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Kinder Morgan (KMI) Affiliate Starts 3 RNG Plants Construction

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  • KMI

Kinder Morgan, Inc.’s KMI affiliate Kinetrex Energy recently started construction works for three renewable natural gas (RNG) facilities located in Indiana. Kinetrex has an electric cooperative, namely Wabash Valley Power Alliance, as a partner in the project.

This August, Kinder Morgan completed the $310-million Kinetrex acquisition from a subsidiary of a private equity investment firm, Parallel49 Equity. The move was aimed at boosting its green energy exposure. Per the deal, Kinder Morgan acquired a 50% stake in a massive renewable natural gas unit located in Indiana. Kinetrex supplies liquefied natural gas in the U.S. Midwest.

The commencement of the construction of three landfill-based units is following the company’s previously announced plans. Total RNG production from the three facilities will likely be 3.5 billion cubic feet per annum. Operations are expected to start as soon as the fall of 2022. Kinetrex plans to invest a total of $146 million and build facilities that will process gas purchased from the Wabash Valley Power Alliance. The new facilities are expected to be operated by Waste Management and located at the Prairie View Landfill in Wyatt, Twin Bridges Landfill in Danville, and Liberty Landfill in Monticello.

RNG is developed from renewable sources like organic waste in landfills, waste from agricultural operations and wastewater treatments. The decomposition process of these organic wastes creates methane, which is captured by the company. The production process decreases greenhouse gas emissions. Kinder Morgan expects the RNG facilities to make enough production to reduce greenhouse gas emissions by almost 280,000 tons per annum.

As pressure from investors to reduce emissions in the energy spectrum is rising, several companies are boosting investments in green energy. This March, Kinder Morgan created the Energy Transition Ventures group within the company to pursue low-carbon energy opportunities. It intends to be part of the larger energy transition movement, which gathered pace amid the coronavirus pandemic. The latest development from Kinetrex is expected to further strengthen Kinder Morgan’s focus on energy transition.

Price Performance

Kinder Morgan’s shares have increased 3.7% in the past month compared with a 1.7% rise of the industry it belongs to.

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Zacks Rank & Other Key Picks

The company currently has a Zacks Rank #2 (Buy). Other top-ranked stocks from the energy space include Extraction Oil & Gas, Inc. XOG, Cheniere Energy, Inc. LNG, and Schlumberger Limited SLB, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Extraction Oil & Gas’ bottom line for 2021 is pegged at $13.07 per share, indicating a massive improvement from last year’s loss of $2.54.

Cheniere Energy’s bottom line for third-quarter 2021 is expected to surge 239.1% year over year.

Schlumberger’s bottom line for 2021 is expected to rise 83.8% year over year.

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Schlumberger Limited (SLB) : Free Stock Analysis Report

Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report

Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report

Extraction Oil & Gas, Inc. (XOG) : Free Stock Analysis Report

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