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Kinder Morgan's Gulf Coast Express Pipeline Comes Online

Zacks Equity Research

Kinder Morgan, Inc.’s KMI Gulf Coast Express (“GCX”) Pipeline Project is coming online today, ahead of schedule. The pipeline was designed to ramp up natural gas transportation capacity in the Permian Basin, which has been suffering from takeaway capacity limitation.

The 2 billion cubic feet per day (Bcf/d) pipeline will collect natural gas from the Waha region in West Texas and deliver it to Agua Dulce near Texas Gulf Coast. The commencement of the 448-mile pipeline can help the upstream companies operating in the prolific Permian to reduce flaring of natural gas that is produced as a by-product of crude oil.

With production from the region expected to rise in the coming days, the pipeline can provide Kinder Morgan with stable fee-based revenues in the long run. DCP Midstream, LP DCP, Apache Corporation APA, Exxon Mobil Corporation XOM and others will serve as committed shippers for the GCX pipeline.

Markedly, Kinder Morgan is currently building the Permian Highway Pipeline. The project — with all of its capacity fully subscribed under long-term agreements — is anticipated to offer additional capacity for consistent transportation of natural gas to the U.S. Gulf Coast. Notably, the project will likely come online by late 2020. The company is considering a third pipeline, Permian Pass, which is expected to feed LNG terminals in Texas and Louisiana. Kinder Morgan can generate significant cash flow from fees charged for using these midstream properties.

The company, through its subsidiary Kinder Morgan Texas Pipeline, owns a 34% operating stake in the GCX pipeline. It has Altus Midstream, DCP Midstream and a subsidiary of Targa Resources as the partners in the project.

Price Performance & Zacks Rank

Headquartered in Houston, TX, Kinder Morgan has gained 33.7% year to date compared with 11.2% rally of the industry it belongs to. Currently, the companycarries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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