Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan Energy Partners — 2007 KMP Analyst Conference
55 slides from Kinder Morgan's conference presentation, Jan 23, 2007
Slide 1: Terminals
ENERGY PARTNERS, L.P. Terminals Jeff Armstrong President Terminals Group
Slide 2: Kinder Morgan Terminal Locations
ENERGY PARTNERS, L.P. Kinder Morgan Terminal Locations (2) (2) (3) (2) (2) (2) (2) (2) (2) (4) (2) (3) (3) (2) (2) (2) (2) Netherlands (2) (4) (4) (3) (2) 7 Louisiana Terminals Myrtle Grove to Baton Rouge Legend Dry Bulk Locations Product Pipelines Locations Ferro Operation Locations Liquid Location
Slide 3: New Acquisitions 2006
ENERGY PARTNERS, L.P. New Acquisitions 2006 Deer Park Rail Terminal Deer Park, TX Texas Terminal LP Port of Houston, TX Lomita Rail Terminal LLC Lomita, CA 3
Slide 4: 2006 Throughput - Bulk
ENERGY PARTNERS, L.P. 2006 Throughput - Bulk Variance 2006 2005 Amt % Coal 30,770,287 27,866,055 2,904,232 10.4% Petcoke 16,557,182 15,839,997 717,186 4.5% Cement (Including Clinker) 2,380,865 2,409,030 (28,165) -1.2% Fertilizers 5,293,665 5,675,380 (381,715) -6.7% Salt 3,384,796 4,738,712 (1,353,91
Slide 5: 2006 Throughput - Liquids
ENERGY PARTNERS, L.P. 2006 Throughput - Liquids Variance 2006 2005 Amt % Chemical 26,599,382 28,804,466 (2,205,084) -- Distillate 180,759,493 178,132,329 2,627,164 1.5% Petroleum 311,228,886 328,715,411 (17,486,525) -- Fuel Grade Ethanol 22,814,173 8,799,808 14,014,365 159.3% Other 5,181,793 1,950,0
Slide 6: Historical Growth
ENERGY PARTNERS, L.P. Historical Growth Budget 2002 2003 2004 2005 20061 2007 Earnings before DD&A 208,963 240,774 263,168 318,140 396,858 442,565 Growth from prior year 25.94% 15.22% 9.30% 20.89% 24.74% 11.52% Internal 7.51% 7.47% 4.49% 3.97% 14.16% 9.15% Acquisition 18.43% 7.75% 4.81% 16.92% 10.58
Slide 7: Renewable Fuels
ENERGY PARTNERS, L.P. Renewable Fuels 7
Slide 8: Ethanol Overview
ENERGY PARTNERS, L.P. Ethanol Overview Approximately 110 operational ethanol plants in 21 states currently producing approximately 5.0 billion gallons annually. Another 73 plants are under construction; eight existing plants are being expanded and an estimated 200+ plants are under consideration. Io
Slide 9: Existing Ethanol Production Capacity by State
ENERGY PARTNERS, L.P. Existing Ethanol Production Capacity by State __________________________ Source: PIRA’s 27th Annual Retainer Client Seminar, Biofuels: No Longer a Footnote, October 2006 Renewable Fuels Association 9
Slide 10: Ethanol Production Capacity by State, Existing and Probable up to 2010
ENERGY PARTNERS, L.P. Ethanol Production Capacity by State, Existing and Probably up to 2010 __________________________ Source: PIRA’s 27th Annual Retainer Client Seminar, Biofuels: No Longer a Footnote, October 2006 10
Slide 11: Ethanol
ENERGY PARTNERS, L.P. Ethanol __________________________ Source: JP Morgan, North America Corporate Research, May 2006, Investing in Ethanol 11
Slide 12: Lomita Rail Terminal
ENERGY PARTNERS, L.P. Lomita Rail Terminal Acquisition Overview KMT completed the purchase of the membership interest of Lomita Rail Terminal, LLC in April, 2006. LRT is one of the largest ethanol unit train handling facilities in the U.S., with the capability to unload a full unit train of ethanol
Slide 13: Ethanol Trade
ENERGY PARTNERS, L.P. Ethanol Trade Brazil is the major ethanol exporter and accounts for most of the world’s trade. U.S. has been an ethanol importer. Limited by 54 cent per gallon import duty and 2.5% tariff; however, may be avoided. − Duty drawback with jet fuel. − Central American and Caribbea
Slide 14: Ethanol Imports vs. Spot Price
