Kinder Morgan, Inc. · NYSE:KMI

Kinder Morgan — 2006 Analyst Conference

36 slides from Kinder Morgan's conference presentation, Jan 24, 2006

  1. Slide 1: Terminals

    Terminals Jeff Armstrong – President

  2. Slide 2: Kinder Morgan Terminal Locations

    Kinder Morgan Terminal Locations (2) (2) (2) (2) (2) (2) (2) (2) (4) (2) (4) (3) (2) (2) (2) (2) (2) (2) Netherlands (3) (4) (3) (2) 6 Louisiana Terminals Myrtle Grove to Baton Rouge Legend Dry Bulk Locations Product Pipelines Locations Ferro Operation Locations Liquid Locations Petcoke Operation Lo

  3. Slide 3: New Acquisitions 2005

    New Acquisitions 2005 Staten Island Terminal Staten Island, NY KM Deepwater Terminal Deer Park, TX Port of Houston Houston, TX Charleston (Allied Terminal) Charleston, SC 3

  4. Slide 4: Liquid Throughput 2005

    Liquid Throughput 2005 Variance 2005 2004 # % Chemical 28,804,466 29,136,619 (332,153) ­1.1% ­1.1% Distillate 178,132,329 170,372,223 7,760,106 4.6% Petroleum 328,715,411 341,928,782 (13,213,371) ­3.9% ­3.9% Fuel Grade Ethanol 8,799,808 7,735,057 1,064,751 13.8% Other 1,950,070 2,066,659 (116,590) ­

  5. Slide 5: Bulk Throughput 2005

    Bulk Throughput 2005 Variance 2005 2004 # % Coal 28,551,581 27,291,961 1,259,620 4.6% Petcoke 12,272,551 12,370,366 (97,815) ­0.8% ­0.8% Cement 2,245,566 1,303,947 941,619 72.2% Fertilizers 3,709,741 3,422,035 287,706 8.4% Salt 4,022,301 3,818,810 203,491 5.3% Ores/Metals 13,313,291 16,984,046 (3,67

  6. Slide 6: Top 15 Customers / Average Length of Contracts

    Top 15 Customers / Average Length of Contracts Terminals Contract Term Revenue Breakout Top 15 3 + Years Customers Under 1 Year 33% 33% 38% All Others 2­3 Years 8% 1 ­ 2 years 67% 21% Ansac Under 1 Year 1 ­ 2 years 2­3 Years 3 + Years BASF BP Dow George E Waren Corporation CSX Koch / Flint Hill Lyon

  7. Slide 7: Historical Growth Trends

    Historical Growth Trends 2002 2003 2004 2005 2006 Earnings before DD&A 208,963 240,774 263,168 318,140 377,307 Growth from prior year 25.94% 15.22% 9.30% 20.89% 18.60% Internal 7.51% 7.47% 4.49% 3.97% 9.20% Acquisition 18.43% 7.75% 4.81% 16.92% 9.40% Acquisitions 6 months GS 1,032,167 4 months TGS 1

  8. Slide 8: Future Growth – Clean Products Markets

    Future Growth – Clean Products Markets Increased Demand + Increased Supply + Increased Complexities = Increased Opportunities for KM Terminals 8

  9. Slide 9: U.S. Refined Product Demand Growth

    U.S. Refined Product Demand Growth Regionally, the South and West will be the fastest growing areas. areas. U.S. Light Product Demand Growth, Annual % 1995 2000 2005 2010 2015 1995­ 1995­2005 2005 2005­ 2005­2015 2015 PADD I 4,458 4,939 5,378 5,809 6,275 1.9% 1.6% PADD II 3,647 3,897 4,255 4,556 4,7

  10. Slide 10: U.S. Demand Growing for Both Gasoline and Distillate

    U.S. Demand Growing for Both Gasoline and Distillate U.S. Gasoline & Distillate Demand 12000 11170 10280 10000 Thousand Barrels Per Day 9230 8472 8000 7789 7235 6000 5070 4700 4000 4150 3722 3021 3207 2000 0 1990 1995 2000 2005 2010 2015 __________________________ Source: EIA, Annual Energy Outlook

