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Kinder Morgan Energy Partners

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Kinder Morgan Energy Partners, L.P. (KMP) is a pipeline transportation and energy storage company in North America with more than 37,000 miles of pipelines and 180 terminals transporting gasoline, natural gas, and CO2 for enhanced oil recovery projects. Its terminals handle coal, petroleum coke, and steel products. KMP is owned by Kinder Morgan, Inc. (NYSE: KMI), an energy transportation and storage company in the U.S.[1]

Kinder acquires Trans-Global Solutions

In April 2005, Kinder Morgan Energy Partners purchased seven bulk terminal operations from Trans-Global Solutions, Inc. (TGS) for approximately $245 million to "make KMP the largest handler of petroleum coke (petcoke) in the United States," Chairman, CEO and President Richard D. Kinder said. The TGS bulk terminal assets are located in Texas, including facilities at the Port of Houston, the Port of Beaumont and the TGS Deepwater Terminal located on the Houston Ship Channel.[2]

"TGS has long-term petcoke handling contracts in place with major Texas refineries, including ExxonMobil, Shell, Lyondell-Citgo, ConocoPhillips and Premcor, which make these fee-based operations an ideal fit for KMP," Kinder said. In 2005, TGS projected its terminals will handle about 10 million tons of petcoke, and KMP expects to handle about 7 million tons of petcoke at its existing facilities, for a combined 33 percent of the domestic petcoke market. Petcoke is a carbonaceous solid residual by-product of the oil refining coking process and is used primarily in the cement and power generation industries. At closing, KMP will execute a development agreement with TGS, whereby TGS will develop new solid bulk projects, including petcoke and coal projects, which KMP will have the right to purchase.[2]

Kinder Morgan Energy Partners and coal

At a 2011 investor conference, KMP representatives said demand for coal exports will be a driver of future growth for the Terminals segment, and that the company had entered into two significant contracts with customers to handle coal and is actively pursuing additional coal export opportunities:[3]

Myrtle Grove Midstream Terminal - The Myrtle Grove Midstream Terminal is along the lower Mississippi River in Myrtle Grove, Louisiana. In Feb. 2011, pipeline and storage facility operator Kinder Morgan Energy Partners LP said it agreed with Massey Energy to expand the terminal to handle up to 6 million tons of coal. The 15-year deal anticipates a minimum of 4 million tons of coal per year. Most of the coal will come from Massey mines in central Appalachia for export. Kinder Morgan said it will invest $70 million to expand storage, conveyor belts and environmental controls at the terminal by mid-2012.[4]

The company also plans 7 million ton per year expansions of coal export facilities at the Charleston SC Shipyard River Terminal and at the Fairless Hills Terminal in Philadelphia PA in 2011.[5]

Charleston, South Carolina coal exports

With coal exports increasing along the US East Coast, the Charleston, Shipyard River Coal Terminal export facility, owned by Kinder Morgan Energy Partners, is in the process of expansion. In May, 2011, CSX railroads confirmed plans to expand export facilities by 7 million short tons per year, probably in Philadelphia starting in 2011 and in South Carolina by 2013. [6]

It was announced in June 2012 that U.S. coal companies were looking to boost exports through the Gulf of Mexico after meeting resistance to West Coast port expansions. Kinder Morgan Energy Partners stated that the company planned on expanding their terminals in the Gulf and the Southeast, including its Shipyard River operation in Charleston, South Carolina. Kinder announced they were planning to spend $200 million to boost capacity at the location to 8 million tons a year from 2.5 million. The project is set to be completed by 2015.[7]

Kinder to export coal from Port of Houston

In late April 2011 Kinder Morgan Energy Partners stated that the company will begin exporting Colorado mined coal through its bulk terminal at the Port of Houston in Houston, Texas. According to its first quarter earnings report, Kinder wrote that they had signed an agreement with a “large western coal producer” and will invest about $18 million to expand the ship channel facility.

