Recently, Kinder Morgan, Inc. KMI requested Federal Energy Regulatory Commission’s (“FERC”) approval to bring a fourth liquefied natural gas (LNG) production unit online at the Elba Island LNG export plant, located in Georgia. The Elba Liquefaction Co. LLC is a joint venture between Kinder Morgan and EIG Global Energy Partners.
Kinder Morgan stated that its Movable Modular Liquefaction System No. 2 facilities would be ready to come online in Jan 16. This fourth train is expected to have 0.3 million tons per annum (MTPA) of capacity, similar to the other trains in the project. Notably, the first, third and fourth units have already started operations, with the first cargo exported from Unit 1 last December.
The facility is expected to have a liquefaction capacity of 2.5 MTPA and comprise 10 trains. Notably, the project has a 20-year offtake contract with Royal Dutch Shell plc RDS.A. The terminal was originally built to import LNG. Following the U.S. shale revolution, the facility was converted to boost exports. With abundance of natural gas in the domestic market and growing demand for cleaner energy sources globally, the facility is anticipated to generate huge profit margins in the coming days.
Per Reuters, LNG export capacity of the United States is currently 7.6 billion cubic feet per day (Bcf/d). Incorporating the ongoing project developments, the capacity is likely to surge to 9.6 Bcf/d in 2020 and further to 10.3 Bcf/d in 2021. Given such positive developments, the United States is expected to become the biggest LNG exporter by 2024. The United States currently holds the third place, with Qatar and Australia being the only countries ahead of it in this respect.
Kinder Morgan has the largest network of natural gas pipelines in North America that spreads almost 84,000 miles and provides it with stable fee-based revenues. Its midstream properties are linked to all the prospective U.S. plays that are rich in hydrocarbons. Coming to price performance, the stock has rallied 23.9% in the past year, outperforming 2.9% growth 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 Enbridge Inc. ENB, 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 first-quarter 2020 is expected to rise 78.6% year over year.
Enbridge’s bottom line for fourth-quarter 2019 is expected to rise 8% year over year.
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