ENERGY PARTNERS, L.P. Ethanol Imports vs. Spot Price 3,500,000 $4.00 3,000,000 $3.50 Avg. Chicago Spot Price $3.00 No. of Barrels Imported 2,500,000 $2.50 2,000,000 $2.00 1,500,000 $1.50 1,000,000 $1.00 500,000 $0.50 0 $0.00 ce r ry Fe ry r ne ch r er ly st ay ril De be be be ua a Ju ob Ap gu Ju ar
Slide 15: Ethanol Production Costs for Various Feedstocks
ENERGY PARTNERS, L.P. Ethanol Production Costs for Various Feedstocks __________________________ Source: PIRA’s 27th Annual Retainer Client Seminar, Biofuels: No Longer a Footnote, October 2006 15
Slide 16: KMT Response to Ethanol Market
ENERGY PARTNERS, L.P. KMT Response to Ethanol Market 2.2MM barrels of ethanol tankage and another 225MB under construction or being converted. Handled 22.8 barrels in 2006 versus 8.8MM barrels during 2005. Increase in ethanol storage and handling rates. Acquired unit train rail facility in Lomita, C
Slide 17: Biodiesel
ENERGY PARTNERS, L.P. Biodiesel 17
Slide 18: Biodiesel
ENERGY PARTNERS, L.P. Biodiesel Made by esterifying oils, fats or Disadvantages greases. Tends to reduce fuel economy Superior lubricity, detergency, Cloud and pour point issues cetane, and lower GHG emissions level compared to petroleum diesel. Blend instability and water contamination Frequently u
Slide 19: Biodiesel 101
ENERGY PARTNERS, L.P. Biodiesel 101 Natural Fats & Oil Alcohol Catalyst End Products + + = Soybean Methanol Sodium Hydroxide Methyl Ester (aka bio- Canola Oil Ethanol Potassium Hydroxide diesel) Rapeseed Sodium Methoxide Glycerin Palm Tallow/Poultry Yellow Grease __________________________ Source: P
Slide 20: U.S. Biodiesel Incentives
ENERGY PARTNERS, L.P. U.S. Biodiesel Incentives Energy act of 2005 provides $1/gallon federal tax incentive (payable to blenders) for biodiesel made from virgin vegetable oils and animal fats (1¢ per %) Tax incentive for biodiesel made from used vegetable oils and animal fats is 50¢/gallon (0.5¢ per
Slide 21: Estimated U.S. Biodiesel Production 1999-2006
Estimated U.S. Biodiesel Production ENERGY PARTNERS, L.P. 1999 – 2005 and Estimate for 2006 480 500 450 400 Million Gallons 350 300 250 200 150 100 75 50 15 20 25 0.5 2 5 0 1999 2000 2001 2002 2003 2004 2005 2006 F. Calendar Year __________________________ Source: National Biodiesel Board 21
Slide 22: Commercial Biodiesel Production Plants
ENERGY PARTNERS, L.P. Commercial Biodiesel Production Plants (November 2006) __________________________ Source: www.biodiesel.org/buyingbiodiesel/producers_marketers/ProducersMap-Existing.pdf 22
Slide 23: Biodiesel Production Plants Under Construction or Expansion
Biodiesel Production Plants Under ENERGY PARTNERS, L.P. Construction or Expansion (September 2006) __________________________ Source: www.biodiesel.org/buyingbiodiesel/producers_marketers/ProducersMap-Construction.pdf 23
Slide 24: U.S. Already Has Large and Growing Vegoil Deficit
ENERGY PARTNERS, L.P. U.S. Already Has Large and Growing Vegoil Deficit ! " #$ %& 24
Slide 25: Global Biodiesel Production, 2005
ENERGY PARTNERS, L.P. Global Biodiesel Production, 2005 __________________________ Source: PIRA’s 27th Annual Retainer Client Seminar, Biofuels: No Longer a Footnote, October 2006 25
Slide 26: EU-25 Biodiesel Production
ENERGY PARTNERS, L.P. EU-25 Biodiesel Production Europe Taxes normally account for over 50% of retail price of diesel; biodiesel is exempt from these taxes in Germany, Sweden, and Spain; exemption varies from 40-70% of taxes in other countries. There are payments for land “set-aside:” from food
Slide 27: KMT Response to Biodiesel Market
ENERGY PARTNERS, L.P. KMT Response to Biodiesel Market Use KM Terminal locations as platforms to co-locate customers’ biodiesel plants or platform for downstream tankage at KM truck racks. Signed Letter of Intent with Green Earth Fuels to co-locate eight 43 million gallon plants at KM Galena Park, H
