Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Q4 2001 Earnings Presentation
120 slides from Kinder Morgan's earnings presentation, Jan 17, 2002
Slide 1: KMP Natural Gas Pipelines
KMP Natural Gas Pipelines Bill Allison Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and securities values of Kinder Morgan Inc. and Kinder Morgan Energy Partners, L.P. (collectively known as “Kinder Morgan”) may d
Slide 2: KMP Natural Gas Pipelines
1 KMP Natural Gas Pipelines KMP/KMR Natural Gas Pipelines (a) Terminals Tejas KMIGT 18% 24% 26% Products CO2 Pipelines Pipelines 38% 11% Trailblazer Natural Gas KMTP 11% Pipelines 27% 33% Red Cedar/ Other Rockies 12% (a) Assumes first quarter closing for Tejas
Slide 3: Natural Gas Pipelines Distributable Cash
2 Natural Gas Pipelines Distributable Cash $331.8 $350 52% increase $300 24% $250 $218.4 12% Tejas $200 18% 11% Red Cedar/Other 12% Trailblazer $150 KMTP 27% 25% KMIGT $100 $50 44% 26% $0 2001 2002E (a) Assumes first quarter closing for Tejas
Slide 4: KMIGT – System Map
3 KMIGT – System Map Powder River WYOMING Basin Wind River Basin GLENROCK CASPER SAND DRAW Casper LABONTE PXP GUERNSEY NEBRASKA ALBION Cheyenne HUNTSMAN BIG NORTH Omaha SPRINGS PLATTE GRAND ISLAND CHEYENNE HUB LEXINGTON (Rockport) PXP COZAD STERLING CLAY CENTER PXP HOLDREGE Denver NE Colorado HERNDO
Slide 5: KMIGT – System Overview
4 KMIGT – System Overview 6,100 miles of pipeline with total capacity of 825,000/d 26 Compressor stations totaling 147,000 Hp 100 receipt points and ~ 9,000 delivery points Dual Purpose Pipeline System – Traditional system consists of high-pressure distribution network primarily serving small towns,
Slide 6: KMIGT – System Overview
5 KMIGT –System Overview Huntsman Gas Storage facility – Located upstream of market area and near Cheyenne Hub. – Total Capacity of 8Bcf – 106,000 Dth/day withdrawal capacity – 60,000 Dth/day injection capacity Principal Supply Basins – Directly connected to the Wind River and Powder River Basins, N
Slide 7: KMIGT - Customers
6 KMIGT- Customers Total customers = 110 Average Annual Revenue size $1.1 Customer Mix Based of MDQ million Customer Sample List – Oneok Energy 32% LDC's/Industrial – Dynegy Producers – Kinder Morgan Inc.(Retail) Marketers – Midwest Energy, Inc. 63% – Missouri Gas Energy 5% – Public Service Company
Slide 8: KMIGT - Contract Expirations
7 KMIGT - Contract Expirations MDQ % of Year Dth/d Capacity Sold 2002 60,300 7.3% 2003 35,763 4.3% 2004 24,809 3.0% 2005 2,000 0.2% 2006 30,600 3.7% 2007 5,052 0.6% 2008 172,200 20.1% 330,724 39.2%
Slide 9: KMIGT – Volumes / Load Profile
8 KMIGT – Volumes / Load Profile 2000 2001 2002 Total MDth Through-put 204,877 202,578 203,700 Average Dth/day 561,300 555,000 558,100 Utilization 68% 67% 68% Peak Day Winter 567,000 652,000 N/A Peak Day Summer 540,000 625,000 N/A 1. Heating needs drive winter through-put and irrigation / agricultur
Slide 10: KMIGT Competition and Regulation
9 KMIGT Competition Little significant competition for Traditional Markets in WY, CO, NE, and KS Regulation Through its January 2000 rate settlement, KMIGT rates locked in place through 12/04 No environmental, health or safety issues No significant impact from proposed OPS regulation on pipeline saf
Slide 11: KMIGT Strategies and Advantages
