Inside Kinder Morgan Inc (KMI): KM Canada – Enbridge Inc (USA) (ENB), Kinder Morgan Energy Partners LP (KMP)

Kinder Morgan Inc (NYSE:KMI)Based on combined enterprise value, Kinder Morgan Inc (NYSE:KMI) 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 terminalsnatural gas pipelines, and products pipelines, so today we’ll break down the partnership’s Canada segment.

Background on the assets
Kinder Morgan Inc (NYSE:KMI) Canada consists of five pipeline systems and two terminals. The capacity of the pipeline systems are broken out below:

Trans Mountain (crude oil, refined products): 300,000 bpd
Trans Mountain Jet Fuel (jet fuel): 45,000 bpd
Puget Sound (crude oil, refined products): 180,000 bpd
Express & Platte (crude oil): Express, 280,000 bpd; Platte, ~150,000 bpd
Cochin (propane): 70,000 bpd

There are five terminals that are technically part of the Trans Mountain pipeline system. The biggest one is the Edmonton terminal, which features 19 storage tanks and a current capacity of 2.5 million barrels.

The two main terminals are operated by a Kinder Morgan Energy Partners LP (NYSE:KMP) subsidiary, cleverly titled Kinder Morgan Canada Terminals. Its North Forty terminal is located east of Edmonton. It provides storage and blending services for crude oil and petroleum products and has a capacity of 2.2 million barrels. Its Vancouver Wharves terminal sits in Port Metro, British Columbia, and handles over 3 million tons of bulk cargo every year.

From a fiscal standpoint, Kinder Morgan Inc (NYSE:KMI) Canada makes the smallest contribution to the bottom line out of all of the partnership’s business segments. It earned $71 million in the fourth quarter of last year, which was a 38% increase over 2011. At the end of 2012, Kinder Morgan Energy Partners LP (NYSE:KMP) sold its ownership interest in the Express-Platte pipeline system to Spectra Energy Corp. (NYSE:SE), which will affect earnings in the short term. That being said, this segment is going to be a powerhouse in five years, based largely on some expansion work.

A look ahead
The biggest news for the segment is the potential growth of the Trans Mountain line, which we’ll get to in a minute. First, let’s cover the expansion of the Edmonton terminal, which sits on the Trans Mountain line.

In January, Kinder Morgan Inc (NYSE:KMI) announced that it had secured contracts that would support the additional expansion of the facility. This would be phase two of the build out (phase one is already under way), and it will add 1.2 million barrels of additional storage capacity to the site. The partnership expects to spend $112 million to bring the new capacity online by the end of 2014. Once completed, the Edmonton terminal will have a total capacity of 9.4 million barrels.