  11. Slide 11: Gasoline Imports have Supplied Half Demand Growth in Recent Years

    Gasoline Imports have Supplied Half Demand Growth in Recent Years U.S. Gasoline Imports & Production (MB/D) 8500 2000 8300 1800 8100 1600 Total Production Excl. Blending Compontent Net Imports 7900 1400 7700 1200 7500 1000 7300 800 7100 600 6900 400 Total Net Imports 6700 200 6500 0 1990 1991 1992 1

  12. Slide 12: Europe's Growing Product Imbalance

    Europe’s Growing Product Imbalance EU­15 Product Net Imports 800 600 Middle Distillate Net Imports Thousand Barrels Per Day 400 200 0 ­200 ­400 ­600 Gasoline Net Exports ­800 ­1000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 __________________________ Source: EIA, Annual Energy Outlook 2005 12

  13. Slide 13: KM Response

    KM Response Purchase of Port Mobil facility in New York Harbor with 2.9 million million barrels of storage. Bring back 600,000 barrels of idle capacity and add ship dock. Build 1.4 million barrels of new capacity at Perth Amboy, New Jersey Jersey Terminal. $84 Million investment 13

  14. Slide 14: U.S. Refinery Production Growth

    U.S. Refinery Production Growth Refinery production of gasoline, jet and distillate grew by 1.2 percent from 1995 to 2005 and a similar rate is projected through 2015. n PADD III will provide nearly 60 percent of the incremental refinery refinery production. n Growth in PADDS I and V is limited by e

  15. Slide 15: Fewer But More Complex Refineries

    Fewer But More Complex Refineries 15

  16. Slide 16: Historical GRM for Gulf Coast Refining Types

    Historical GRM for Gulf Coast Refining Types __________________________ Source: Baker & O’Brien, Inc., Status of the U.S. Refining Industry, October 25, 2005, Pg. 24 16

  17. Slide 17: Light / Heavy Crude Differential

    Light / Heavy Crude Differential __________________________ NOTE: Maya formula: f.o.b. Mexico; WTI spot: Cushing. Source: Baker & O’Brien, Inc., Status of the U.S. Refining Industry, October 25, 2005, Pg. 24 17

  18. Slide 18: North American Petcoke Production Announced / Planned

    North American Petcoke Production Announced / Planned 80 80 70 70 60 60 50 50 No. of Coking Refineries 40 40 Short Tons Produced 30 30 27+ Coker Projects 20 20 25+ million new short tons 10 10 0 0 2005 2006 2007 2008 2009 2010 2011 2012 __________________________ Source: Jacobs Consultancy 18

  19. Slide 19: KM Response

    KM Response Built 1.0 million barrels in 2005, 600,000 barrels in 2006 of new new clean products capacity in the Houston Ship Channel. Largest independent throughput throughput terminal in the world. Acquired TGS in 2005. Positioned ourselves as the largest Petcoke Petcoke handler in the U.S. $317 M

  20. Slide 20: Further Complexities

    Further Complexities Ethanol Ultra Low Sulfur Diesel U.S. Off­Road Diesel Rules Low Sulfur Gasoline 20

  21. Slide 21: Ethanol

    Ethanol § December 2005 Production = 4.2 billion gallons per year (273,973 barrels per day). § Plants under construction = 1.7 billion gallons (110,894 barrels per day). § Energy Policy Act of 2005 mandates 7.5 billion gallons by 2012 (489,237 per day). § 215,264 barrels per day needed by 2012. § Ap

  22. Slide 22: U.S. Ultra Low Sulfur Diesel

    U.S. Ultra Low Sulfur Diesel 15 ppm “S “S” ” from 500 ppm with Refinery Compliance by June 1, 2006 (Retail by by Oct. 15, 2006). n Averaging, Banking, Trading by PADD n 30% 500 ppm Compliance Option n Full 15 ppm required by January 1, 2010 Geographic phase­ phase­in, in, small refinery and hardship

  23. Slide 23: U.S. Off Road Diesel Rule

    U.S. Off Road Diesel Rule Affects construction, agricultural, industrial, railroads and marine marine markets. Issued April 2003 / Finalized May 2004. Diesel fuel sulfur n Current 2000­ 2000­4000 4000 ppm n 2007 500 n 2010 15 n 2012 15 for railroads and marine use Cetane Index, min 40 or 35% max aro