10 KMIGT Strategies and Advantages Strategy: Advantages: Maintain stable earnings and small Since the early 1930’s, KMIGT’s growth in traditional markets in WY, strategy was to serve rural CO, NE, and KS not served by other communities in our traditional market pipes area. This single supplier strat
Slide 12: KMIGT Historical Performance
11 KMIGT Historical Performance ($Millions) 2000 2001 2002 Gross Margin $115.3 $125.2 $121.7 Direct O&M $20.4 $22.3 $23.2 EBITDA $91.8 $98.3 $93.2 90% of KMIGT’s transportation and storage services are sold on a demand basis KMIGT’s PXP capacity utilization continues to increase from less than 60% i
Slide 13: KMIGT 2002 Plan Risks
12 KMIGT 2002 Plan Risks Maintaining recently achieved FL&U rates Managing Regulatory uncertainty
Slide 14: KMIGT Projects / Expansion
13 KMIGT Projects / Expansion Advantage Pipeline: 1.3 MMDthd of coal bed methane production expected to develop in the Wyoming Powder River Basin by 2004. Pipeline infrastructure exists to gather and transport this volume to the Cheyenne Hub (Weld County, CO), but Cheyenne will have insufficient tak
Slide 15: KMIGT Proposed Advantage Pipeline
14 KMIGT Proposed Advantage Pipeline WYOMING CASPER SAND DRAW Casper LABONTE PXP GUERNSEY NEBRASKA ALBION Cheyenne HUNTSMAN BIG NORTH PLATT Omaha SPRING GRAND ISLAND S E CHEYENNE HUB LEXINGTON PXP LEGEND (Rockport) STERLING COZAD CLAY CENTER PXP Proposed Advantage Pipeline HOLDREGE Denver HERNDON NN
Slide 16: KMIGT Projects / Expansion
15 KMIGT Projects / Expansion Huntsman Expansion: New supplies and pipelines at Cheyenne Hub create demand for new storage and hub services. KMIGT Huntsman storage facilities and pipeline capacity from Huntsman to Cheyenne can be expanded to provide these new services, while still supporting on-syst
Slide 17: KMIGT - Proposed Storage Expansion
16 KMIGT - Proposed Storage Expansion KMIGT WIC 75,000 Dth/d withdrawal 45,000 Dth/d injection Huntsman Storage CIG Cheyenne To Neb. Hub TPC XCEL To K.C.
Slide 18: KMIGT Projects / Expansion
17 KMIGT Projects / Expansion Northeast Colorado Pipeline (“NECO”) Gas production from Yuma County, CO is a good supply source for KMIGT markets. Production is constrained by the existing small diameter KMIGT pipeline system and limited other outlets. KMIGT is currently marketing a new 12”, 95 mile
Slide 19: KMIGT Proposed NECO Pipeline
18 KMIGT Proposed NECO Pipeline WYOMING CASPER SAND DRAW Casper LABONTE PXP GUERNSEY NEBRASKA ALBION Cheyenne HUNTSMAN BIG NORTH Omaha SPRINGS PLATTE GRAND ISLAND CHEYENNE HUB LEXINGTON (Rockport) PXP COZAD LEGEND STERLING CLAY CENTER PXP HOLDREGE KMIGT Denver HERNDON BEECHER KMIGT Compression ISLAN
Slide 20: KMIGT Long Term Outlook
19 KMIGT Long Term Outlook Opportunities – Internal Growth projects: Advantage, Storage Expansion, NECO Regulatory Environment – Stable rates for at least 3 years – Minimum impact from Order 637 or NOPR on affiliate interaction Supply – Powder River Basin in Wyoming and NE Colorado will replace shri
Slide 21: KMIGT Summary
20 KMIGT Summary Stable 2001 operating results,continuing through 2002 and beyond. Serving rural loads, 90% + revenue generated through long term demand based contracts, cost containment, and ability to capture niche opportunities will continue
Slide 22: Trailblazer Overview
21 Trailblazer Overview 436 miles of 36” pipe 10,000 HP at one compressor station Certificated capacity o f 522,000 Dth./day Fully contracted at max rate ($0.12/Dth.)
