Kinder Morgan seeking partner to fund Trans Mountain Expansion
Houston-based Kinder Morgan dropped a bombshell this week by announcing it is seeking a partner to help fund its Trans Mountain Expansion. The company's CEO had previously hinted to investors it was looking to spin off and IPO its Canadian subsidiary, Kinder Morgan Canada.
Late last year, Kinder Morgan revised the project's capital cost estimate from $5.4 billion to $6.9 billion. No word yet if that number is still valid.
In this week's 2017 financial outlook, the company says it expects to generate US$4.46 billion next year which should be enough to fund its expansions without needing to access debt markets. Kinder Morgan stock (NYSE:KMI) has significantly lagged against its Canadian peers (namely TransCanada and Enbridge) due to its high debt load and less generous dividend payout.
The expanded Trans Mountain line runs 1,180 km from Edmonton to an export terminal in Burnaby, BC. About 200 km of pipe is already in place and will need to be reactivated, while 987 km of new pipe will need to be installed, run mostly in parallel to the existing line. The expansion will add another 590,000 bbl/day of export capacity for Alberta crude and refined products.
Kinder Morgan is the largest pipeline player in the US and has a US$13 billion backlog in energy infrastructure projects.