KINDER MORGAN Q1 FY26 earnings call KMI

Rich Kinder highlighted the accelerating demand for natural gas, primarily driven by growth in LNG feed gas and increased utilization for electric generation, especially for data centers. KMI's forecast for overall U.S. gas demand now extends through 2031, projecting 150 Bcf/day, a 27% increase from current levels. This outlook is supported by S&P Global Market Intelligence's report of utilities planning to add 153 gigawatts of gas-fired generation capacity by 2030, double the estimate from a year ago.

Kinder Morgan's extensive network of 78,000 miles of pipeline and 136 terminals is strategically positioned to capitalize on growing energy demand. The company's expansion project backlog increased to $10.1 billion this quarter, up $145 million, with $230 million of projects put in service and $375 million in new projects added, including three data center deals. The backlog maintains an attractive multiple below 6x and an average in-service date of Q1 2028.

KMI entered into an agreement to acquire the Monument Pipeline system in Texas for approximately $500 million, with early HSR termination received and closing expected by month-end. This acquisition is a natural fit, integrating well with KMI's existing network and providing access to storage. The system is underpinned by long-term contracts with a weighted average life of about 9 years, with over 90% of counterparties being utilities and industrials with strong credit ratings.

KMI and Phillips 66 successfully concluded an open season for the proposed Western Gateway pipeline system. This project aims to provide California and Arizona with access to domestic refined product supply from Texas and the Eastern United States, reducing reliance on international markets. The next steps involve finalizing definitive transportation service agreements and joint venture agreements, with an expected Final Investment Decision (FID) in the next few months^⏳.

Kinder Morgan emphasized its significant natural gas storage capabilities, with over 700 Bcf of storage, as a key differentiator in the market. With the scale of increasing demand, particularly from large power generation and LNG facilities, the ability to quickly inject and withdraw gas from storage is becoming critical for operational balancing. KMI is actively exploring expansions across its footprint, including at Bear Creek, to leverage these opportunities.

The Terminals business segment demonstrated strong performance with liquids lease capacity remaining high at almost 94% and utilization of available tanks at approximately 99% in key hubs like Houston Ship Channel and Carteret. The Jones Act tanker fleet is exceptionally well-contracted, being 100% leased through 2026, 97% through 2027, and 80% through 2028, with an average firm contract length of 3 years.