Slide 28: Rail Opportunities
ENERGY PARTNERS, L.P. Rail Opportunities 28
Slide 29: KMMS Locations (as of December, 2006)
ENERGY PARTNERS, L.P. KMMS Locations (as of December, 2006) (2) (2) (3) Legend Kinder Morgan Locations Transload Services, LLC (a Kinder Morgan Company) Transload Operations operated by Kinder Morgan at CSX Transportation facilities under the “TRANSFLO” name 29
Slide 30: Railcar Storage Services provide a good opportunity to leverage the franchise
Railcar Storage Services provide a ENERGY PARTNERS, L.P. good opportunity to leverage the franchise Drivers: Number of miles of track owned by Class 1 rail carriers has decreased from nearly 271,000 in 1980 to 170,000 in 2005. Class 1 rail ton miles have increased from 932 billion ton miles to Deman
Slide 31: Transload Services, LLC
ENERGY PARTNERS, L.P. Transload Services, LLC Acquisition Overview KMT completed the purchase of the membership interest of Transload Services, LLC in November, 2006 – facts are as follows: Locations (14): Chicago Heights, IL; Tampa, FL; Harvey, IL; Denver, CO; Marshalltown, IA; Memphis, TN; Fosto
Slide 32: Steel
ENERGY PARTNERS, L.P. Steel 32
Slide 33: Steel Supply/Demand in the United States
ENERGY PARTNERS, L.P. Steel Supply/Demand in the United States All data – short tons * Estimated 2002 2003 2004 2005 2006 Production 102,000,000 103,000,000 109,000,000 103,000,000 111,000,000 Shipments 99,200,000 106,000,000 112,100,000 103,000,000 112,000,000 Exports 6,000,000 8,200,000 7,900,000
Slide 34: KM Network of Steel Terminals
ENERGY PARTNERS, L.P. KM Network of Steel Terminals Kinder Morgan Steel Terminals Deepwater Ports River Ports and Houston Ship Channel Transload Services Chicago West IL Decatur AL Ontario CA Chesapeake Bulk MD Guntersville AL Stockton CA Pinney Dock (Ashtabula) OH Ft Smith AR Denver CO Fairless Hil
Slide 35: Petcoke
ENERGY PARTNERS, L.P. Petcoke 35
Slide 36: Petroleum Coke Production Trends
ENERGY PARTNERS, L.P. Petroleum Coke Production Trends 2006 World Production= est. 80 M/DMT 1995 World Production < 50 M/DMT 74% (59.1 DMT) is fuel grade 26% (20.9 DMT) is calcined grade World Production will be 107.6 M/DMT by 2012; North America will be 64.9 M/DMT (N.A. 46.8 M/DMT in 2005) 59 annou
Slide 37: World Petcoke Production - 2005
ENERGY PARTNERS, L.P. World Petcoke Production - 2005 Total Production = 80 million DMT Latin America 11% Asia (ex China) 8% China Fuel- 8% Calcined Grade EU 2% Other North 3% America 68% Fuel-Grade = 59.1 million DMT __________________________ Source: Jacobs Consultancy, New Petcoke Production and
Slide 38: Announced Coker Additions 2006 - 2012 (ex. China)
ENERGY PARTNERS, L.P. Announced Coker Additions 2006 – 2012 (ex. China) 32.1 Million MT Canada United States Upgraders 33% 30% Other India 3% Mexico Brazil 13% 8% 7% Spain 6% __________________________ Source: Jacobs Consultancy, New Petcoke Production and the Changing Demand Picture, October 1, 200
Slide 39: Petcoke Product Flows
ENERGY PARTNERS, L.P. Petcoke Product Flows Current 3Y Percentage Category Longer Term Trends MM Tons Projected Change North America 52 58.4 12.3% Higher growth – new coker units installed Production North America 9.0 12 33% Will rise higher in out years due to scrubbers Consumption and gasification
Slide 40: Sulfur
ENERGY PARTNERS, L.P. Sulfur 40
Slide 41: Market Drivers
ENERGY PARTNERS, L.P. Market Drivers Demand World demand is forecasted to grow from 67 to 81 million metric tons by 2014 96% of sulfur goes toward the production of Sulfuric Acid which is primarily used for the production of Fertilizers and Chemical & Pigment manufacturing North American deman
