Kinder Morgan Energy Partners, LP (KMP) on Tuesday entered into a 15-year agreement to supply Praxair Inc. with up to 90,000 MMBtu/d of natural gas from its Texas intrastate pipeline system.

Under the agreement, KMP will supply natural gas to Praxair’s new hydrogen facilities located in Texas City, TX and Port Arthur, TX. The new hydrogen facilities are scheduled to be in production in 2004. Because the pipeline is an intrastate line, it operates in a deregulated environment and is regulated by the Texas Railroad Commission instead of the Federal Energy Regulatory Commission. This allows KMP to actually supply natural gas as opposed to only delivering capacity.

Kinder Morgan Energy Partners CEO Richard D. Kinder said the long-term agreement would help “grow the business of our Texas Intrastate Pipeline Group” in addition to generating “reliable income for our unitholders. With approximately 5,800 miles of pipeline and more than 5 Bcf of peak capacity, our Texas intrastate pipelines provide a valuable link between natural gas producing fields in South Texas and key markets within the state.”

In addition to supplying hydrogen, Praxair also delivers a complete portfolio of large-volume industrial gases, cylinder gases and specialized services to refinery customers. It operates 22 steam-methane reformers and seven major hydrogen pipeline systems that deliver more than 500 MMcf/d of hydrogen.

“Securing a long-term supply of natural gas from Kinder Morgan for our new hydrogen plants is consistent with our business strategy,” said Dan Yankowski, vice president, South Region, for Praxair’s North American Industrial Gases organization. “It is another step to strengthen our supply capabilities and reinforces Praxair’s commitment to our hydrogen customers in the U.S. Gulf Coast.”

Kinder Morgan Energy Partners’ general partner is owned by Kinder Morgan Inc., one of the largest energy transportation and storage companies in America. The partnership is the largest publicly traded pipeline limited partnership in the United States, transporting up to 7.8 Bcf/d of natural gas, 2 million bbl/d of gasoline and other petroleum products. It has an enterprise value of $9 billion.

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