We are one of the largest energy storage and transportation companies in the United
States, operating, either for ourselves or on behalf of Kinder Morgan Energy Partners,
L.P. ("Kinder Morgan Energy Partners"), over 35,000 miles of natural
gas and petroleum products pipelines and approximately 80 terminals. We own and
operate (1) Natural Gas Pipeline Company of America, a major interstate natural
gas pipeline system with approximately 9,900 miles of pipelines and associated
storage facilities and (2) TransColorado Gas Transmission Company, a 300-mile
interstate natural gas pipeline in western Colorado and northwest New Mexico.
We own interests in and operate a retail natural gas distribution business serving
approximately 241,000 customers in Colorado, Nebraska and Wyoming. We have constructed,
currently operate and own interests in certain natural gas-fired electric generation
facilities.
Kinder Morgan Energy Partners owns and/or operates a diverse group of assets
used in the transportation, storage and processing of energy products, including
refined petroleum products pipeline systems with more than 10,000 miles of products
pipeline and 39 associated terminals. Kinder Morgan Energy Partners owns over
15,000 miles of natural gas transportation pipelines, plus natural gas gathering
and storage facilities. Kinder Morgan Energy Partners also owns or operates
approximately 52 liquid and bulk terminal facilities and approximately 57 rail
transloading facilities located throughout the United States, handling nearly
60 million tons of coal, petroleum coke and other dry-bulk materials annually
and having a liquids storage capacity of approximately 55 million barrels for
refined petroleum products, chemicals and other liquid products. In addition,
Kinder Morgan Energy Partners owns Kinder Morgan CO2 Company, L.P., which has
over 1,100 miles of pipelines and transports, markets and produces carbon dioxide
for use in enhanced oil recovery operations and owns interests in and/or operates
six oil fields in West Texas, all of which are using or have used carbon dioxide
injection operations.
Our business strategy is to: (1) focus on fee-based energy transportation and
storage assets that are core to the energy infrastructure of growing markets
within North America, (2) increase utilization of our existing assets while
controlling costs, (3) make selected incremental acquisitions and expansions
of properties that fit within our strategy and are accretive to earnings and
cash flow, (4) maximize the benefits of our financial structure to create and
return value to our stockholders as discussed following and (5) continue to
align employee and shareholder incentives.
We own and manage a diversified portfolio of energy transportation and storage
assets. Our operations are conducted through the following reportable business
segments:
Natural Gas Pipelines—for all periods presented in our financial statements
this segment consists of approximately 62,000 miles of natural gas transmission
pipelines and gathering lines, plus natural gas storage, treating and processing
facilities, through which natural gas is gathered, transported, stored, treated,
processed and sold and equity earnings from our 20% interest in NGPL Holdco
LLC. Following our May 25, 2012 EP acquisition, this segment also includes the
natural gas operations of EP, its subsidiaries (including EPB) and its equity
investments;
Products Pipelines—KMP—which consists of approximately 8,600 miles
of refined petroleum products pipelines that deliver gasoline, diesel fuel,
jet fuel and natural gas liquids to various markets; plus approximately 62 associated
product terminals and petroleum pipeline transmix processing facilities serving
customers across the U.S.;
CO2—KMP—which produces, markets and transports, through approximately
1,500 miles of pipelines, carbon dioxide to oil fields that use carbon dioxide
to increase production of oil; owns interests in and/or operates seven oil fields
in West Texas; and owns and operates a 450-mile crude oil pipeline system in
West Texas;
Terminals—KMP—which consists of approximately 113 owned or operated
liquids and bulk terminal facilities and approximately 35 rail transloading
and materials handling facilities located throughout the U.S. and portions of
Canada, which together transload, store and deliver a wide variety of bulk,
petroleum, petrochemical and other liquids products for customers across the
U.S. and Canada;
Kinder Morgan Canada—KMP—which transports crude oil and refined
petroleum products through over 2,500 miles of pipelines from Alberta, Canada
to marketing terminals and refineries in British Columbia, the state of Washington
and the Rocky Mountains and Central regions of the U.S.; plus five associated
product terminal facilities;
Competition
The market for supply of natural gas is highly competitive, and new pipelines
are currently being built to serve the growing demand for natural gas in each
of the markets served by the pipelines in our Natural Gas Pipelines business
segment. These operations compete with interstate and intrastate pipelines,
and their shippers, for attachments to new markets and supplies and for transportation,
processing and treating services. We believe the principal elements of competition
in our various markets are transportation rates, terms of service and flexibility
and reliability of service. From time to time, other pipeline projects are proposed
that would compete with our pipelines, and some proposed pipelines may deliver
natural gas to markets we serve from new supply sources closer to those markets.
We do not know whether or when any such projects would be built, or the extent
of their impact on our operations or profitability.
Shippers on our natural gas pipelines compete with other forms of energy available
to their natural gas customers and end users, including electricity, coal, propane
and fuel oils. Several factors influence the demand for natural gas, including
price changes, the availability of natural gas and other forms of energy, the
level of business activity, conservation, legislation and governmental regulations,
the ability to convert to alternative fuels and weather.
KMP’s Products Pipelines’ pipeline operations compete against proprietary
pipelines owned and operated by major oil companies, other independent products
pipelines, trucking and marine transportation firms (for short-haul movements
of products) and railcars. The Products Pipelines’ terminal operations
compete with proprietary terminals owned and operated by major oil companies
and other independent terminal operators, and our transmix operations compete
with refineries owned by major oil companies and independent transmix facilities.
KMCO2’s primary competitors for the sale of carbon dioxide include suppliers
that have an ownership interest in McElmo Dome, Bravo Dome and Sheep Mountain
carbon dioxide resources, and OxyUSA, Inc, which controls waste carbon dioxide
extracted from natural gas production in the Val Verde Basin of West Texas.
KMCO2’s ownership interests in the Central Basin, Cortez and Bravo pipelines
are in direct competition with other carbon dioxide pipelines. KMCO2 also competes
with other interest owners in the McElmo Dome unit and the Bravo Dome unit for
transportation of carbon dioxide to the Denver City, Texas market area.
KMP is one of the largest independent operators of liquids terminals in the
U.S, based on barrels of liquids terminaling capacity. Its liquids terminals
compete with other publicly or privately held independent liquids terminals,
and terminals owned by oil, chemical and pipeline companies. Its bulk terminals
compete with numerous independent terminal operators, terminals owned by producers
and distributors of bulk commodities, stevedoring companies and other industrial
companies opting not to outsource terminal services. In some locations, competitors
are smaller, independent operators with lower cost structures. KMP’s rail
transloading (material services) operations compete with a variety of single-
or multi-site transload, warehouse and terminal operators across the U.S. its
ethanol rail transload operations compete with a variety of ethanol handling
terminal sites across the U.S., many offering waterborne service, truck loading,
and unit train capability serviced by Class 1 rail carriers.
Trans Mountain and the Express pipeline system are each one of several pipeline
alternatives for western Canadian crude oil and refined petroleum production,
and each competes against other pipeline providers.