Slide 42: North American Sulfur demand and production will drive increasing exports
ENERGY PARTNERS, L.P. North American Sulfur demand and production will drive increasing exports World Balance North American Balance 100 25 80 20 s Tons in MM' s Tons in MM' 60 15 Demand Demand 40 Supply 10 Supply 20 5 0 0 2005 2009 2014 2005 2009 2014 North American net exports to grow by nearly 5
Slide 43: North American Sulfur Logistics - 2009
ENERGY PARTNERS, L.P. North American Sulfur Logistics - 2009 Primary Production Primary Shipping Canada United States Annual Production: 10.8mt Annual Production 10mt Annual Consumption: 1.3mt Annual Imports: 2.7mt Annual Exports: Annual Consumption: 12mt To U.S.: 2.7mt Annual Exports: To World: 6.8
Slide 44: KMT Response to Sulfur Market
ENERGY PARTNERS, L.P. KMT Response to Sulfur Market KM purchased Devco Sulfur Prilling Company in November 2006. We will provide build, own and operate model to change molten liquid sulfur to bulk commodity that can be economically shipped to international markets. KM to build out Gulf Coast and Can
Slide 45: Coal
ENERGY PARTNERS, L.P. Coal 45
Slide 46: Pier IX Terminal (Newport News, VA)
ENERGY PARTNERS, L.P. Pier IX Terminal (Newport News, VA) Export Metcoal Synfuel (12/31/07) Cement Import Capital Investment: Approx $70 million Ship Discharging: 30,000 TPD Draft: 50 ft Nominal Small Cape Size Barge & Ship Loading with blending and sampling Import Coal Storage: 500,000 NT Import ca
Slide 47: KM Coal Response
ENERGY PARTNERS, L.P. KM Coal Response High sulfur coals (i.e. Illinois Basin) and petcoke will increase in demand as scrubbers are built. Low sulfur coals (PRB and imports) will increase in demand at unscrubbed plants. Cora/GRT terminals in position to take advantage by building out PRB / Illinois
Slide 48: Canadian Opportunities
ENERGY PARTNERS, L.P. Canadian Opportunities 48
Slide 49: Western Canada Production Forecast
ENERGY PARTNERS, L.P. Western Canada Production Forecast 5,000 4,500 Oilsands Pentanes/Condensate 4,000 Conventional Heavy Conventional Light/Med 3,500 3,000 kbpd 2,500 2,000 1,500 1,000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 __________________________ Sourc
Slide 50: Canadian Light/Heavy Differentials
ENERGY PARTNERS, L.P. Canadian Light/Heavy Differentials __________________________ Source: CAPP 50
Slide 51: Non-Regulated Terminal Opportunities
ENERGY PARTNERS, L.P. Non-Regulated Terminal Opportunities Edmonton North 40 Phase I - Currently Under Construction - CA $133 million 2.15 million barrels Fully contracted In-service the first quarter of 2008 Edmonton North 40 Phase II Exploratory Efforts Customer Expressions of Interest being solic
Slide 52: Capital Expenditures
ENERGY PARTNERS, L.P. Capital Expenditures 52
Slide 53: Capital Spending on Expansion Projects
ENERGY PARTNERS, L.P. Capital Spending on Expansion Projects $219 Million Pasadena & Galena Park Expansions Clean Products 74 Expansion of 3100 Manifold Pasadena & Galena Park ULSD System Clean Products 6 Houston, TX Pasadena Ethanol Handling Systems Clean Products 8 Galena Park Biodeisel Tanks Clea
Slide 54: Capital Spending on Expansion Projects
ENERGY PARTNERS, L.P. Capital Spending on Expansion Projects Pit 9 - Houston $360 Million Pasadena & Galena Park Expansion Clean Products 90 Pasadena & Galena Park ULSD System Clean Products 4 Pasadena Ethanol Handling Systems Clean Products 2 Galena Park Biodeisel Tanks Clean Products 13 Perth Ambo
Slide 55: ENERGY PARTNERS, L.P.
KINDER’ “MORGAN ENERGY PARTNERS, L.P.
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