Kinder stated it will be the first time Western coal will be exported from the Port of Houston. In February 2011, Kinder Morgan inked a deal with Massey Energy to export up to 6 million tons of coal annually through Kinder’s Myrtle Grove, La., facility.[8]

The company also plans 7 million ton per year expansions of coal export facilities at the Charleston SC Shipyard River Terminal and at the Fairless Hills Terminal in Philadelphia PA in 2011.[9]

Deal with Peabody Coal for coal exports to Europe

On July 17, 2012, Peabody Energy announced that, under new agreements with Kinder Morgan Energy Partners, it would gain additional coal export capacity from Kinder Morgan's Deepwater Terminal and Houston Bulk Terminal in Texas, as well as increased access to the International Marine Terminal at Myrtle Grove, Louisiana, south of New Orleans.

The planned expansion would more than double Peabody's export capacity along the Gulf Coast to between 5 million and 7 million tons annually between 2014 and 2020. In 2011, Peabody shipped 6.6 million tons of coal through export terminals on the Atlantic, Pacific and Gulf coasts, and it has projected total exports of 10 million tons for 2012. Much of the coal being shipped from Texas and Louisiana will serve Peabody's European markets.

The company expects to begin shipping Colorado and Powder River Basin coal through the Houston terminal in 2014. Shipments of Colorado and Powder River Basin coal from Louisiana will begin around the same time, and Peabody will extend contracts at the Cora River terminal in Illinois to facilitate shipments of Illinois Basin coal for domestic and international markets.

To facilitate the Gulf Coast export expansion, Peabody secured a rail service agreement with Union Pacific Railroad to transport coal from its Colorado mines to Kinder Morgan's Houston terminals. Kinder Morgan also agreed to invest roughly $400 million in its Gulf Coast terminals, to increase export capacity through the Gulf of Mexico to roughly 27 million short tons annually.[10]

It was announced in August 2012 that Peabody Energy signed a deal with Kinder Morgan to increase the company's access to Gulf Coast export facilities. It was reported that the agreement deal, which will give Peabody access to multiple terminals, will expand the company's Gulf Coast coal export capacity to a range of 5 million to 7 million tons per year between 2014 and 2020.[11]

Port of St. Helens potential candidate for coal export to Asia, Kinder Morgan

In June 2011, The Oregonian reported that the Port of St. Helens in Columbia City, Oregon was being eyed as a potential Northwest port that would export coal to Asian countries. It was also reported that Columbia Riverkeeper, which opposes coal export, asked a judge to require St. Helens Port to release all of its coal-related documents. In a response, a lawyer for the port stated that doing so would violate a confidentiality agreement and "would result in the greatest harm to the public interest which can be imagined -- a loss of jobs in our community."[12]

Oregon Democratic Gov. John Kitzhaber, wrote in a statement to The Oregonian that the terminal "should not happen in the dead of night. We must have an open, vigorous public debate before any projects move forward."[12]

In January 2012 The Oregonian reported that Kinder Morgan Energy Partners would develop a dry bulk export terminal at the Port of St. Helens' Port Westward industrial park, using rail lines and building facilities to store and load coal.

Ambre Energy also announced that their subsidiary Pacific Transloading would ship 3.5 million metric tons of coal a year with potential to ship as much as 8 million metric tons with port approval. Coal would be shipped on covered barges, received at Port Westward and directly loaded onto about 50 ocean-going ships a year. Pacific Transloading would ship 3.5 million metric tons of coal a year with potential to ship as much as 8 million metric tons with port approval the company stated.[13]

In January 2012 it was reported that the proposed coal terminal at Port Westward was forcing Rainier-area officials to examine whether they needed to expand rail lines through the heart of town to accommodate hundreds of rail cars daily.[14]

On January 25, 2012 Port of St. Helens commissioners approved lease options for two coal terminals to Port Westward. The five-member commission unanimously approved a lease option from Pacific Transloading, a subsidiary of Australian coal company Ambre Energy, to operate a coal barge unloading dock at Port Westward. Commissioners voted 4-1 to approve a lease option from Kinder Morgan Energy Partners to build what could be the largest coal terminal on the U.S. West Coast.[15]

