Kinder Morgan Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manav Gupta - UBS Securities LLC - Analyst : Thank you, guys. First quick question here. The backlog went up pretty much, on a good note, which is very positive, but the multiple also went up just a little. So if you could just talk about the dynamics of those two things here.

Question: Manav Gupta - UBS Securities LLC - Analyst : Thank you for a very detailed response. My quick follow-up here is, you mentioned the demand coming from data centers, and we completely agree with you. When you are having these discussions with the data center operators, we believe, at one point, these data center operators were not even talking to natural gas company. They were only talking to renewable sources. Have you seen a change in sentiment where reliability has become a key factor? So you are a bigger part of these conversations than you were probably 18 or 24 months ago?

Question: Manav Gupta - UBS Securities LLC - Analyst : Thank you very much. I'll turn it over.

Question: John Mackay - Goldman Sachs & Co. LLC - Analyst : Hey Kim, thanks for the time. Maybe we'll pick up a little bit on that last one surprisingly. So if you guys are talking about 5 bcf of power demand discussions right now, would just be curious to hear a little bit from you on where you're seeing that geographically. Is it primarily Texas? Is it elsewhere in the portfolio? And anything you can comment on in terms of speed to market. And again, that might be a Texas versus more firm jurisdiction discussion, but both of those have been interesting. Thanks. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 8:30PM, KMI.N - Q2 2024 Kinder Morgan Inc Earnings Call

Question: John Mackay - Goldman Sachs & Co. LLC - Analyst : And maybe just on the time to market in terms of how long it could bring (multiple speakers)

Question: John Mackay - Goldman Sachs & Co. LLC - Analyst : Appreciate that. And then just second question. You guys talked a little bit about some kind of portfolio optimization here. There is that CO2, I guess you could call it asset swap. There's a line in the release on maybe some divestitures in the net gas segment. I'd just be curious overall for an updated view on how you're thinking about portfolio pruning and optimization over time.

Question: John Mackay - Goldman Sachs & Co. LLC - Analyst : Thanks for the time.

Question: Keith Stanley - Wolfe Research, LLC - Analyst : Hi, good afternoon. I wanted to follow up on the SNG South system project. Can you just talk to the timeline for regulatory approval started construction? And is it all coming into service in late 2028 or phased over time? Is it also fair to assume your customer here is your partner Southern on the project or is it a broader customer base supporting this project? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 8:30PM, KMI.N - Q2 2024 Kinder Morgan Inc Earnings Call

Question: Keith Stanley - Wolfe Research, LLC - Analyst : Yeah. And then just on -- yes, you did. Does it on -- does the contribution come in all in the end of 2028 or has it phased in over time as you see it?

Question: Keith Stanley - Wolfe Research, LLC - Analyst : Okay, great. Thank you. Second question. Wanted to touch back on the Texas loan program for gas-fired power plants. How can we think about the opportunity for Kinder here? So say Texas builds 20 gigawatts of new gas-fired power plants over the next five years. What type of market share do you have in the Texas market today in connecting to power plants? What's a typical capital investment to do a plant tie-in? Just any thoughts of what it could mean for opportunities for the intrastate system?

Question: Keith Stanley - Wolfe Research, LLC - Analyst : Thank you.

Question: Jeremy Tonet - J.P. Morgan Securities LLC - Analyst : Hi, good afternoon. Just wanted to pivot back to the Double H conversion here. And how the -- did you say how the NGLs are getting out of Guernsey at this point on -- with this project? And are you working with any other mid-streamers on this project overall?

Question: Jeremy Tonet - J.P. Morgan Securities LLC - Analyst : Got it. Okay. And maybe just pivoting when talking about a highly competitive market as far as Permian natural gas egress is concerned. Just wondering any updated thoughts you could provide with regards to the potential for brownfield expansion, be it through GCX expanding or greenfield as well getting to a different market or even the potential to market a joint solution at the same time. Just wondering how you see this market evolving, given that 2026 Permian gas egress looks like a dTjavu all over again.

Question: Jeremy Tonet - J.P. Morgan Securities LLC - Analyst : Got it. Understood. I'll leave it there. Thanks.