Slide 23: Trailblazer Pipeline
22 Trailblazer Pipeline WYOMING Casper NEBRASKA Cheyenne 80 Omaha CHEYENNE HUB PL NG 601 80 196 WNG 602 NNG 25 CIG 603 76 106 Denver COLORADO NGPL 70 KANSAS 195 LEGEND Trailblazer Compressor Station Major Interconnect Location Receipt Delivery
Slide 24: Trailblazer Expansion
23 Trailblazer Expansion Capacity: Expand TB by 324,000 Dth./day – Total capacity will be 846,000 Dth./day Facilities: Install 50,000 HP at three stations Cost: $55 million In-Service: June, 2002 Revenue: $25.1 million per year
Slide 25: Trailblazer Financial Performance
24 Trailblazer Financial Performance (a) Projected 2000 2001 2002 Revenue $30.6 $27.9 $46.1 Direct Expenses 10.3 6.7 15.3 EBITDA 26.3 25.4 36.0 Operating Income 20.3 21.2 30.8 (a) Reflects 100% of asset. Currently, KMP ownership is 66%, but it has reached agreement to acquire the additional 33% inte
Slide 26: Trailblazer Fourth Quarter Highlights
25 Trailblazer Fourth Quarter Highlights Completed contract to buy Enron’s one-third of Trailblazer – Pending approval by bankruptcy court Letter of intent with CIG to buy its right to become an equity partner Expansion project is on schedule, on budget
Slide 27: Kinder Morgan Texas Pipeline (KMTP)
26 Kinder Morgan Texas Pipeline (“KMTP”) Approximately 2,500 miles of pipeline 5 Compressor Stations – 52k HP Seller and transporter of natural gas Total capacity 2.4 Bcf/day Capacity utilized in 2001 – 1.7 Bcf/day Storage Capacity 22 Bcf
Slide 28: Kinder Morgan Texas Pipeline
27 Kinder Morgan Texas Pipeline Ft. Worth Dallas LEGEND Kinder Morgan Texas Pipeline Austin Beaumont San Antonio Houston Corpus Christi
Slide 29: KMTP - Strategy
28 KMTP - Strategy Full Service Texas Intrastate Pipeline (Gas Utility) – Buy or Sell – Transport – Storage No Marketing Affiliate Customer deals with one person for all needs Long term relationships
Slide 30: KMTP – Strong Customer Base
29 KMTP – Strong Customer Base Entex Houston Lighting & Power (HL&P) Calpine Southern Union Houston Ship Channel and Beaumont/Port Arthur area Industrial Customers
Slide 31: KMTP – Growth Opportunities
30 KMTP – Growth Opportunities Internal: Electric Generation Local Distribution Companies (LDC’s) Industrial Market Supply Base Expansion Project: North Texas Pipeline – Capacity: 300,000 dth./day – Facilities: 86 Miles of 36” – Costs: $69 Million – In Service: June 1, 2003 (Interruptible Service in
Slide 32: KMTP – Performance
31 KMTP – Performance ($ Million/Volume BCF) 2000 2001 2002 Gross Margin $81.3 $93.3 $112.2 Costs (w/Lease Buyout) $27.6 $32.4 $ 32.7 Op Income $53.7 $60.9 $ 79.5 Volumes: Sales: 405 359 416 Transport: 249 250 302 Throughput: 654 609 718
Slide 33: KMTP – 2002 Plan Upside
32 KMTP – 2002 Plan Upside Aggressive supply acquisition program Market Storage Services Increase 3rd Party Transportation
Slide 34: Tejas Pipeline
Tejas Pipeline David Jenkins Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and securities values of Kinder Morgan Inc. and Kinder Morgan Energy Partners, L.P. (collectively known as “Kinder Morgan”) may differ mate
Slide 35: Tejas Overview
34 Tejas Overview Approximately 3,400 miles of pipeline 16 Compressor Stations Seller of natural gas as well as transport Total capacity 3.5 Bcf/day Capacity utilized in 2001 – 2.7 Bcf/day 2 natural gas storage fields
Slide 36: Tejas Gas
35 Tejas Gas LEGEND Ft. Worth Dallas Tejas Gas Tejas Joint Venture Austin Beaumont San Antonio Houston CLEAR LAKE STORAGE STRATTON RIDGE (TEJAS) Corpus Christi KING RANCH PLANT FANDANGO PLANT
Slide 37: Tejas Synergies
36 Tejas Synergies Storage Treating Plants New Markets – Austin – Corpus Christi – Texas City – East Texas Expand Beaumont Throughput System optimization Increases flexibility and reliability for customers
