Kinder Morgan (KMI) reported earnings after the bell on Wednesday, highlighting growth opportunities in natural gas.
Kinder Morgan reaffirmed that expected natural gas demand growth will have a substantial positive impact on the company. Future demand for natural gas is expected to be lifted by LNG exports. Additionally, the electricity requirements of AI and data centers will increase demand. This creates growth opportunities for Kinder Morgan.
“In fact, in my decades of experience in the midstream arena, I’ve never seen a macro environment so rich with opportunities for incremental build out of natural gas infrastructure,” Kinder Morgan Executive Chairman Rich Kinder said during the company’s third quarter earnings call on October 16. “We expect to be a major player in developing that infrastructure.”
See more: Kinder Morgan Continues Stock Buybacks, Reports Q2 Results
Growth Opportunities for Kinder Morgan
The midstream company is currently in discussions on power opportunities totaling over 5 billion cubic feet per day (Bcf/d), Kinder Morgan CEO Kim Dang said during the call. Additionally, Kinder Morgan’s internal number for growth in the overall natural gas market is now roughly 25 Bcf/d over the next five years.
Kinder Morgan announced on Wednesday the $455 million expansion of its Gulf Coast Express (GCX) pipeline. The expansion will enable customers to move substantial additional gas out of the Permian Basin. It will increase natural gas deliveries by 570 MMcf/d from the Permian Basin to South Texas markets.
Including the GCX expansion, Kinder Morgan added roughly $450 million of projects to the backlog during the third quarter. This also includes a storage expansion on NGPL and a new lateral to serve a natural gas power plant.
Other Natural Gas Updates to Watch for in Future Earnings
Kinder Morgan expects to announce additional significant projects over the next several months. These will allow it to expand and extend its network to better serve the needs of customers and benefit its bottom line, Kinder said. “As these projects come online, we should be able to grow our EPS, EBITDA, and DCF on a consistent and sustainable basis for years to come,” he added.
Furthermore, the midstream company has two open seasons underway. PIpeline expansions will move more natural gas from west to east. These include Mississippi Crossing and Trident, both of which are in competitive areas.
Mississippi Crossing can be scaled up to 2 Bcf/d to get to the Southeast markets. This will feed customers that Kinder Morgan is working with on South System 4, Kinder Morgan vice president Sital Mody said. Meanwhile, Trident is a project that will transport gas from Katy, Texas, to the LNG corridor in Port Arthur, Texas.
See more: Kinder Morgan Says AI, Data Centers Are Natural Gas Growth Opportunities
Exposure to Kinder Morgan and Natural Gas
Kinder Morgan is a holding in the Alerian Energy Infrastructure ETF (ENFR ), weighted 5.7% as of October 16, according to ALPS.
ENFR tracks the Alerian Midstream Energy Select Index (AMEI), a composite of North American energy infrastructure companies. Additionally, investors can access AMEI with the ALPS Alerian Energy Infrastructure Portfolio ALEFX, which provides exposure in a VIT wrapper.
For more news, information, and analysis, visit the Energy Infrastructure Channel.
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