Question: Spiro Dounis - Citigroup Global Markets Inc. - Analyst : Thanks, operator. Afternoon, everybody. First question, maybe just to talk about capital spending longer term. Historically, you've talked about spending near the upper end of that sort of $1 billion to $2 billion range. But Rich and Kim, if I combine your statements at the outset, it seems to suggest, like, there's a pretty robust opportunity set ahead that maybe wasn't contemplated when you last gave us that update. So I'm curious, as you think about these larger projects coming in, like SNG and then the broader power demand you referenced earlier, are you still on track to be in that $2 billion zone long term?

Question: Spiro Dounis - Citigroup Global Markets Inc. - Analyst : Okay. So it sounds like not a material departure from before. Got it. And then --

Question: Spiro Dounis - Citigroup Global Markets Inc. - Analyst : Got it. Okay. That's helpful color. And then switching gears a bit here, Kim, you talked about some of the sort of regulatory events that are sort of becoming tailwinds now, headwinds at first. And I know one other macro factor that got you last year or two was with interest rates that were on the rise. As we look forward, I'm not sure what your view is, but it seems like we're setting up for some rate cuts later this year. So David, maybe you could just remind us, as we think about your floating rate exposure, what does that look like in 2025, and is this a potential tailwind for you?

Question: Spiro Dounis - Citigroup Global Markets Inc. - Analyst : Great. I'll leave it there. Thanks, everybody.

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Thanks. Good afternoon, everyone. So I wanted to get back to the discussion on the data centers. It seems like the hyperscalers are much less price-sensitive, and they're willing to pay higher PPAs to secure power. So do you think that could translate into you earning higher returns than you've gotten historically on some of these potential gas pipeline projects? and is there any way to quantify that?

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Okay. That makes sense. And then, just one more follow-up on Double H. I believe the capacity -- the oil capacity of that pipe was, I think, 88 million barrels a day, so -- 88,000 barrels a day. So I'm just wondering, should we assume that the NGL capacity will be kind of similar?

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Got it. Thank you.

Question: Tristan Richardson - Scotiabank - Analyst : Hi, good afternoon. Maybe just one more on the CO2 portfolio. Can you talk about sort of capital needs or opportunities with the new portfolio? Historically, you've spent $200 million to $300 million annually here, and you noted that there are greater flood opportunities with the new assets. Curious kind of how this changes capital deployment in CO2? And then also in the context of -- I think in the past, you've noted a 10-year development plan of around $900 million. Just curious what the new portfolio kind of looks like going forward. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 8:30PM, KMI.N - Q2 2024 Kinder Morgan Inc Earnings Call

Question: Tristan Richardson - Scotiabank - Analyst : Thanks, Anthony. And then maybe just on refined products, it seems like the lower [48] maybe saw a later start to the summer driving season. But it also seems like perhaps volumes have picked up in late June and end of July. Can you talk about what you're seeing this season and maybe what's contributing to that 1% below your initial budget?

Question: Tristan Richardson - Scotiabank - Analyst : Appreciate it, Kim. Thank you, guys, very much.

Question: Harry Mateer - Barclays Capital Inc. - Analyst : Hi. Good afternoon. So first question for South System Expansion 4, how should we think about funding that given you have the JV opco structure [Songas]? And I guess specifically, how much of an opportunity is there for some non-recourse debt financing to be used at the Songas entity itself?

Question: Harry Mateer - Barclays Capital Inc. - Analyst : Okay, thank you. And then second in Energy Transition Ventures, I'm curious where and whether acquisition opportunities in RNG might fit right now when you're looking at growth potential in that business.

Question: Harry Mateer - Barclays Capital Inc. - Analyst : Great. Thank you.

Question: Sunil Sibal - Seaport Global Securities - Analyst : Yeah, hi, good afternoon. This is Sunil Sibal. So starting off on the new projects that you announced, could you talk a little bit about contractual construct behind those? What kind of contract durations you have supporting those two projects?

Question: Sunil Sibal - Seaport Global Securities - Analyst : Understood. Then on the full year expectations, I think you mentioned you're tracking a little bit below budget as far as gathering volumes are concerned. Could you talk a little bit about which basins et cetera are tracking below what we were expecting at the start of the year? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 17, 2024 / 8:30PM, KMI.N - Q2 2024 Kinder Morgan Inc Earnings Call

Question: Sunil Sibal - Seaport Global Securities - Analyst : Thank you.