Kinder Morgan Forecasts Surge in Natural Gas Demand and Rise of Renewable Diesel

Kinder Morgan Inc., a leading energy infrastructure company, expects a significant increase of over 20% in natural gas demand by 2028, according to their Q3 2023 earnings statements released on Wednesday. The company’s projections also indicate a boost in renewable diesel volumes, leading to the displacement of traditional diesel fuel.

Exploration of Potential Opportunities

In addition to their optimistic outlook, Kinder Morgan has identified potential opportunities in various sectors. They aim to capitalize on the growing demand for natural gas and power, as well as explore potential exports to Mexico. The company is also focusing on renewable diesel projects on the West Coast.

Meeting Growing Demand

To meet the projected increase in demand, especially in Texas and Louisiana, where a substantial portion of the additional demand is expected, Kinder Morgan recognizes the necessity of expanding their pipeline network. CEO Kim Dang highlights the significance of this infrastructure development.

Transitioning to Renewable Diesel

With the continued growth of renewable diesel volumes in California, Kinder Morgan’s President, Tom Martin, predicts a decline in conventional diesel transport volumes. He attributes this shift to the rising volumes of renewable diesel flowing through the company’s pipelines. Notably, the daily flow of renewable diesel has risen from 700 barrels in Q1 of this year to an impressive 24,000 barrels in Q3.

Robust Growth in Refined Product and Crude Volumes

Kinder Morgan reported a notable growth of 1.28% in their refined product volumes during the quarter. Furthermore, their crude and condensate volumes experienced a substantial 4.925% increase. This growth can be attributed to higher Bakken and Eagle Ford volumes.

Increasing Natural Gas Transport and Gathering Volumes

In the third quarter of 2022, Kinder Morgan witnessed a 5% increase in natural gas transport volumes compared to the same period in 2021. Additionally, natural gas gathering volumes saw significant growth, rising by 11% from the third quarter of the previous year.

Kinder Morgan Inc. remains well-positioned to meet the evolving energy demands by leveraging their extensive infrastructure network and strategic focus on renewable energy sources.

Gasoline and Diesel Volumes in Q3 2023

Gasoline volumes in Q3 2023 experienced a slight increase of about 1% compared to Q3 2021. The volume reached 1.002 million b/d, up from 989,000 b/d in the previous quarter. In contrast, diesel volumes decreased by 1.6% to 362,000 b/d, falling by 6,000 b/d from Q3 2021’s level of 368,000 b/d.

Jet Fuel Volumes in Q3 2023

On the other hand, jet fuel volumes showed a positive performance, rising by 5.03% compared to Q3 2021. However, the total volume of jet fuel, which amounted to 292,000 b/d, is still below the pre-pandemic level of Q3 2019’s 318,000 b/d.

Financial Performance of KMI in Q3 2023

KMI reported total revenue of $3.907 billion for Q3 2023, indicating a decrease of $1.27 billion compared to the previous year’s figure of $5.177 billion.

Furthermore, KMI’s net income for Q3 2023 amounted to $532 million, reflecting a 7.6% decrease year-over-year. The company also experienced a drop in distributable cash flow, which declined from $1.122 billion in Q3 2022 to $1.094 billion in Q3 2023.

Decrease in DCF for the First Nine Months of 2023

For the first nine months of 2023, the company’s distributable cash flow (DCF) was $3.54 billion, showing a 6% decrease compared to the previous year’s figure of $3.75 billion. This decline can primarily be attributed to higher interest expenses and sustaining capital expenditure, as stated in the company’s earnings statement.

KMI’s Annual Target and Challenges

KMI has announced that it may fall short of its annual target due to several factors. These include lower-than-anticipated commodity prices, delayed RNG (renewable natural gas) projects, and increased pipeline integrity expenditures.