Kinder Morgan Inc. (KMI) has placed the Gulf LNG (liquefied natural gas) export project on the backburner in favor of other growth opportunities, CEO Steve Kean indicated Wednesday during the firm’s analyst day.
KMI received FERC approval in July 2019 for the Gulf project, which entails two liquefaction trains, each with a capacity of 5 million metric tons/year (mmty).
“With respect to Gulf LNG, I wouldn’t expect anything anytime soon there, just in light of the situation right now for U.S. LNG,” Kean said. “So I think that’s just not a likely thing to develop in the near future, in the medium-term.”
Developers of greenfield liquefaction projects in the United States have reported difficulties securing long-term customer contracts for the so-called second wave of proposed export terminals, which total more than 20.
LNG exports will, however, be the main driver of U.S. natural gas demand growth and of KMI’s capital deployment over the coming years, executives said.
Elba Liquefaction Co. LLC, KMI’s joint-venture with EIG Global Energy Partners, sent a request on January 13 to the Federal Energy Regulatory Commission for permission to bring a fourth liquefaction train online at the Elba Island Liquefaction facility in Georgia, where the first cargo was sent out in December.
“We are happy to have the Elba opportunity,” Kean said, adding that KMI “would look at” expanding Elba Island’s capability “if our customer was interested and the economics worked for our shareholders.”
Kinder has about 3.5 Bcf/d of contracted, long-term pipeline transport capacity to LNG export facilities online, with another roughly 2.5 Bcf/d set to enter service by mid-2023, said Tom Martin, president of natural gas. Total contracted LNG sendout capacity stands at about 6 Bcf/d, translating to $1 billion of capital deployed, Martin said.
“We will see ancillary services, storage opportunities, [and] balancing services sort of evolve off of that initial 6 Bcf/d, and then on top of that we’ve got over 4 Bcf/d of incremental opportunities with the second wave” of LNG projects, Martin said.
These opportunities are in varying stages of development and not yet in Kinder’s backlog, Martin said, although “some may be soon.”
Kean highlighted, “We don’t feel pressure to refill the backlog. We feel pressure to deploy our investors’ capital wisely. We expect we’re going to have those opportunities, but we’re not going to force it.”
Kean said that Kinder has “significant market shares” in the LNG export and Mexico export markets, which are forecast to account for 15.9 Bcf/d and 2.7 Bcf/d of demand growth, respectively, through 2030, Kean said, citing projections from Wood Mackenzie.