Kinder Morgan's Gulf LNG Project Clears Environmental Test

Kinder Morgan Inc (NYSE:KMI) made progress toward receipt of federal consent for construction of the proposed Gulf LNG export terminal in Mississippi. The news followed after a Federal Energy Regulatory Commission (“FERC”) staff issued a draft of environmental report.

In the report, also termed as an environmental impact statement, the FERC staff concluded that construction and operation of the project will lead to various unfavorable impacts on the environment. These can be reduced to tolerable levels if Kinder Morgan follows the suggestions in the draft report.

FERC has not revealed the time of commissioners’ decision on the project. The federal body stated that the commissioners will consider the staff’s recommendations whenever the decision is made.

Gulf LNG comprises the pipeline and two liquefaction trains. Each of them have a production capacity of 5.75 million tons per annum (MTPA) of LNG, equivalent to about 0.77 billion cubic feet per day (bcfd). One billion cubic feet includes sufficient gas to fuel about 5 million homes for a day.

To meet the growing global demand for fuel, dozens of LNG export terminals, including Gulf LNG, in the United States, Canada and Mexico are seeking customers with regards to construction in the next several years.

In 2017, the United States became a net exporter of natural gas, including LNG, for the first time in six decades. Evaluating the plants currently under construction, U.S. LNG export capacity is anticipated to climb to 5.2 bcfd by the end of 2018, 8.9 bcfd in 2019 and 10.3 bcfd in 2020 from the current level of around 3.8 bcfd.

Kinder Morgan did not make a statement regarding the final investment decision for the construction of the Gulf LNG project. The Gulf LNG export terminal will be incorporated with an existing import terminal at the site in Pascagoula. The import terminal has the capacity to re-gasify 1.5 bcfd.

Other partners in the project include units of Blackstone (NYSE:BX) Group, Warburg Pincus and Lightfoot Capital Partners.

Zacks Rank & Other Key Picks

Currently, Pioneer Natural carries a Zacks Rank #2 (Buy).

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New York-based Hess is a global integrated energy company. The company delivered an average positive earnings surprise of 230.5% in the last four quarters.

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