Kinder Morgan

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Kinder Morgan
TypePublic
Traded asNYSEKMI
S&P 500 Component
IndustryOil and gas
Founded1997
FoundersRichard Kinder
HeadquartersKinder Morgan Building
Houston, Texas, U.S.
Area servedUSA and Canada
Key peopleRichard Kinder
(Chairman and CEO)
ServicesPipeline transport
Oil storage
Employees~ 11,000 (2014)
SubsidiariesKinder Morgan Energy Partners
Websitewww.kindermorgan.com
 
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Kinder Morgan
TypePublic
Traded asNYSEKMI
S&P 500 Component
IndustryOil and gas
Founded1997
FoundersRichard Kinder
HeadquartersKinder Morgan Building
Houston, Texas, U.S.
Area servedUSA and Canada
Key peopleRichard Kinder
(Chairman and CEO)
ServicesPipeline transport
Oil storage
Employees~ 11,000 (2014)
SubsidiariesKinder Morgan Energy Partners
Websitewww.kindermorgan.com

Kinder Morgan is an American energy company. It is the fourth largest energy company in North America.[1] The Kinder Morgan group publicly traded companies include Kinder Morgan, Inc. (NYSE: KMI), Kinder Morgan Energy Partners, L.P. (NYSE: KMP), Kinder Morgan Management, LLC (NYSE: KMR) and El Paso Pipeline Partners, L.P. (NYSE: EPB).

Kinder Morgan owns about 180 terminals that store and handle products such as gasoline, coal, and petroleum coke. Kinder Morgan's CO2 division provides carbon dioxide (CO
2
) for enhanced oil recovery projects in North America.[2] in 2014, a third of the natural gas that moves in the United States passes through a Kinder Morgan asset.[3]

Kinder Morgan has been cited by the U.S. government in 24 incidents which led to five federal enforcement actions from 2006 to 2014.[4]

On August 10, 2014, Kinder announced it was moving to full ownership of its partially owned subsidiaries Kinder Morgan Energy Partners, Kinder Morgan Management, and El Paso Pipeline Partners in a deal worth $71 billion.[5]

CEO[edit]

Chairman and CEO Richard Kinder, selected by Morningstar as its 2005 CEO of the Year, receives a salary of $1.00 a year, no bonuses, no option grants, and no restricted stock. Kinder Morgan claims that it does not spend money on corporate jets, first-class airfares, sports tickets, or other expensive perquisites.[6]

However, Forbes Magazine estimates that Richard Kinder's net worth at more than $10 billion dollars as of August 9, 2014.[7]

History[edit]

Kinder was founded in 1997 when a group of investors acquired the general partner of a small, publicly traded pipeline limited partnership (Enron Liquids Pipeline, L.P.).[1]

On December 23, 2013, Kinder Morgan announced that, through its Kinder Morgan Energy partner subsidiary (ticker KMP on NYSE), it has agreed to acquire the US oil tanker operator American Petroleum Tankers (APT) and its affiliated company SCT (State Class Tankers) from the US private equity investment firms Blackstone Group and Cerberus Capital management. APT operates a fleet of five US flagged MR 50,000 tons - 330,000 barrels - oil tankers and has four other similar other tankers on order from the General Dynamics shipbuilding company NASSCO in California. This acquisition appears to be the first case whereby a pipeline operator will also be able to offer marine transportation.[8]

In addition to its role in the energy transportation and storage industry, Kinder Morgan operates in two major oil fields in Texas: the Yates Oil Field and the SACROC Unit. Kinder Morgan produces approximately 55,000 barrels per day between the two areas, and claims to be the second-largest oil producer in Texas.[9]

Leveraged buyout[edit]

On August 28, 2006, Kinder Morgan announced that it would be taken private in a management-led leveraged buyout totaling approximately $22 billion. Outside participants in the transaction include Fayez Sarofim, Goldman Sachs Capital Partners and Highstar Capital (then owned by American International Group).[10]

On September 8, 2010, a notice of a class action settlement was filed in the District Court of Shawnee County Kansas. The proposed settlement is to resolve claims of breach of fiduciary duty owed to Kinder Morgan shareholders by persons involved with the buyout. The settlement payment is to be $200 million. A hearing on the settlement was scheduled for November 12, 2010.[citation needed]

