Kinder Morgan Inc (KMI): Passing On Coal, For Now

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Kinder Morgan Inc (NYSE:KMI) and Kinder Morgan Energy Partners LP (NYSE:KMP) have made headlines in the past because of large acquisitions. Today I’m going to look at two much smaller stories that highlight trends in the American energy game that investors should be aware of.

Passing on coal, for now
Kinder Morgan Inc (KMI)Earlier this month, Kinder Morgan Inc (NYSE:KMI) made news when it decided not to pursue the development of a coal export terminal on the Columbia River in Oregon. This would have been a huge project, exporting 30 million tons of coal a year.

Though the partnership’s coal export volumes are on the rise, management ultimately decided to pursue other options. Coal terminals in the Pacific Northwest are facing increasing opposition from local citizenry over the environmental impact of both the terminals themselves and the actual combustion of coal. According The Oregonian, three of six recent coal export terminals in the Pacific Northwest have been dropped, including Kinder Morgan’s. The combined export capacity of the three projects was about 50 million tons of coal originating in Montana and Wyoming.

Gulf Coast focus
One project that is getting the green light, is an expansion of Kinder Morgan Inc (NYSE:KMI)’s facilities on the Houston Ship Channel. The partnership will spend $106 million adding acreage, upgrading storage, and constructing a new barge dock at its Pasadena and Galena Park terminals in Texas.

There is an awful lot of activity not just at the Houston Ship Channel, but on the Gulf Coast in general, as domestic oil and gas production rises, and refined products exports increase. Kinder Morgan Inc (NYSE:KMI) looks to be positioned nicely, as does Enterprise Products Partners L.P. (NYSE:EPD) and Martin Midstream Partners L.P. (NASDAQ:MMLP).

Enterprise’s marine transportation business grew in the first quarter of this year, and the partnership recently struck a deal to increase capacity at one of its terminals on the Houston Ship Channel. It will team up with Oiltanking Partners LP (NYSE:OILT) to build a new dock and improve the existing docks so that more vessels may access the terminal.

Meanwhile, Martin Midstream Partners L.P. (NASDAQ:MMLP) signed two big deals to increase its maritime business, spending $47.4 million to pick up 10 marine terminals from Talen’s Marine and Fuel, and $50.8 million on six liquefied petroleum gas barges and two commercial push boats.

As a result, both of these partnerships, along with Kinder Morgan Inc (NYSE:KMI), will soon reap the windfall of increased production and export opportunity coming out of the nearby Eagle Ford Shale.



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