Why These Trends in KMI’s Natural Gas Volumes Matter



Lower transport volumes

Kinder Morgan’s (KMI) natural gas transport volumes fell 2% YoY (year-over-year) in 4Q16. According to the company, this fall was driven by “lower throughput on the Ruby Pipeline due to increased Canadian imports to the Pacific Northwest, lower throughput on the Texas Intrastate Natural Gas Pipelines due to lower Eagle Ford Shale volumes, and lower throughput on Wyoming Interstate Company and TransColorado pipelines due to lower Rockies production.”

As the above graph shows, lower Eagle Ford volumes impacted the segment’s transport volumes in 3Q16 as well.

Article continues below advertisement

Kinder Morgan believes that there are ample growth opportunities for the company’s natural gas infrastructure, driven by greater demand for gas-fired power generation, LNG (liquefied natural gas) exports, exports to Mexico, and demand from the petrochemical industry. (We’ll discuss these drivers further in subsequent parts of this series.)

Lower gathering volumes

KMI’s Natural Gas Pipelines segment’s natural gas gathering volumes fell 21% YoY in 4Q16. The fall was primarily driven by lower Eagle Ford volumes, which have been impacting the segment’s performance over the last few quarters, as the above graph shows.

These declining volumes have been a cause for concern among investors, and the lower volumes get reflected in the segment’s EBDA (earnings before depreciation and amortization), which fell 10% YoY in 4Q16.

So what are the growth catalysts for this segment? Continue to the next part for a closer look.


More From Market Realist