there," Martin said.

C-suite changes

The company also announced a succession plan in which Kean will step down as CEO on Aug. 1, after serving as the top executive for eight years. Kean, who will remain on Kinder Morgan's board, will be replaced as CEO by current President Kimberly Allen Dang. Martin will succeed Dang as Kinder Morgan's president.

Kinder Morgan moved an average of 40.1 billion Btu/d in gas along its pipelines in the fourth quarter of 2022, after averaging around 38.5 billion Btu/d in transport volumes in the fourth quarter of 2021. The midstream company attributed the 4% year-over-year increase in transported volumes to power and heating demand as a result of colder weather and coal plant retirements.

Executives said the weather-driven increase in demand partly offset reduced feedgas volumes due to the outage at the Freeport LNG Development LP facility in Texas and a decrease in exports to Mexico due to other capacity added to the market.

Executives reported delivering about 5.4 million Dth/d of feedgas to LNG facilities during the quarter, down about 450,000 Dth/d from the fourth quarter of 2021. Kinder Morgan's delivered LNG volumes during the quarter would have increased by about 5% if not for the Freeport outage, Dang said.

Kinder Morgan's natural gas pipeline and storage business recorded net income of $1.35 billion during the fourth quarter of 2022, up about 11% from the fourth quarter of 2021.

For the three months ended Dec. 31, 2022, Kinder Morgan recorded net income of $670 million, or 30 cents per share, compared with a profit of $637 million, or 28 cents per share, in the same period of 2021. For the full year 2022, Kinder Morgan reported net income of $2.55 billion, compared to $1.78 billion in 2021.

S&P Global Commodity Insights reporter Corey Paul produces content for distribution on Platts Dimensions Pro.