A com­pany that’s run by share­hold­ers, for share­hold­ers

Founded two decades ago, Kin­der Mor­gan has be­come the largest in­de­pen­dent trans­porter of pe­tro­leum prod­ucts in the US and boasts a vast net­work of pipelines stretch­ing across North Amer­ica.

Finweek English Edition - - MARKETPLACE -

in the late 1990s the emer­gence of com­mer­cial hy­draulic frac­tur­ing and hor­i­zon­tal drilling for shale (col­lec­tively known as frack­ing) trans­formed the US en­ergy land­scape. These tech­nolo­gies en­abled ac­cess to pre­vi­ously un­reach­able, abun­dant North Amer­i­can oil and gas re­serves. Af­ter decades of heavy de­pen­dence on im­ported en­ergy, the US is now the largest global nat­u­ral gas pro­ducer, and by 2020 could over­take Saudi Ara­bia as the world’s largest sup­plier of hy­dro­car­bons. A key ben­e­fi­ciary of these de­vel­op­ments has been Kin­der Mor­gan, now North Amer­ica’s largest en­ergy in­fra­struc­ture com­pany.

Founded in 1997 by col­lege friends Richard Kin­der and Wil­liam Mor­gan when they ac­quired En­ron Liq­uids Pipe­line for $40m, Kin­der Mor­gan now has a mar­ket cap­i­tal­i­sa­tion of close to $50bn. It has in­vested in an un­par­al­leled net­work of pipelines, ter­mi­nals and pro­cess­ing facilities across the US and Canada. This net­work uniquely po­si­tions the com­pany to take ad­van­tage of the grow­ing need for en­ergy in­fra­struc­ture to sup­port do­mes­tic oil and gas pro­duc­tion.

Ex­ploit­ing the oil and gas opportunity

The US econ­omy has re­lied heav­ily on im­ported en­ergy for the past 40 years or so and re­lated in­fra­struc­ture was struc­tured to sup­port this. Im­ported sup­plies were trans­ported in one di­rec­tion: from the US Gulf Coast re­finer­ies and ports to the mid-con­ti­nent re­gion. Fol­low­ing the “frack­ing rev­o­lu­tion”, new in­fra­struc­ture was re­quired to con­nect the new shale wells – lo­cated across the coun­try – to the ex­ist­ing re­fin­ery cen­tres. Re­fined prod­uct then ei­ther needs to be trans­ported to ports for ex­port, or back through a com­plex net­work of pipelines for do­mes­tic use across the breadth of the US. See­ing opportunity, Kin­der Mor­gan in­vested heav­ily to meet this de­mand by buy­ing up nu­mer­ous smaller pipe­line busi­nesses and build­ing new lines to con­nect new shale wells to ex­ist­ing net­works. To­day, the com­pany’s vast net­work of pipelines, ter­mi­nals and pro­cess­ing facilities spans ap­prox­i­mately 135 000km and com­prises 180 ter­mi­nals, which store and re­di­rect flow.

Nat­u­ral gas is an in­creas­ingly im­por­tant en­ergy source pow­er­ing the US econ­omy, over­tak­ing coal in 2015 as the most-con­sumed fuel (high­lighted in the graph be­low). De­mand for US nat­u­ral gas is pro­jected to in­crease by a fur­ther 35% over the next 10 years. Kin­der Mor­gan has the largest nat­u­ral gas net­work in the US with 111 000km of pipe­line, con­nected to ev­ery im­por­tant US nat­u­ral gas or shale gas re­source. Thirty-eight per­cent of the nat­u­ral gas con­sumed in North Amer­ica moves through the com­pany’s pipelines.

The com­pany is the largest in­de­pen­dent trans­porter of pe­tro­leum prod­ucts, mov­ing 2.1m bar­rels of prod­uct a day. It trans­ports gaso­line, jet fuel, diesel, crude, nat­u­ral gas liq­uids and more from the Gulf Coast re­finer­ies to whole­sale dis­tri­bu­tion cen­tres through­out the coun­try.

Kin­der Mor­gan is the largest trans­porter of car­bon diox­ide, trans­port­ing 1.2bn cu­bic feet a day. Most of the car­bon diox­ide

The US is now the largest global nat­u­ral gas pro­ducer, and by 2020 could over­take Saudi Ara­bia as the world’s largest sup­plier of hy­dro­car­bons.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.