  24. Slide 24: New Sulfur Standards for U.S. Gasoline

    New Sulfur Standards for U.S. Gasoline California, Beg. 2004: 20 ppm per Gallon or 15ppm Average ppm Compliance Rest of Country Beg Year: 2004 2005 2006 Achieved with Refinery / Importer Average n/a 30 30 Credits Corporate Pool Average 120 90 n/a Allotments Per­ Per­gallon gallon Cap 300 * 300 80 •

  25. Slide 25: KM Response

    KM Response Working with specific customers to build dedicated storage for Ethanol, Ethanol, ULSD and Biodiesel. Working with customers and railroads to build or buy rail terminals terminals to serve in­ in­land land markets. $50+ Million of Incremental Investment Opportunities 25

  26. Slide 26: Coal

    Coal Increased Demand + Increased Supply + Increased Complexities = Increased Opportunities for KM Terminals 26

  27. Slide 27: Coal Supply & Demand Balances

    Coal Supply & Demand Balances __________________________ Source: Hill & Associates 27

  28. Slide 28: Demand Drivers

    Demand Drivers U.S. Coal Consumption by Sector 1994 ­ 2004 § Electric Power Sector on average has represented 92% of U.S. Coal 1,200,000 Consumption in last 6 years. 1,000,000 § Currently 124 planned coal projects vs. zero two years ago. Thousand Short Tons 800,000 § Expected – 25 plants § Potential

  29. Slide 29: Import Coal History and Forecast

    Import Coal History and Forecast 50 45 40 35 30 25 20 15 10 5 0 '90 '92 '94 '96 '98 '00 '02 '04 '15f mm stpy __________________________ Source: Hill & Associates 29

  30. Slide 30: Clean Air Interstate Rule - CAIR

    Clean Air Interstate Rule ­ CAIR Actual Emissions versus Caps NH 12 VT ME ND 10 SO2 Nationwide MN MA 8 NOX Region SD WI NY MI RI 6 CT IA PA NE NJ* 4 IL IN OH DE* 2 WV VA MD KS MO KY DC 0 NC 2003 2009 2010 2015 OK TN AR SC MS AL GA n EPA finalized CAIR rules in 2004 ­­ more stringent limits on SO2, N

  31. Slide 31: SO2 Clean-Up Equipment Installed and Announced

    SO2 Clean­Up Equipment Installed and Announced 96 Total of 209 MM 80 Tons Announced MM Tons 64 48 32 16 2012 1960 1969 1974 1976 1980 1982 1984 1986 1988 1991 1994 1996 1998 2000 2004 2008 2010 2014 1972 1978 2002 2006 No Date Installed Announced __________________________ Source: Hill & Associates

  32. Slide 32: KM Response

    KM Response High sulfur coals (i.e. Illinois Basin) and petcoke will increase increase in demand as scrubbers are built. Low sulfur coals (PRB and imports) will increase in demand at unscrubbed unscrubbed plants. Cora/GRT terminals in position to take advantage by building out PRB / Illinois coal ha

  33. Slide 33: Canadian Opportunities

    Canadian Opportunities Canadian Crude Production by Type (a) (MBbl/d) 4,000 Oilsands Pentanes/Condensate 3,500 5 Conventional Heavy ‘05­‘1 AGR 10% C 3,000 Conventional Light/Med nd s ~ Oilsa 2,500 2.7 MMBbl/d 2,000 1 MMBbl/d Oilsands­only 1,500 1,000 500 0 2001 2003 2005 2007 2009 2011 2013 2015 33

  34. Slide 34: WTI and Canadian Light / Heavy Differential

    WTI and Canadian Light / Heavy Differential 34

  35. Slide 35: KM Response

    KM Response Build 2.35 million barrels of crude / crude blending storage at Edmonton. Build 2 million barrels of crude / crude blending storage at Hardisty. Build / purchase bulk terminals. $200 – $250 Million in Investment Opportunities 35

  36. Slide 36: Kinder Morgan

    KINDER’ MORGAN

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