Kinder Morgan buying 50 percent interest in natural gas venture for $300 million

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (KMP), on April 25 announced a definitive agreement with an investment vehicle affiliated with Kohlberg Kravis Roberts & Co. L.P., whereby KMP will purchase from KKR its 50 percent interest in the joint venture that owns the Altamont gathering, processing and treating assets (Uinta Basin in Utah) and the Camino Real Gathering System (Eagle Ford Shale in Texas) for $300 million in KMP common units.

El Paso Corp. (EP) owns the other 50 percent of the joint venture.

KMP anticipates the transaction will close subsequent to the completion of Kinder Morgan, Inc.'s (KMI) acquisition of El Paso, which is expected to occur by the end of May.

"We are pleased to reach this agreement with KKR which, upon closure of both transactions noted above, will increase Kinder Morgan's ownership in this joint venture to 100 percent - 50 percent at KMP and 50 percent at KMI," said Duane Kokinda, president of Kinder Morgan's intrastate pipelines.

Upon closing, the transaction is expected to be immediately accretive to cash distributable to KMP unitholders.

Marc Lipschultz, KKR's global head of energy and infrastructure, commented, "Since forming our joint venture over a year ago, it has been a pleasure partnering with the El Paso team on building out an exciting midstream business."

With over 1,100 miles of pipeline infrastructure, the Altamont system includes over 450 well connections with producers, and it operates a processing plant with the design capacity of 60 million cubic feet per day (MMcf/d) and a 5,600 barrel per day (b/d) natural gas liquids fractionator. The Camino Real Gathering System has 150 MMcf/d of gas gathering capacity and 110,000 b/d of oil gathering capacity.

Kinder Morgan Energy Partners increases quarterly distribution to $1.20 per unit

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (NYSE: KMP) on April 18 increased its quarterly cash distribution per common unit to $1.20 ($4.80 annualized) payable on May 15 to unitholders of record as of April 30.

This represents a five percent increase over the first quarter 2011 cash distribution per unit of $1.14 ($4.56 annualized) and is up from $1.16 per unit ($4.64 annualized) for the fourth quarter of 2011. KMP has increased the distribution 43 times since current management took over in February of 1997.

Kinder Morgan, Martin Midstream announce rail terminal joint venture in Texas

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (NYSE: KMP)  and Martin Midstream Partners L.P. (Nasdaq: MMLP) on Feb. 27 announced a new joint venture, Pecos Valley Producer Services LLC, to develop a multi-commodity rail terminal in Pecos, Texas.

The new terminal will serve the growing oil and natural gas industries in the Permian Basin. The facility will be constructed and operated by a subsidiary of Watco Companies, Inc., the largest privately held short line railroad company in the United States. KMP holds a preferred equity position in Watco.

The terminal will offer a variety of services to producers in the Permian Basin including crude oil hauling, storage, transloading and marketing. It will also provide producers access to light Louisiana sweet crude oil markets. Kinder Morgan and Martin Midstream Partners will offer immediate NGL storage, takeaway, and fractionation services, and seek to develop natural gas and crude gathering and processing systems within the area. Additionally, the joint venture has held initial discussions to develop a frack sand unit train terminal to serve Reeves County and surrounding counties.

The first stage of the terminal is expected to be completed and operational by May 2012. Crude oil, natural gas liquids, frack sand, pipe, tube, structural steel, rig mats and other commodities can be railed in and out, and transloaded to truck for delivery to the surrounding area.

Once the terminal has been fully developed, it will encompass approximately 85 acres and will be able to support unit trains. Total railcar capacity is anticipated to be 300 to 600 per day based on demand. The terminal is strategically located along the Pecos Valley Southern Railway (PVS) and directly adjacent to the Union Pacific mainline in the city of Pecos, and will offer scalability and convenience for local area producers.

Once fully operational, the terminal will create up to 45 new jobs. Bill Oglesby, executive director of the Pecos Economic Development Corporation, said, "We welcome Kinder Morgan and Martin Midstream's announcement of this rail terminal in Pecos. This is a significant step for Pecos and Reeves County, and the development of our oil and gas resources."

Kinder Morgan Partners buys TransMontaigne Partners' interest in BOSTCO

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (NYSE: KMP) on Jan. 4 announced the purchase of TransMontaigne Partners L.P.'s 50 percent interest in the previously announced Battleground Oil Specialty Terminal Co., LLC (BOSTCO) project.

KMP now owns 98 percent of BOSTCO and began construction on Dec. 14 of a new, approximately $430 million oil terminal located on the Houston Ship Channel.

The remaining two percent will be held by a customer at the BOSTCO facility.

The first phase of the project currently includes construction of 52 storage tanks that will have a capacity of 6.6 million barrels for handling residual fuel, feedstocks, distillates and other black oils. Terminal service agreements and/or letters of intent have been executed with customers for almost all of the capacity.

"The project will include one of the deepest vessel drafts in the Houston Ship Channel and position Kinder Morgan extremely well for the growing trend of exporting petroleum related products overseas," said Kinder Morgan Terminals President Jeff Armstrong.

BOSTCO is expected to be accretive to cash distributable to KMP unitholders when the first phase of the project comes online in the third quarter of 2013. The first phase of the project is expected to be completed by the first quarter of 2014.

