Kinder Morgan's (KMI) NGPL Texas Expansion Receives FERC Nod

Kinder Morgan, Inc.’s KMI subsidiary Natural Gas Pipeline Company of America or NGPL recently received a green light from the Federal Energy Regulatory Commission (FERC) to commence the Gulf Coast Southbound Expansion Project’s Phase 2 construction.

While Phase 1 came online in October 2018, the second phase will likely start operations in mid-2021. This crucial project will supply the third liquefaction train at Corpus Christi liquified natural gas export facility of Cheniere Energy, Inc. LNG in South Texas. The Phase 2 is expected to provide the Corpus Christi export facility with an additional 300,000 dekatherm per day (Dth/d) of firm southbound capacity. The third train at the site is currently under construction. Markedly, the Phase 2 will likely create an additional 28,000 Dth/d of incremental firm transportation capacity for NGPL.

Notably, the same pipeline system provides Cheniere's Sabine Pass LNG export facility in Louisiana with feedgas. Cheniere is currently operating five trains at the Sabine Pass LNG export facility and building a sixth one.

The latest clearance from the FERC will enable NGPL to add more horsepower to its existing compressor stations in Harrison, Victoria and Wharton counties in Texas. It is one of the many projects that are designed to boost natural gas shipment at liquefaction and export facilities in the expanding market along the coast. The company is looking for non-binding commitments for the third phase of the project, which will provide 260,000 Dth/d of incremental firm southbound transportation capacity. Notably, NGPL already operates 9,100 miles of pipeline and more than 1 million compression horsepower. It also has 288 billion cubic feet of working gas storage.

The latest green signal came from the regulatory authority amid fierce objection from local opponents and safety threats to workers due to coronavirus pandemic. As low input and shipping costs are making some energy projects profitable, the move from the FERC will likely boost the morale of midstream operators and energy exporters.

Price Performance

Kinder Morgan has plunged 39.8% year to date against compared with 39.5% decline of the industry it belongs to.

Zacks Rank and Stocks to Consider

Currently, Kinder Morgan has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector include DCP Midstream Partners, LP DCP and Antero Resources Corporation AR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DCP Midstream’s bottom line for 2020 is expected to rise 240% year over year.

Antero Resources’ bottom line for 2020 is expected to rise 22.2% year over year.

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Cheniere Energy, Inc. (LNG): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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