Slide 38: Tejas Financial Overview
37 Tejas Financial Overview $750 million Slightly over 8X 2002 expected DCF Slightly under 8X 2002 expected EBITDA $0.10 earnings accretion to KMP in 2002 Fee based storage – 10 year demand contract with Coral for Clear Lake storage facility Large customers – Exxon – BP/Amoco – Pemex – Phillips Sign
Slide 39: Natural Gas Pipeline (NGPL) Update
Natural Gas Pipeline (NGPL) Update Deb Macdonald Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and securities values of Kinder Morgan Inc. and Kinder Morgan Energy Partners, L.P. (collectively known as “Kinder Morg
Slide 40: Natural Gas Pipeline
39 Natural Gas Pipeline Pipeline and Storage System Overview Amarillo Amarillo Line Line NGPL System Over 10,000 Miles of Pipe 61 Compressor Units with Joint Joint Gulf Gulf Coast Coast 1.0 Million HP Ventures Ventures Line Line Peak Day Bcf/d Deliverability - Market Amarillo Line 1.6 Gulf Coast Lin
Slide 41: Overview
40 Overview NGPL Estimated Earnings Contribution(a) 2001 2002 Power & Power & Retail Other Retail Other 6% 9% 7% 8% KMP 35% KMP 46% NGPL NGPL 41% 48% $346 million $360 million (a) Segment earnings before allocation of G&A and interest expense.
Slide 42: NGPL Strategies
41 NGPL Strategies Retain traditional customer/revenue base through successful contract renegotiation Revenue stream is heavily demand based Utilize system in untraditional ways to generate incremental opportunity – Short hauls, back hauls, power plants with related services Continue push toward Ope
Slide 43: NGPL Production Zone Firm Transport Delivery MDQ
42 NGPL Production Zone Firm Transport Delivery MDQ 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1999 2000 2001 2002 Jan-99 Jan-00 Jan-01 Jan-02 TXOK 87,779 72,779 302,889 394,917 STX 60,264 60,264 12,514 112,350 PERM 15,000 0 246,390 324,480 MIDC 182,546 189,446 151,206 147,616 LA 1,261,318 1,
Slide 44: NGPL Strategic Advantages
43 NGPL Strategic Advantages Premium storage flexibility and services Supply diversity – Gulf Coast, Midcontinent, and Permian, Rockies Canada Infrastructure – Storage at both ends of pipe creates flexibility and opportunity – Integral to Chicago area LDCs and wheeling opportunities Low cost structu
Slide 45: Renegotiation of NSS
44 Renegotiation of NSS Summary for 2002 To Sell – 43.6 Bcf expiring in 2002 – 1.5 Bcf new available in 2002 – 45.1 Bcf Total Sold – 44.1 Bcf sold – Average term = 5.68 years (5-10+ year contracts) – Average rate = $.4883 (max rate = $.4912) Remaining – 1.0 Bcf expiring later in year
Slide 46: Renegotiation of DSS
45 Renegotiation of DSS Summary for 2002 To Sell – 2.4 Bcf expiring in 2002 Sold – 2.4 Bcf sold – Average Term = 4.81 years – Average Rate = $1.254 (max rate = $1.368) Remaining – No expirations remaining until 2003
Slide 47: Renegotiation of FTS
46 Renegotiation of FTS Summary for 2002 System-wide – 1.8 Bcf/day expiring in 2002 of 5.3 Bcf/d – Top Six Shippers – El Paso 312,702/day 17.3% – Aquila 395,000/day 21.9% – Marathon 131,000/day 7.3% – Wisc. Elec. 104,133/day 5.8% – MidAmerican 100,000/day 5.5% – NIPSCO 295,100/day 16.4% 74.2%
Slide 48: Renegotiation of FTS
47 Renegotiation of FTS Summary for 2002 (cont’d) To Major Market Area – 0.31 Bcf/day Amarillo receipt – 0.70 Bcf/day Gulf Coast receipt – 1.01 Bcf/day Total 2002 expirations to market of 3.4 Bcf/d – 1st Quarter 95,250/day 9.5% – 2nd Quarter 300/day 0.03% – 3rd Quarter 350,000/day 34.6% – 4th Quarte
Slide 49: NGPL Performance
48 NGPL Performance 2000 2001 2002 Gross Margin $510.1 $521.4 $541.5 Direct Expense $167.2 $175.1 $181.7 Operating Income (a) $342.9 $346.3 $359.8 EBITDA $427.9 $432.3 $447.1 (a) Before allocation of G&A and interest.
