Kinder Morgan remained profitable last year

Kinder Morgan remained profitable in 2020 as it battled the worst oil downturn in a generation that slashed demand for the crude and natural gas flowing through its network of pipelines and terminals.

Nevertheless, the Houston company on Wednesday said it’s preparing for a low-carbon future in which its business would shift to transport and store biofuels and hydrogen instead of fossil fuels.

“As the world transitions to a future of lower emissions, our assets are wellpositioned for the energy transition,” Kinder Morgan Executive Chairman Richard Kinder told analysts in a conference call Wednesday.

The company on Wednesday said it made $119 million in 2020, a fraction of the $2.2 billion profit in 2019. Annual revenue declined by 11 percent to $11.7 billion from $13.2 billion in 2019.

During the fourth quarter, Kinder Morgan made $607 million, down slightly from $610 million during the same period a year earlier. Revenue fell 7 percent to $3.1 billion from $3.35 billion a year earlier. Its financial performance proved robust enough that the company said it would increase its fourth-quarter dividend by 5 percent.

Although executives said they remain bullish about the future of natural gas as a backup energy supply to intermittent solar and wind power, the pipeline giant said it is preparing for greater use of biofuels and hydrogen paired with carbon capture storage, which executives said are “ripe for expansion.” Biofuels are made from animal and food waste while hydrogen can be produced from fossil fuels. Both can be transported as a gas through pipelines or stored at terminals in liquid form.

Pipeline and terminal projects face mounting opposition from environmental activists and political leaders increasingly concerned about climate change.

One of President Joe Biden’s first executive orders after his inauguration Wednesday was to revoke the permit for the Keystone XL pipeline that would have moved crude from Canadian oil sands to U.S. refineries in the Midwest and Texas.

Emerging energy sources, such as hydrogen with carbon capture storage, are not yet economically viable, Kinder Morgan executives said. But the company said it is looking at opportunities to expand into these areas on its own or through acquisitions.

“If (hydrogen) were in existence next year, we can move it in our pipelines next year,” CEO Steve Kean said. “Other (renewables) are a good ways off. We need to be discerning.”

The company owns or operates about 83,000 miles of pipelines and 144 terminals, which transport and store natural gas, refined petroleum products, crude oil, carbon dioxide and other products.

“Our competitive advantage is in the existing network we have and existing customer relationships we have,” Kean said.