Kinder Morgan Plans to Invest $400M in a JV

by Trefis Team
Kinder Morgan Partners
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Kinder Morgan Energy Partners (NYSE:KMP) recently unveiled its plans to invest $400 million for the development of a oil terminal. [1] We take a quick look at the development and the value it adds to the company’s Terminals’ business. Kinder Morgan Energy Partners faces direct competition from other pipeline and energy companies like Enterprise Products Partners (NYSE:EPD), Williams Companies, Inc. (NYSE:WMB) and from pipeline subsidiaries of energy giants like Exxon Mobil Corporation (NYSE:XOM).

We have a $78.24 price estimate for KMP, which is roughly in line with the current market price.

According the the reports, KMP will invest $400 million into a joint venture with TransMontaigne Partners L.P. The new entity will be called Battleground Oil Specialty Terminal Company, LLC or BOSTCO. The first phase of the development consists of building 52 storage tanks with a total capacity to handle 6.6 million barrels of residual fuel and black oils.

KMP currently owns an interest and/or operates close to 180 terminals, which generated $180 million in profits in the last quarter. The newly built terminal will be owned and operated by Kinder Morgan, creating a significant contribution to the division’s revenues.

The venture has been granted the Environmental Quality air permit and it is also expected to receive the go-ahead from other various authorities by the end of November. Construction is expected to commence before the end of this year.

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  1. Kinder Morgan Announces Plans to Build New Oil Terminal on Houston Ship Channel, Marketwatch []
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