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Which Segment Drives Kinder Morgan’s Performance?

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KMI’s Natural Gas Pipelines segment

Kinder Morgan (KMI) conducts its operations through five reportable segments. Natural Gas Pipelines is Kinder Morgan’s largest business segment in terms of EBDA (earnings before depreciation and amortization). In 2Q16, the segment alone accounted for 54% of the company’s total EBDA.

The segment gathers, processes, transports, and stores natural gas, and fractionates and transports NGLs (natural gas liquids).

In 2Q16, the segment’s EBDA increased nearly 4% year-over-year, thanks to increased contribution from the segment’s Tennessee Gas Pipeline. This larger contribution was driven by expansion projects and improved performance by the acquired Hiland midstream assets.

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CO2 segment

The above graph shows the segmental contribution to KMI’s EBDA over the last six quarters. KMI’s CO2 (carbon dioxide) segment primarily produces, transports, and markets CO2 to oilfields. CO2 is used to enhance recovery of crude oil from mature oilfields.

The segment’s EBDA fell 5% between 2Q15 and 2Q16. The segment’s performance over the last few quarters has been impacted by lower commodity prices.

Terminals segment

KMI’s Terminals segment owns and operates liquids and bulk terminals. The segment’s EBDA rose 4.7% between 2Q15 and 2Q16. The growth was driven by strong growth at liquids terminals, which comprise more than three-quarters of the segment’s business. The growth in the liquids terminals business was primarily driven by expansion projects.

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Products Pipelines segment

KMI’s Products Pipelines segment’s 2Q16 EBDA grew 5.8% year-over-year, driven by higher volumes on the segment’s crude and condensate pipeline, the startup of a new petroleum condensate processing facility during 2015, and improved performance on the segment’s Cochin system.

Kinder Morgan Canada

The Kinder Morgan Canada segment owns and operates the Trans Mountain pipeline system, which transports crude oil and refined products from Alberta, Canada, to marketing terminals and refineries in British Columbia, Canada, and the state of Washington. Kinder Morgan Canada’s 2Q16 EBDA was 8.1% higher than it was in 2Q15. The growth was driven by high demand for capacity on its Trans Mountain pipeline system.

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