KMI earns $1.4 billion Q1 2021, boosted by winter storm
Kinder Morgan Inc. (KMI) had first-quarter 2021 net income of $1.4 billion, compared with a net loss of $306 million in first-quarter 2020. The increase was primarily related to the February winter storm and therefore largely nonrecurring.
KMI realized greater margins on its Texas intrastate pipeline systems resulting from the temporary supply and demand imbalances and spot market price volatility caused by the storm; as well as favorable contributions from its CO2 segment, with curtailed oil production during the storm allowing power it would have used to be delivered to the grid instead. Net income for first-quarter 2021 was also higher due to $971 million of impairment charges taken first-quarter 2020.
The natural gas pipelines segment’s financial performance was up from first-quarter 2020 on higher contributions from the Texas intrastate systems and Tennessee Gas Pipeline (TGP), due to their performance during the February storm, partially offset by lower contributions from KMI’s Oklahoma gathering systems, also due to the storm.
Natural gas transport volumes were down 3% compared with first-quarter 2020, with notable volume declines on Colorado Interstate Gas Pipeline (CIG) due to production declines in the Rockies basin; on El Paso Natural Gas due to lower Permian supplies and power generation shifting to coal due to higher natural gas prices (particularly during the winter storm), and milder weather in the southwest later in the quarter; and on Fayetteville Express Pipeline due to contract expirations. These declines were partially offset by: increased volumes on TGP due primarily to weather-related increased usage across the system and increased deliveries to LNG and Mexico customers; the Permian Highway Pipeline going into service; and increased volumes on Elba Express due to increased LNG deliveries to Elba Island. Natural gas gathering volumes were down 25% from the first quarter of 2020 across nearly all KMI systems.
Contributions from the products pipelines segment were down compared with first-quarter 2020 on lower refined products demand as well as lower crude and condensate volumes, exacerbated by temporary supply and demand interruptions from the winter storm.
Terminals segment earnings were down compared with first-quarter 2020. Extended refinery outages resulting from the storm impacted refined product and petroleum coke volumes at KMI’s Houston Ship Channel and Port Arthur, Texas-area terminals, reducing associated ancillary and product handling fees for the quarter.
Construction continues on Kinder Morgan Louisiana Pipeline’s 945-MMcfd expansion to serve Train 6 at Cheniere Energy Inc.’s Sabine Pass LNG plant in Cameron Parish, La. The expansion is expected to enter commercial service as early as first-quarter 2022.
On Mar. 8, 2021, KMI and Brookfield Infrastructure Partners LP completed sale of a combined 25% interest in Natural Gas Pipeline Co. of America LLC (NGPL) to a fund controlled by ArcLight Capital Partners LLC. KMI received net proceeds of $413 million for its share. KMI and Brookfield now each hold a 37.5% interest in NGPL. KMI will continue to operate the pipeline.
NGPL’s Gulf Coast Southbound project was placed in service on Mar. 1, 2021, increasing southbound capacity on NGPL’s Gulf Coast System by 300 MMcfd to serve Cheniere’s Corpus Christi LNG plant in San Patricio County, Tex.
On Mar. 11, 2021, CIG said it will partner in a responsibly sourced gas (RSG) pilot project along with Project Canary, Colorado Springs Utilities, Bayswater Exploration & Production LLC and Rimrock Energy Partners. RSG is produced and transported by companies who have committed to reducing methane emissions and whose operations have been independently verified as meeting certain environmental, social and governance standards.