Slide 50: NGPL Growth Projects
49 NGPL Growth Projects Horizon Pipeline – Capacity: 380,000 Dth./day – Facilities: 28 miles of 36”, 42 miles of 36” leased capacity, 8,900 HP at one station – Cost: $79.6 million – In-Service: April, 2002 – Revenue: – Horizon Pipeline = $11.2 million per year – Additional NGPL Upstream Revenue = $2
Slide 51: NGPL Growth Projects
50 NGPL Growth Projects NGPL Permian Expansion – Capacity: 60,500 Dth./day – Facilities: Install 4,000 HP at two stations – Cost: $1.2 million capital, $1.5 million per year lease – In-Service: January, 2002 (in service now) – NGPL Revenue: $4.2 million per year North Texas Pipeline: – Additional NG
Slide 52: Natural Gas Fired Power Generation Market
51 Natural’s Gas Fired Power Generation Market Megawatts under construction for in-service thru 2004... Gas Fired Generation Development on Natural Gas Pipeline 20,000 15,000 Megawatts Peaker 10,000 Baseload Total 5,000 0 1999 2000 2001 2002 2003 2004 Year Plant In Service ’99 – ’01 2002 2003 2004 T
Slide 53: NGPL Summary
52 NGPL Summary NGPL’s primary market is one of the most competitive in the country (Alliance, N. Border, N. Natural, ANR, etc.) NGPL faces constant contract renegotiations, but: - Strong historical track record - Very successful recent recontracting NGPL Strategies and Strategic Advantages will all
Slide 54: Product Pipelines
Product Pipelines Tom Bannigan F o r w a r d lo o k in g s ta te m e n ts a r e n o t g u a r a n te e s o f p e r fo r m a n c e . T h e y in v o lv e r is k s , u n c e r ta in tie s a n d a s s u m p tio n s . T h e f u tu r e r e s u lts a n d s e c u r itie s v a lu e s o f K in d e r M o r g a
Slide 55: Product Pipelines Overview
54 Product Pipelines Overview Pipeline Transportation – Over 10,000 mile pipeline system, largest independent products pipeline in the U.S. – Transports over 2MM barrels of products a day – Refined petroleum products: gasoline (59%), diesel (20%), jet fuel (12.5% commercial/2.5% military) – NGL’s fo
Slide 56: Product Pipelines Map
55 Product Pipelines Map Cochin P/L Mid-Continent Chicago Pacific Operations CalNev Pipe Line Orange County Plantation Cypress Pipe Line Houston Pipe Line Products Operations Pipelines CFPL Pipe Line Transmix Facilities
Slide 57: Pacific Operations
56 Pacific Operations 3,900 mile refined products pipeline system and 22 terminals with 15 million barrels of storage Predominant market share, transporting bulk of refined products used in CA, AZ and NV Transports over 1.1 million barrels per day Pacific: 61% Gasoline, 22% Diesel, 17% Jet Fuel Rapi
Slide 58: Plantation Pipe Line/CFPL
57 Plantation Pipe Line/CFPL Asset Overview – 3,300 mile refined products pipeline systems; transports over 730M bbls/day – Serves fast-growing Southeast and Florida markets (Atlanta, Charlotte, D.C., Orlando) – 51% ownership of Plantation; Exxon/Mobil is remaining 49% partner – PPL Volumes: 66% Gas
Slide 59: The North System
58 The North System 1,600 mile NGL and refined products pipeline system Major transporter of products between central Kansas and Chicago refineries 8 Midwest truck loading propane terminals 50% partner of Heartland Pipeline, gasoline/distillates to markets in Iowa/Nebraska Volumes: Propane 41%, Refi
Slide 60: Cochin Pipe Line