However, May 2, 2012 Portland General Electric blocked Kinder Morgan’s multimillion-dollar proposal to construct a coal export terminal because of concerns over coal dust. PGE renewed a 99-year lease in 2008 on 852 acres of developable land at the Port of St. Helens-owned energy park near Clatskanie, Oregon. In turn, it can sublease the Port Westward property to other companies. However, in early May 2012 PGE denied the request by Kinder Morgan to construct a terminal on the site.[16]

Port cancelled

In May 2013 Kinder Morgan announced it was dropping its plan to build a $200-million facility at Port Westward in Oregon, saying it could not be configured optimally to handle export of up to 30 million tons of coal a year.[17]

Sightline Institute reports "track record of pollution, lawbreaking, and cover-ups" at Kinder Morgan facilities

An April 2012 report by the environmental think tank Sightline Institute, "The Facts about Kinder Morgan," , lists a series of legal violations and pollution incidents at various Kinder Morgan terminals. The report includes the following:[18]

  • "In Louisiana, Kinder Morgan’s coal export facilities are so dirty that satellite photos clearly show coal dust pollution spewing into the Mississippi River."
  • "In South Carolina, coal dust from Kinder Morgan’s terminal contaminates oysters, pilings, and boats. Locals have even caught the company on video washing coal directly into sensitive waterways."
  • "In Virginia, Kinder Morgan’s coal export terminal is an open sore on the neighborhood, coating nearby homes in dust so frequently that even the mayor is speaking out about the problem."
  • "In Portland, Kinder Morgan officials bribed a ship captain to illegally dump contaminated material at sea, and their operations have repeatedly polluted the Willamette River."
  • "Kinder Morgan has been fined by the US government for stealing coal from customer’s stockpiles, lying to air pollution regulators, illegally mixing hazardous waste into gasoline, and many other crimes."
  • "Kinder Morgan’s pipelines are plagued by leaks and explosions, including two large dangerous spills in residential neighborhoods in British Columbia."

Articles and resources

Related SourceWatch articles

References

  1. "About Us" Kinder Morgan, accessed April 2011.
  2. 2.0 2.1 "Kinder Morgan Energy Partners Announces $245 Million Terminal Acquisition" PRNewswire, April 11, 2005.
  3. "Kinder Morgan Energy Partners Increases Quarterly Distribution to $1.14 Per Unit" istockanalyst, April 20, 2011.
  4. "Kinder Morgan to expand terminal for Massey coal" AP, Feb. 24, 2011.
  5. [1] Argus Media, May 29, 2011.
  6. "US East Coast coal exports surge in May,"Argus, June 28, 2011.
  7. "U.S. Coal Industry Seeks to Boost Exports Through Gulf of Mexico" Mario Parker, Bloomberg, June 22, 2012.
  8. "Kinder to Export Coal from Port of Houston" Casey Wooten, Business Journal, April 25, 2011.
  9. [2] Argus Media, May 29, 2011.
  10. Daniel Cusick,"Peabody to boost exports from Gulf Coast as Pacific Northwest terminal plans stall," ClimateWire, July 18, 2012.
  11. "Peabody Energy, Kinder Morgan sign coal export deal" Reuters, July 17, 2012.
  12. 12.0 12.1 "Port of St. Helens potential candidate for coal export to Asia" Scott Learn, The Oregonian, June 15, 2011.
  13. "Two coal companies want to export coal through the Port of St. Helens" Scott Learn, The Oregonian, January 17, 2012.
  14. "Oregon officials ponder potential rail expansion for coal terminal" Erik Olson, TDN.com, January 19, 2012.
  15. "Coal in Clatskanie: Commissioners approve 2 Port Westward export proposals" Erik Olson, The Daily News Online, January 26, 2012.
  16. "EXCLUSIVE: PGE blocks major Oregon coal export project" South County Spotlight, Stover E Hanger III, May 2, 2012.
  17. Kim Murphy, "Plans shelved for coal export terminal in Oregon," LA Times, May 8, 2013.
  18. Eric de Place, "The Facts about Kinder Morgan," Sightline Institute, April 2012

External resources

  • "Terminals," Jeff Armstrong, President, Kinder Morgan Terminals Group

External articles