Kallanish Energy

Texas-based pipeline operator Kinder Morgan reported a net gain of $455 million or 20 cents per share in the third quarter 2020, Kallanish Energy reports.

That is a 10% decline from the $506 million or 22 cents per share in earnings in 3Q 2019.

The 3Q 2020 profit is in sharp contrast to Kinder Morgan’s $637 million loss in 2Q 2020, when the company wrote down $1 billion in assets.

“We are now in the seventh month of an unprecedented reduction in energy demand due to the pandemic,” executive chairman Richard Kinder said in a statement. “Yet our company continued to produce considerable earnings.”

Said CEO Steve Kean: “We are very proud of how our team has performed during this challenging time. We have maintained our vigilance with respect to capital spending, expenses and increased operational efficiency.”

It cut $175 million from its 2020 operating budget and cut its 2020 capital spending by $680 million or about  30%.

The company said its product pipelines that move gasoline, jet fuel and diesel fell 20% in the quarter.

It has predicted that the 4Q 2020 volume for refined products will be off by 10% from a year ago.

It said market conditions have delayed a number of planned expansion projects that are not needed at the moment.

Kinder Morgan reported that its Permian Highway Pipeline that encountered strong resistance in the Texas Hill Country is 97% complete and on schedule to begin service in the first quarter of 2021.

The $2 billion pipeline to move natural gas will stretch 432 miles. It will move 2.1 billion cubic feet of natural gas per day.

The pipeline will run from the Waha Hub in the Permian Basin of West Texas and New Mexico to the Katy Hub near Houston, Texas, where it will connect with other pipelines to transport natural gas to the Gulf Coast and to Mexico.

Three Texas cities, Austin, San Marcos and Kyle, have filed lawsuits against the project, as have some Texas schools and counties. Opponents say the pipeline poses a threat to the Edwards Aquifer.

In other news, the Federal Energy Regulatory Commission gave a Kinder Morgan subsidiary approval to begin construction on the Acadiana natural gas pipeline project in Louisiana to boost natural gas going to Cheniere Energy’s Sabine Pass LNG liquefaction/export terminal.

The $143 million project will boost gas capacity by nearly 1 billion cubic feet per day with three new compressor stations on the Kinder Morgan system in Acadia Parish in northern Louisiana.

The additional compression will likely begin service in 2Q 2022.

It will provide additional natural gas to Cheniere Energy’s Sabine Pass LNG facility and additional gas to the market.

Cheniere is adding a sixth train or unit at Sabine Pass. It is expected to begin service in late 2022.

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