59 Cochin Pipe Line 1,938 mile NGL pipeline system from Alberta, CN through 7 U.S. states and terminates in Ontario, CN. 4 U.S. propane terminals Ft Saskatchewan 45% ownership in Cochin: – BP 45% Sarnia – Conoco 10% Chicago 69% Propane, 8% Ethane, 23% Ethylene Top 6 shippers account for 2/3 volume a
Slide 61: Segment Overview
60 Segment Overview (a) Product Pipeline Contribution to KMP Breakout of Product Pipeline Distributable Cash Distributable Cash Transmix CFPL 5% 6% Plantation Terminals Products 9% 18% Pipelines CO2 38% Cochin Pipelines 3% 11% North Pacific Natural Cypress 53% Gas 5% Pipelines West Coast 33% 9% CALN
Slide 62: Segment Overview: Regulatory Summary
61 Segment Overview: Regulatory Summary 2000 EARNINGS 2002 ESTIMATED EARNINGS Intrastate Intrastate Regulated Regulated 20% 28% FERC FERC Regulated Regulated 49% 47% Non Non Regulated Regulated 23% 33%
Slide 63: Segment Strategy
62 Segment Strategy Make use of underutilized capacity to capture demand growth Goal is to offset increases in variable costs with productivity improvements Cost Reduction Strategies – Power Management – Superior Regulatory Compliance/System Integrity – Leverage KMI/KMP Purchasing Power (Pumps, DRA,
Slide 64: 2001 Results
63 2001 Results Segment Earnings up $87.7 MM (40%) 2001 vs. 2000 Volumes Revenues (Revenues $1,000) Pacific +3.2% +7.9% 286,069 Calnev +0.8% +1.9% 48,660 West Coast Terminals +4.9% +5.0% 53,597 Plantation -0.5% -3.7% 156,669 Central Florida Pipe Line -0.9% +0.5% 31,379 North +4.9% +0.7% 35,771 Cypre
Slide 65: 2002 Overview
64 2002 Overview Segment Goals – Increase Revenues by 4.5% – Increase Net Income by 12% – Zero System Releases and Zero On-The-Job Injuries
Slide 66: 2002 Plan: Growth Assumptions
65 2002 Plan: Growth Assumptions $36.9 Million Segment Operating Income Growth – $20 Million Volume/Market Share Growth (54%) – $8.3 Million (Full Year Calnev) (22%) – $4.7 Million Expansion Projects (13%) – $3.9 Million Price Increases (11%) Expansion Projects – Terminal Facilities in LA and Northw
Slide 67: 2002 Plan: Risks
66 2002 Plan: Risks Severe Recession Slower Air Travel Recovery Sustained Mild Weather in East and Midcontinent Affecting Propane/Fuel Oil Demand
Slide 68: 2002 Plan: Upside
67 2002 Plan: Upside Accelerated Economic Recovery Industry Consolidation / Favorable Shifts In Supply Increased Imports and Product Price Volatility Stimulate Demand for Terminal Storage Greater Volume Growth in High Tariff Markets
Slide 69: Long Term Growth Opportunities
68 Long Term Growth Opportunities Operate in Growth Markets/High Barriers of Entry Improve Market Share Pursue Accretive Acquisition Opportunities
Slide 70: Long Term Growth Opportunities
69 Long Term Growth Opportunities Operate in Growth Markets U.S. 2000 Census (1995-2005 Population Growth) > 50% (California, New Mexico, Arizona, Nevada) > 40% (Florida) > 30% (Georgia, North Carolina, Virginia) U.S. Products Demand Growth 1.7% CAGR – 1991-2001
Slide 71: Commodity Demand: U.S. Petroleum Products Supplied
70 Commodity Demand U.S. Petroleum Products Supplied per Day 18 1.7% 16 CAGR 14 Million Barrels Per Day 12 Residual Fuel Oil 10 Jet Fuel Distillate 8 Gasoline 6 4 2 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Sources: EIA; U.S. Petroleum Products Supplied, 2000 to Present 2001. Year 200
Slide 72: Commodity Demand: 2002 Forecast
