Kinder Morgan increases investment in renewable gas
Energy company Kinder Morgan, Inc. (KMI) is increasing investments in renewable energy that can run on existing fossil fuel infrastructure. Since the beginning of the year, KMI quotes have increased by 17.59% to $18.65 at the auction on August 18. Kinder Morgan’s main field of activity is infrastructure for oil and gas transportation. The company has more than 133 thousand kilometers of pipelines in North America. But the company is preparing to reduce the role of fossil fuels, and already there are biofuels and other renewable fuels in its storage and pipes, as well as carbon dioxide collected at enterprises.
Last year, Kinder Morgan created a new division that deals with the company’s transition to green energy. The first step in the new segment was purchasing technologies to produce methane from the garbage. The company plans to process this methane into gas that can be used as ordinary natural gas, for example, in gas boilers and generators and fuel for cars. Kinder Morgan invests $146 million in a new “garbage” project. It consists of a liquefied natural gas production facility and three landfills at landfills owned by Waste Management, Inc. (WM). Commercial operation of the facilities will begin in the fall of 2022.
They generate an annual EBITDA of about $185 million, which is not much compared to the company’s total EBITDA of $7.2 billion. Nevertheless, Kinder Morgan will get a profitable new business, which already has demand from companies with large fleets of natural gas vehicles. Moreover, it can scale the project to hundreds of nearby landfills with organic waste. In twenty years, Kinder Morgan can increase its green business by about 15 times and thus become a major supplier of renewable fuels, which may attract long-term investors’ attention.