In October 2011, Kinder Morgan Inc. agreed to buy El Paso Corp. (EP) for $21.1 billion and will make the combined company have 67,000 miles (107,000 kilometers) of gas lines and eclipse Enterprise Products Partners LP (EPD) as the biggest U.S. pipeline operator. The transaction paid with shares of Kinder Morgan, Kinder Morgan warrants, and all of cash portion $11.5 billion through Barclays Plc (BARC) borrowing.[11]

Companies[edit]

Kinder Morgan Brisbane Terminal in Brisbane, California. The 20 tanks here can hold up to 618,000 barrels of petroleum products.

Key to Abbreviations:

- GG Gas Gathering

- GT Gas Transmission

- HL Hazardous Liquids

This list may not be up to date due to turnover in holdings:

Pipelines[edit]

Kinder Morgan, through a subsidiary, is the general partner and owner of many of the interests in Kinder Morgan Energy Partners, a publicly traded pipeline and terminal limited partnership. Kinder Morgan Energy Partners, L.P. is a leading pipeline transportation and energy storage company in North America. Kinder Morgan owns or operates approximately 82,000 miles of pipelines transporting primarily natural gas, crude oil, and petroleum products.

Trans Mountain Oil Pipeline[edit]

In Canada, Kinder Morgan operates the Trans Mountain oil pipeline which links Alberta with Vancouver, BC, as well as the Cochin natural gas pipeline between Western Canada and the US Mid West. In 2013, Kinder Morgan completed the filing of its application to the Canadian National Energy Board ("NEB") for building a second parallel pipeline to Trans Mountain, which would nearly triple the transportation capacity of Trans Mountain from 300,000 to 850,000 barrels per day, for an estimated investment of $5.4 billion. This expansion would enable the export of larger volumes of Alberta bituminous sands oil to the US and to Asian countries.

Kinder Morgan has indicated that it already has the support of several large customers for this expansion, i.e.: BP Canada Energy Trading Co., Canadian Natural Resources, Canadian Oil Sands Ltd., Cenovus Energy Inc., Devon Canada Corp., Husky Energy Marketing Inc., Imperial Oil Ltd., Nexen Marketing Inc., Statoil Canada Ltd., Suncor Energy Marketing Inc., Suncor Energy Products Partnership, Tesoro Refining & Marketing Co. and Total E&P Canada Ltd.

However, this project, like other new pipeline projects, will face opposition, especially from the Indian First Nations who have title to the lands crossed by the pipelines as well as from environmentally concerned citizens. (See below, "Challenges to Kinder Morgan Pipelines" and "Accidents").

Challenges to Kinder Morgan Pipelines[edit]

The Kinder Morgan Trans Mountain existing pipeline for transporting diluted bitumen between Edmonton, Alberta and Burnaby, East of Vancouver, BC is proposed to be nearly tripled with a capacity of 850,000 barrels per day from 300,000, for a total investment of $5.4 billion. [1] [12][13]

This project is controversial, as are similar pipeline projects Northern Gateway from Alberta to Kitimat, BC, Keystone XL to the US south and Line 9 (Enbridge's project, from Sarnia to Montreal), all of which expand the transportation capacity of heavy crude to refineries or loading ports for export to the US or overseas, a potentially significant contributor to climate change and ocean acidification, and a threat to aquifer and watershed integrity where the lines run.

Members of the Squamish and Tsleil-Waututh First Nations of British Columbia, Canada paddled canoes on the waters of Burrard Inlet to the Kinder Morgan Burnaby Terminal for a ceremony to protest the $5 billion expansion of the Trans Mountain pipeline, in North Vancouver, B.C., on September 1, 2012. Tsleil-Waututh leaders made it clear that their ultimate goal was to shut down the project altogether.[14]

The existing and proposed pipelines ship diluted bitumen through the Strait of Juan de Fuca, an extremely sensitive environmental region. The tankers have to pass through a very narrow channel of shallow water to reach the open sea, making the project controversial and strongly opposed by some Canadians [2] and Americans, for reasons similar to the opposition to Keystone XL, Line 9, and Northern Gateway and offshore deep ocean oil drilling.

