February 23, 2024

Houston-based Kinder Morgan Inc. (KMI) said it would expand the working gas storage capacity at its Markham storage facility in Matagorda County along the Texas Gulf Coast in a recent news release.

Kinder Morgan closed a deal with Underground Services Markham LLC, a subsidiary of Texas Brine Company LLC, to lease an additional cavern at the Markham storage facility to incrementally supply over six billion cubic feet (Bcf) of working gas storage capacity and 650 million cubic feet per day (MMcf/d) of withdrawal capacity through KMI’s Texas pipeline system, the release said.

Anchor shippers have subscribed to roughly half of the available capacity under long-term agreements, and commercial in-service for the project is expected in January 2024, according to the news release.

Before the expansion, the Markham storage facility’s working gas storage capacity was 21.8 Bcf with natural gas peak delivery of 1.1 Bcf/day. It has multiple receipt and delivery locations serving Kinder Morgan’s nearly 7,000-mile intrastate pipeline system, the company said.

According to Kinder Morgan Natural Gas Midstream President Tom Dender, the company’s storage portfolio was “critical” in providing “much needed supply to numerous electric generation facilities” during Winter Storm Uri in February 2021. The increased natural gas storage will “further support Texas customers, particularly during severe weather events,” Dender added.

“Storage capabilities on highly utilized assets are critical to support Texas’ ability to respond to an energy crisis and ensure energy reliability as renewables become a greater portion of the state’s energy mix,” Dender said.

Strong Gas Returns

KMI’s natural gas intrastate and interstate pipeline network, which stretches around 70,000 miles, moves about 40 percent of USA natural gas production and comprises 700 billion cubic feet of natural gas storage, which is 15 percent of total USA natural gas storage capacity, chief executive Steve Kean noted. “Our extensive and interconnected network continued to generate strong earnings this quarter, particularly in our Natural Gas Pipelines and Terminals business segments,” Kean said in the company’s first quarter earnings release.

“The Natural Gas Pipelines business segment’s financial performance was up in the first quarter of 2023 relative to the first quarter of 2022, primarily on higher contributions from our Texas Intrastate system, from Midcontinent Express Pipeline, from El Paso Natural Gas and from most of our gathering system assets,” Kinder Morgan President Kim Dang said in the release.

The company reported a first quarter net income attributable to Kinder Morgan of $679 million, compared to $667 million in the first quarter of 2022. It reported a distributable cash flow of $1,374 million in the first quarter, up from $1,455 million in the same period of 2022. Adjusted earnings were $675 million for January-March 2023, versus $732 million in the corresponding 2022 quarter.

Transported natural gas rose three percent in volume against the 2022 opening quarter, driven by increases on El Paso Natural Gas, the company said. The company also reported that natural gas gathering volumes increased 18 percent from January-March 2022 mainly from its Haynesville and Eagle Ford systems.

“While the U.S. Congress debates much-needed infrastructure permitting reform, the system we operate under today makes it difficult to permit new natural gas pipelines in much of the country. That in turn increases the value of our existing natural gas pipeline systems, which results in a favorable recontracting environment,” Kean said in the release. “With a large portion of our existing natural gas pipeline network in Texas and Louisiana, we also benefit from our ability to expand to meet growing demand in the most infrastructure-friendly region of the country.”

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