Quick Take KMP posts a strong set of Q1 numbers with revenues and earnings growing by 43% and 65% respectively year-over-year. Natural gas pipeline division displays the highest earnings growth (78%) with higher volumes and contribution from recently acquired assets. CO2 segment’s earnings remain flat compared to last year despite increased liquids production due to lower price realization. Canadian operations report marginal growth due to a better performance by the -Platte pipeline and the Puget Sound System of the Trans Mountain pipeline. Products pipeline segment sees its earnings grow with higher volumes on Cochin pipeline and higher trans-mix volumes. Kinder Morgan Energy Partners released its Q1 2013 results April 17. The results were largely in line with our expectations and were driven by a strong performance from the recently acquired Tennessee Gas Pipeline and El Paso natural gas operations, higher coal exports and strong liquids production in the firm’s CO2 business. (Related read: Kinder Morgan Q1 Preview: Natural Gas Pipelines In The Spotlight) Quarterly revenues grew by around 43% over the last year to $2.66 billion while income from continuing operations grew by around 65% to $794 million.
Tag Archives: Tennessee Gas Pipeline
4 Opportunities in Pennsylvania's Gas Boom
By Aimee Duffy, The Motley Fool
Filed under: Investing
Last week, the Energy Information Administration, or EIA, reported that Pennsylvania‘s natural gas production climbed an astounding 69% between 2011 and 2012. The state sits above the Marcellus Shale, and exploiting that formation has likely catapulted Pennsylvania into the ranks of the top five natural gas producing states. Let’s take a closer look at this story, and what opportunities it may provide for investors.
Rapid growth
Pennsylvania‘s transformation from gasless laggard to methane monster happened seemingly overnight. In 2008, the state produced less than 1 billion cubic feet per day (bcfd) of natural gas. That was the first year producers started drilling horizontal wells in meaningful numbers. The results are impressive:
Source: EIA
In a mere four years, Pennsylvania‘s natural gas production has climbed from 1.0 bcfd to reach 6.1 bcfd in 2012. You can see how much of an impact shale drilling has had, given the rapid decline of non-horizontal wells in blue, and the corresponding rise of horizontal wells in brown.
Perhaps the more important take away from the graph above, is that this growth came at a time when drilling slowed overall. Between 2011 and 2012, there were about 750 fewer wells drilled, yet production increased 69% over that same period. Let’s take a look at how this happened, and at two key opportunities that came out of it for investors.
Fewer rigs, but more gas?
There are two reasons that drilling rig counts dropped but production increased. The first is that because of a lack of pipeline capacity in the Marcellus, many rigs were drilled and never turned on. Capacity grew in 2012, and will grow even more in 2013, and again in 2014. This will allow producers to move more gas, which should drive the price up, much the way additional pipeline capacity in Texas has boosted the price of oil.
The second reason is that producers are much more efficient at drilling wells now. Improved techniques contribute to not only shorter drilling times, but higher production rates per well. The average horizontal well drilled in the Marcellus costs about $3 million-$4 million. Obviously, any company that improves drilling efficiency has the opportunity to cut costs as well.
Companies to consider
Given what we know about what is behind the growth in Pennsylvania, it makes sense to search for pipeline operators and efficient drillers in the Marcellus Shale. Here are four companies to get your research started:
- Kinder Morgan Energy Partners is the nation’s leading natural gas transporter and naturally has a stake in the Marcellus. It is expanding its Tennessee Gas Pipeline system in several places, which should increase takeaway capacity by more than 8.0 million cubic feet per day by the end of November 2013.
- Enterprise Products Partners is bringing online one of the region’s most anticipated pipeline projects, the ATEX Express. Chesapeake Energy said in its last investor presentation that its wet gas production isn’t going to …read more
Source: FULL ARTICLE at DailyFinance
Inside Kinder Morgan: Natural Gas Pipelines
By Aimee Duffy, The Motley Fool
Filed under: Investing
Based on combined enterprise value, Kinder Morgan is the third largest energy company in North America. We tend to associate the giant with its 75,000 miles of pipelines, but in reality, its operations are incredibly diverse. Over the next few days, I’ll take a closer look at each of the midstream company’s five distinct business units. I’ve already tackled the terminals segment, and today we’ll break down the partnership’s natural gas pipeline business.
Background on the assets
Kinder Morgan, together with its master limited partnerships Kinder Morgan Energy Partners and El Paso Pipeline Partners , operates an impressive 62,000 miles of natural gas pipeline, making it the largest natural gas transporter in the United States. The pipelines reach natural gas plays and serve major consuming markets from coast to coast but are concentrated heavily along the southern border of the U.S., from Arizona to Florida. Texas is the epicenter of the partnership’s footprint, yet it’s the company’s East region that’s expected to generate the largest percentage of earnings for the segment in 2013.
Source: Kinder Morgan.
The East segment includes roughly all of Kinder Morgan‘s pipes east of the Mississippi River, from Florida to New Hampshire, while the midstream segment designates the Texas intrastate system. West denotes everything west and north of El Paso, while Central includes everything west of the Mississippi and north of the Texas/Oklahoma border. You can check out the whole map here.
Overall, the segment grew 64% year over year in the fourth quarter of 2012 and $474 million in earnings. Much of that growth can be attributed to the booming Eagle Ford Shale play, and the increase of natural gas used for power generation. Kinder Morgan hopes to continue to drive success here and is in the midst of investing $2.7 billion in its natural gas pipeline assets.
A look ahead
A big part of that investment capital is headed straight for two shale plays: the Marcellus and the Eagle Ford. We’ll get to Texas in a minute, but first let’s tackle the Marcellus, where Kinder Morgan has two of similar looping projects on the Tennessee Gas Pipeline system coming online by the end of November.
The first project is the Marcellus Pooling Point project, an $86 million pipeline expansion that will loop a line in northwest Pennsylvania with 7.9 miles of 30-inch pipe. (Looping means that new pipe will be installed adjacent to the existing line.) It will also feature upgrades to four pumping stations. The new capacity comes in around 240,000 dekatherms per day, which is roughly equal to 2.3 million cubic feet of gas, and it will feed utilities and other connecting pipelines.
The second looping project is the Northeast Upgrade, and it is much more expensive at $450 million. This project will add about 40 miles of 30-inch looped line on the Tennessee Gas Pipeline system and will have a capacity of about 640,000 dekatherms per day, which …read more
Source: FULL ARTICLE at DailyFinance