Kinder Morgan (KMI) Withdraws Application From NED Pipeline

Kinder Morgan, Inc. (NYSE:KMI) announced that it has withdrawn its application to the U.S. Federal Energy Regulatory Commission for the Northeast Energy Direct (NED) natural gas pipeline. The move was precipitated by the company anticipating insufficient contractual commitments for the project.

The NED Project is composed of the Supply Path and the Market Path. The Supply Path component will include about 133 miles of a 30-inch diameter pipeline from TGP’s existing 300 Line system in northern Pennsylvania to an interconnection with TGP’s 200 Line system and Iroquois Gas Transmission System, L.P. at Wright, NY. About 41 miles of a 36-inch diameter looping pipeline along TGP’s 300 Line in Bradford and Susquehanna counties in Pennsylvania will also be part of the Supply Path component.

The NED Project is estimated to cost about $5 billion. Additionally, this component will be responsible for the construction and operation of one modified and three new compressor stations as well as two new meter stations.

The Market Path component will have a maximum design capacity of 1.3 Bcf/d and comprise about 188 miles of a 30-inch pipeline extending from Wright, NY, to Dracut, MA, five delivery laterals in Massachusetts and New Hampshire, and one pipeline loop in Connecticut.

Kinder Morgan is the largest energy infrastructure company in North America. It owns an interest in or operates approximately 84,000 miles of pipelines and approximately 165 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke. Kinder Morgan is the largest midstream and third largest energy company in North America.

But like all other oil and gas majors, Kinder Morgan remains vulnerable to volatile crude oil and natural gas prices, an imbalance between supply and demand for its products, and rising interest rates. Such factors can hurt the company’s volumes and margins.

Currently, Kinder Morgan carries a Zacks Rank #4 (Sell). Some better-ranked players from the same space are CVR Refining, LP (NYSE:CVRR) , PetroChina Co. Ltd. (NYSE:PTR) and Braskem S.A. (NYSE:BAK) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).