TransMontaigne Partners L.P. (NYSE: TLP)  received cash consideration equal to its investment plus a transferrable option to buy 50 percent of Kinder Morgan's interest at any time prior to Jan. 20, 2013.

The project will include one of the deepest vessel drafts in the Houston Ship Channel and be well positioned to participate in the growing trend of exporting petroleum-related products overseas.

Kinder Morgan to invest $130 million in new condensate processing facility

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (NYSE: KMP) on Dec. 14 announced it will build, own and operate a petroleum condensate processing facility near its Galena Park terminal on the Houston Ship Channel.

With an initial throughput of 25,000 barrels per day (b/d) and a design that provides for future expansions of up to 100,000 b/d, the approximately $130 million project will split condensate into its various components such as light and heavy naphthas, kerosene and gas oil. A major oil industry customer is underwriting, through a fee structure, the initial throughput of the facility.

"The location of our new facility, when combined with our recently announced $220 million crude/condensate pipeline, will provide customers with unparalleled connectivity to crude oil and clean products markets including refineries, chemical companies, gasoline blenders, finished product storage, outbound pipelines and marine facilities on the Texas Gulf Coast," said KMP Products Pipelines President Tom Bannigan.

The transaction is expected to be immediately accretive to cash distributable to KMP unitholders upon the project's completion in January 2014.

The pipeline, which will transport crude/condensate from the Eagle Ford Shale in south Texas to the Houston Ship Channel, will consist of almost 70 miles of new-build construction and 113 miles of converted natural gas pipeline. Construction on the pipeline has begun and Kinder Morgan expects it to be in service in the second quarter of 2012.

The pipeline is one of several projects to tap the prolific light, sweet Eagle Ford shale oil formation to make the connection between the field and the heavy concentration of refineries along the U.S. Gulf Coast, replacing more expensive crude imports.

KM-Valero joint venture pipeline headquarters to locate in Covington, La.

Kinder Morgan Energy Partners-Valero pipeline headquarters will be locating in the city of Covington, announced Covington Mayor Mike Cooper at the Covington city council meeting on Oct. 18.

The company will have about 20 professional positions, some hiring locally, some from their corporate offices elsewhere and will occupy about 7,000 square feet in 2000 Covington Centre.

Cooper said the company plans to become involved in local business organizations including the Covington Business Association, patronizing local restaurants and businesses in the course of the business day and plan on being here for two to three years.

The company is constructing a 136-mile, 16-inch pipeline to transport gasoline, jet fuel and diesel from refineries in Norco to an existing petroleum transportation hub in Collins, Miss. owned by Plantation Pipe Line Co., 51 percent of which is owned by Kinder Morgan. Kinder Morgan will operate the pipeline.

Kinder Morgan is partnering with Valero Energy Corp. that will own Parkway Pipeline LLC. The pipeline will have an initial capacity of 110,000 barrels per day with the ability to expand to more than 200,000 b/d, according to a news release.

Pending receipt of environmental and regulatory approvals, the approximately $220 million pipeline project is expected to be in service by mid-year 2013.

About $140 million of the construction cost will be spent in Louisiana and $80 million in Mississippi. Local property tax impact is estimated to be $3.3 million in Louisiana and $2.5 million in Mississippi, according to the news release.

According to the new release, "The economic impact of construction for a project of this size will be significant as workers will reside locally and rely upon local businesses, housing and support services during the construction period. Local businesses will benefit directly from servicing these workers and the project directly."

Kinder Morgan profit up in 2Q, but Kinder Morgan Partners net plummets

Second-quarter profit at Kinder Morgan Inc. (NYSE: KMI) soared on higher revenue and increased earnings from equity investments. For the latest quarter, Kinder Morgan Inc. reported earnings of $132.1 million, or 17 cents per Class A share, compared with $46 million a year earlier. Revenue climbed 2.1 percent to $2.03 billion. Analysts polled by Thomson Reuters expected a profit of 25 cents on revenue of $2.07 billion. Earnings from equity investments were $75.3 million, up 24 percent from the prior year. The company owns the general partner of Kinder Morgan Energy Partners as well as a stake in the pipeline operator.

Second-quarter profit at Kinder Morgan Energy Partners LP (NYSE: KMP) fell 36 percent as expenses jumped. KMP’s profit fell to $230.5 million from $361.2 million. On a per-unit basis, which is affected by the general partner's interest, the latest quarter was a loss of 19 cents per unit, compared with an 88-cent profit a year earlier. Revenue improved 2.9 percent to $2.02 billion. Wall Street projected a 40-cent profit on $2.12 billion in revenue. Expenses increased 14 percent.

Kinder Morgan, Inc. (NYSE: KMI) has announced an increase in its dividend for the second quarter to $0.30 per share ($1.20 annualized) from $.29 per share ($1.16 annualized), payable on Aug. 15 to shareholders of record on Aug. 1. KMI on July 19 reported second quarter cash available to pay dividends of $154 million. Through the first two quarters of the year, the company reported cash available to pay dividends of $405 million. Chairman and CEO Richard D. Kinder said, "KMI had a good second quarter and is on target to exceed its previously disclosed annual budget of $820 million in cash available to pay dividends." Approximately 98 percent of the distributions KMI receives are attributable to KMP. KMI also owns a 20 percent interest in Natural Gas Pipeline Company of America.