KMI loses $306 million Q1 2020, commissions Elba Train 6
Kinder Morgan Inc. (KMI) had a first-quarter 2020 net loss of $306 million, compared to net earnings of $556 million in first-quarter 2019. The net loss was primarily due to $950 million of non-cash impairments of assets and goodwill associated with certain oil and gas producing assets in KMI’s CO2 segment driven by the recent sharp decline in crude oil prices.
The company reduced expenses and sustaining capital expenditures by more than $100 million combined versus budget. KMI also reduced its expansion capital outlook for 2020 by about $700 million, almost 30%.
Elba Liquefaction Co. (ELC) is continuing commissioning and startup of the 10 trains that comprise its portion of the Elba Liquefaction project near Savannah, Ga. The fifth train was placed in service in March 2020, and the sixth on April 20, 2020. The remaining four units are expected to be placed in service during spring and summer of 2020. The plant will have total liquefaction capacity of 2.5 million tonnes/year of LNG.
The nearly $2-billion project is supported by long-term contracts with Shell. ELC, a KMI joint venture with EIG Global Energy Partners as a 49% partner, owns the liquefaction units and other ancillary equipment. Other infrastructure associated with the project 100% owned by KMI.
Construction of the Permian Highway Pipeline (PHP) is now fully underway, and nearly complete in the Waha area in West Texas. The $2-billion project is designed to transport up to 2.1 bcfd of natural gas through 430 miles of 42-in. OD pipeline from the Waha area to US Gulf Coast and Mexico markets. PHP is expected to be in service early in 2021. Its total capacity is fully subscribed under long-term, binding agreements.
Kinder Morgan Texas Pipeline (KMTP), EagleClaw Midstream, and Altus Midstream each hold an ownership interest of about 26.7%, and an affiliate of an anchor shipper has a 20% interest. KMTP is building and will operate the pipeline.
KMI’s Dayton Loop Project was placed in service February 2020, providing incremental takeaway capacity from the East Texas and Goodrich areas to the Houston Ship Channel, Texas City, and Katy, Tex., market areas.
Construction continues on other projects across KMI’s Texas intrastate system, and the company is investing approximately $260 million in a collection of projects designed to increase capacity by 1.4 bcfd and improve connectivity across the system. The additional projects are designed to support the distribution of significant incremental volumes as DCP Midstream and Targa Resources Corp.’s Gulf Coast Express, PHP, and other new Permian basin takeaway projects deliver into the US Gulf Coast and Mexico markets.
The $56-million Sierrita Gas Pipeline Expansion Project entered service April 12, 2020, increasing the pipeline’s capacity by 323 MMcfd to 524 MMcfd via a new 15,900-hp compressor station in Pima County, Ariz. KMI is 35% owner and the operator of Sierrita Gas Pipeline.
On Feb. 21, 2020, the US Federal Energy Regulatory Commission (FERC) issued a 7c certificate to Natural Gas Pipeline Co. of America (NGPL) for its Gulf Coast Southbound project. On Mar. 31, 2020, FERC approved NGPL’s request to proceed with construction. The $230-million project will increase southbound capacity on NGPL’s Gulf Coast System by 300 MMcfd to serve Corpus Christi Liquefaction LLC. The project is supported by a long-term take-or-pay contract and is expected to be placed into service first-half 2021.
KMI’s Roanoke Expansion Project was placed in service Apr. 1, 2020. The full project adds 21,000 b/d of incremental refined petroleum products capacity on the Plantation Pipe Line system from Baton Rouge, La., and Collins, Miss., origin points to the Roanoke, Va., area. The project consisted primarily of additional pump capacity and operational storage.
Projects underway at Kinder Morgan’s Pasadena Terminal on the Houston Ship Channel include increasing flow rates on inbound pipeline connections and outbound dock lines, tank modifications that will add butane blending and vapor combustion capabilities to 10 storage tanks, expansion of the current methyl tert-butyl ether storage and blending platform, and a new dedicated natural gasoline (C5) inbound connection, which has been placed in service. The improvements are supported by a long-term agreement with a major refiner and are expected to be completed by end second-quarter 2020.
Construction is also underway on an upgrade at Battleground Oil Specialty Terminal Co. LLC (BOSTCO), a fuel oil storage terminal on the Houston Ship Channel. The upgrade will add piping to allow segregation of high-sulfur and low-sulfur fuel oils. Detailed engineering and design work is underway on the project, which is expected to be placed in-service fourth-quarter 2020. KMI owns a 55% interest in and is operator of BOSTCO.