Kinder Morgan Inc.: Shaping the Future of Renewable Fuels

During Kinder Morgan Inc.'s (KMI) recent investor day event, the company unveiled its long-term perspective on the U.S. refined product demand. While KMI expects a decline of approximately 1% by 2040, it anticipates this reduction to be offset by various factors such as rate adjustments, the growth of renewable fuels, and non-jurisdictional revenue growth.

Dax Sanders, the President of Products at KMI, shed light on the company's strategy to adapt its current West Coast assets to accommodate the increasing volumes of renewable diesel. Highlighting their presence in southern California, Sanders revealed that Kinder Morgan already provides a remarkable 18 million barrels per day (mbbld) of renewable diesel capacity between the Colton and Mission Valley rack. Additionally, the company plans to enhance its biodiesel blend capabilities by 20% at Colton.

Sanders expressed optimism about the potential of the refineries located in northern California. Refineries such as Marathon and P66 in Martinez and Rodeo are forecasted to increase their production levels significantly from their current high 20,000 barrels per day to a staggering 100,000 barrels per day once they fully convert. Since these additional barrels are expected to be transported through pipelines, Kinder Morgan anticipates a substantial increase in pipeline utilization, further consolidating its position in the mid-continent region.

Moving closer to the Port of Los Angeles, the Carson asset offers valuable support with an additional 20 mbbld renewable diesel capacity at the rack. Furthermore, KMI plans to convert 750 thousand barrels of storage capacity into facilities for renewable diesel.

Notably, Kinder Morgan holds the distinction of being the first company to transport renewable diesel via pipeline in the United States. Its northern California hub plays a vital role, providing an impressive 39 mbbld renewable diesel capacity at truck racks situated between Fresno, San Jose, and Bradshaw.

Expanding its influence in the Bay Area, KMI's Richmond facility is also adapting to the evolving landscape by converting approximately 50 thousand barrels of storage capacity into renewable diesel facilities, thereby reinforcing its commitment to sustainability.

Kinder Morgan Inc. reaffirms its dedication to innovation and transformative solutions as it navigates the shifting tides of the energy industry. With a firm grip on the potential of renewable fuels, KMI stands at the forefront of the renewable energy future with its strategic initiatives and adaptability.

As the demand for renewable diesel continues to rise, Sanders, a representative from an unnamed company, revealed plans to expand their capabilities in moving renewable diesel through current hubs. Currently delivering approximately 57 million barrels per day (mbbld) via pipelines, the company is exploring the conversion of assets in Washington and Oregon to handle renewable diesel.

"We have exciting plans ahead," Sanders said. "We are confident that we will initiate an RD conversion project in Oregon this year, and it is highly likely that we will do the same in Washington."

Sanders also hinted at the possibility of transforming their chemical facility in Richmond, Calif. into a feedstock facility. However, details regarding this project are yet to be finalized as discussions with nearby refineries progress.

Looking at the broader picture, Kinder Morgan, a Houston-based company, is forecasting significant growth in natural gas demand for the United States. By 2030, they anticipate a 19% increase in demand and a staggering 98% surge in liquefied natural gas (LNG) exports to Mexico. These projections align with the positive outlook for U.S. natural gas, as stated by CEO Kim Dang.

"The future for U.S. natural gas is exceptionally promising," Dang remarked confidently during a recent discussion. "This positive trajectory not only benefits our existing operations but also opens doors for expansion opportunities."