Pipeline Safety Violations[edit]

In 2009, the Pipeline and Hazardous Materials Safety Administration (PHMSA) cited Kinder Morgan for violating proper procedures for establishing the distance between a natural gas pipeline and a “high consequence area” such as a school or hospital, resulting in distances being too close.[15]

In 2011, PHMSA cited Kinder Morgan for these safety violations:

In 2013, the headline “Wall Street Worries About Kinder Morgan’s Safety Record: BC pipeline operator slashes and defers maintenance spending” was a concern to anyone who lived or worked near a Kinder Morgan pipeline.[17]

The Wall Street Journal asked, “Is Kinder Morgan Scrimping on its Pipelines?” after an investment analyst charged the company with starving its pipelines of routine maintenance spending in order to return more cash to investors.[18]

Deferred maintenance may account for the high number of Kinder Morgan pipeline accidents in the last decade.

Accidents[edit]

In Texas from 2003 to 2014, Kinder Morgan experienced 36 "significant incidents" resulting in fatalities or hospitalization, fires, explosions, or spills.[19]

Throughout the U.S. since 2003, Kinder Morgan and its subsidiaries' pipelines have been responsible for at least 180 spills, evacuations, explosions, fires, and fatalities in 24 states.[20] Some examples (also including spills in Canada):

References[edit]

  1. ^ a b "About Us". http://kindermorgan.com. Retrieved 25 Aug 2014. 
  2. ^ Failure Investigation Report – Central Florida Pipeline 10-inch Jet Fuel Pipeline Failure, July 22, 2011, http://www.phmsa.dot.gov/pv_obj_cache/pv_obj_id_4DFEE9C3F71E6C9384A34BA182C1F157C5212A00/filename/cntrl_FL_red_appD.pdf.
  3. ^ Otterbourg, Ken (2 Jun 2014). "Kinder Morgan: The energy boom’s mighty middleman". Fortune.com. Retrieved 8 Sep 2014. 
  4. ^ Pipeline Operator Information, http://primis.phmsa.dot.gov/comm/reports/operator/Operatorlist.html?nocache=5346.
  5. ^ "Pipeline King Kinder rakes in $1.5 bn in one day". Houston Mirror. 11 August 2014. Retrieved 13 August 2014. 
  6. ^ Company profile on KM web site
  7. ^ http://www.forbes.com/profile/richard-kinder/
  8. ^ Kinder Morgan Tankers, http://www.kindermorgan.com/business/terminals/apt.cfm
  9. ^ Kinder Morgan CO
    2
    : description of CO
    2
    and oil operations
  10. ^ SEC Form 10-Q, March 31, 2009
  11. ^ "Kinder Morgan to Buy El Paso for $21 Billion in Cash, Stock". October 18, 2011. 
  12. ^ Elisabeth Rosenthal (June 13, 2012). "Canada Seeks Alternatives to Transport Oil Reserves". The New York Times. Retrieved June 14, 2012. 
  13. ^ http://www.transmountain.com/project/project-overview/
  14. ^ "B.C. First Nation launches legal challenge over Kinder Morgan pipeline," http://www.ctvnews.ca/canada/b-c-first-nation-launches-legal-challenge-over-kinder-morgan-pipeline-1.1804190#ixzz350lGUDK4 and http://www.ctvnews.ca/canada/b-c-first-nation-launches-legal-challenge-over-kinder-morgan-pipeline-1.1804190#ixzz350kqw2ja, accessed June 18, 2018.
  15. ^ PHMSA letter to Richard Kinder, September 1, 2009, http://primis.phmsa.dot.gov/comm/reports/enforce/documents/520071008/520071008_FinalOrder_09012009_text.pdf, accessed June 18, 2014.
  16. ^ Pipeline and Hazardous Materials Safety Administration (PHMSA) letter to Hugh Harden, Kinder Morgan, Feb. 28, 2011, http://primis.phmsa.dot.gov/comm/reports/enforce/documents/520115005/520115005_NOPV%20PCO_02282011_text.pdf, accessed June 2014.
  17. ^ Eric de Place, “Wall Street Worries About Kinder Morgan’s Safety Record: BC pipeline operator slashes and defers maintenance spending”, September 19, 2013, http://daily.sightline.org/2013/09/19/wall-street-worries-about-kinder-morgans-safety-record/, consulted June 16, 2014.
  18. ^ Tom Fowler and Ben Lefebvre, “Is Kinder Morgan Scrimping on its Pipelines?” Wall Street Journal, Sep 27, 2013, http://blogs.wsj.com/corporate-intelligence/2013/09/27/is-kinder-morgan-scrimping-on-its-pipelines-the-market-shrugs/, accessed June 16, 2014. Claudia Assis, “Research firm rebuts Kinder Morgan’s rebuttal,” September 26, 2013, Marketwatch / Wall Street Journal, http://blogs.marketwatch.com/energy-ticker/2013/09/26/research-firm-rebuts-kinder-morgans-rebuttal/, accessed June 16, 2014.
  19. ^ Building Safe Communities: Pipeline Risk and its Application to Local Development Decisions, (Washington D.C.: U.S. Department of Transportation Office of Pipeline Safety: 2010), p. 10, at http://primis.phmsa.dot.gov/comm/publications/PIPA/PIPA-PipelineRiskReport-Final-20101021.pdf, accessed June 18, 2014.
  20. ^ PHMSA Pipeline Safety State Pages at http://primis.phmsa.dot.gov/comm/States.htm?nocache=3971.
  21. ^ Scott Marshall, “Kinder-Morgan to pay $5.3 million for fuel spills,” Contra Costa Times, May 21, 2007, http://www.contracostatimes.com/search/ci_5950251, accessed June 16, 2014.
  22. ^ Officials Dole Out Fines In Fatal Pipeline Explosion, May 5, 2005, http://www.ktvu.com/news/news/officials-dole-out-fines-in-fatal-pipeline-explosi/nKYpc/.
  23. ^ "Cal/OSHA Issues Multi-Employer Citation," http://www.dir.ca.gov/dirnews/2005/ir2005-20.html; California Fire Investigation Report, http://osfm.fire.ca.gov/pipeline/pdf/WCFinalReport/PenaltyLetter.pdf; “Kinder Morgan reaches safety deal,” April 10, 2006, http://www.marketwatch.com/story/kinder-morgan-energy-us-reach-safety-deal, accessed June 2014.
  24. ^ Tom Beyerlein, “Fatal explosion puts Kinder Morgan’s past in spotlight,” Dayton Daily News [Ohio], September 14, 2008, in Tar Sands Free BC, September 15, 2008, http://tarsandsfreebc.org/?p=236, accessed June 16, 2014.
  25. ^ Kinder Morgan 2009 annual report, p. 198.
  26. ^ "Cleanup continues on B.C. oil spill". July 24, 2007. Retrieved August 27, 2014. 
  27. ^ "3 companies plead guilty to Burnaby oil spill". October 3, 2011. Retrieved August 27, 2014. 
  28. ^ Eric James, “Pipeline at Pasadena plant explodes,” September 24, 2008, ABC Eyewitness News, Houston, Texas, http://abc13.com/archive/6408372/, accessed June 17, 2014.
  29. ^ “Texas Significant Incidents Listing,” 2003-2014, PHMSA Pipeline Safety Stakeholder Communication, U.S. DOT, http://primis.phmsa.dot.gov/comm/reports/safety/IncDetSt_st_TX_flt_sig.html?nocache=8751, accessed June 17, 2014.
  30. ^ "Pipeline explosion kills 1, injures 3 in Smith county". MS News. Retrieved 23 January 2014. 
  31. ^ PHMSA Corrective Action Order, Case CPF 420101007H.
  32. ^ Kinder Morgan annual report for 2013, p. 166.
  33. ^ “Kinder Morgan, Owner of Illinois Natural Gas Pipeline Co. Where Explosion Occurred, Has Lengthy Record of Pipeline, Workplace Safety Violations,” August 17, 2011, NaturalGasWatch.org, http://www.naturalgaswatch.org/?p=817; “Gas plant explosion injures five,” Hazardex, August 17, 2011, http://www.hazardexonthenet.net/article/44270/Gas-plant-explosion-injures-five.aspx?AreaID=2, accessed June 2014.
  34. ^ http://abc13.com/news/gas-line-explosion-sends-150-foot-flames-up-in-air/142620/, accessed Aug 12, 2014.

External links[edit]