71 Commodity Demand U.S. Petroleum Products Supplied per Day 16 0.96 0.81 14 1.67 1.69 Million Barrels Per Day 12 Residual Fuel Oil 3.84 3.75 Jet Fuel 10 Distillate 8 Gasoline 6 4 8.62 8.8 2 0 (15.09 MBD) (15.04 MBD) 2001 2002 Forecast Sources: EIA; U.S. Petroleum Products Supplied, 2000 to Present
Slide 73: Long Term Growth Opportunities
72 Long Term Growth Opportunities Operate in Growth Markets Vehicle Sales Preferences (Millions)* 1988 - 10.4M Cars/4.7M Light Trucks/Minivans/SUVs 1997 - 8.3M Cars/6.5M Light Trucks/Minivans/SUVs 2001 - For first time, Light Trucks/Minivans/SUVs outsell passenger cars CAFE Standards Unchanged Since
Slide 74: Long Term Growth Opportunities
73 Long Term Growth Opportunities
Slide 75: Operate in Growth Markets
74 Operate in Growth Markets Transportation Mode Preference* – Urban vehicle miles traveled +83% (1980-1997) – Personal use vehicles account for 90% of all local trips, 80% of all long distance trips (> 100 miles) – Transit ridership (bus and rail) flat from 1980-1997 – Urban Congestion** 1982 - 10/
Slide 76: Long Term Growth Opportunities
75 Long Term Growth Opportunities Improve Market Share – Customer Service – “One Stop” Logistics – Non-Affiliated Status Current Terminal Market Shares – Los Angeles (17%) – Seattle (18%) – Portland (25%) – Phoenix (26%) – San Diego (45%) Expand Pipeline Services to Markets Unserved or Underserved P
Slide 77: Summary
76 Summary Stable Assets In Growth Markets Exceptional Growth Track Record Good Opportunities for Future – Underutilized Assets Allow Growth To Drop to Bottom Line – Acquisition Opportunities Due to Consolidation
Slide 78: Kinder Morgan Liquid Terminals, LLC
Kinder Morgan Liquid Terminals, LLC Jeff Armstrong Dixon Betz Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and securities values of Kinder Morgan Inc. and Kinder Morgan Energy Partners, L.P. (collectively known as
Slide 79: KMLT & KMBT Asset System Map
78 KMLT & KMBT Asset System Map Su per ior Hu ro n r io Onta Michigan ie Er Houston Terminals Operations 10 Louisiana Bulk Terminals Bulk Terminals Liquids Terminals
Slide 80: Pasadena Terminal
Pasadena Terminal
Slide 81: Carteret Terminal
Carteret Terminal
Slide 82: Shipyard River Terminal
SHIPYARD RIVER TERMINAL 1997
Slide 83: Shipyard River Terminal
82 SHIPYARD RIVER TERMINAL 2001
Slide 84: Pier IX Terminal
PIER IX TERMINAL Newport News, VA
Slide 85: 2002 Terminal Earnings Forecast
84 2002 Terminal Earnings Forecast Terminal Contribution to Estimated Breakout of 2002 Terminal DCF Product Pipelines Liquid 38% 64% Terminals CO2 18% 11% Bulk Natural Gas 36% 33%
Slide 86: Terminal Segment Earnings
85 Terminal Segment Earnings Acquisitions have driven dramatic growth since 1998 164M 180000 5% stretch in segment budget from acquisitions/projects 130M 160000 140000 120000 100000 80000 35M 38M 60000 19M 40000 20000 0 1998 1999 2000 2001 2002
Slide 87: Acquisition Review - Terminals
Acquisition Review - Terminals Terminal growth has been driven by an aggressive acquisition plan. Terminal multiples tend to be lower than those paid for pipeline assets. We have completed nine acquisitions since 1998. To date, every acquisition has met or exceeded the original acquisition plan. Suc
Slide 88: Kinder Morgan Terminals Acquisition Review
KINDER MORGAN TERMINALS Acquisition Review ($ In Millions) 1998 - 2001 2001 Annualized Acquisition Over Investment EBITDA Plan (Under) Hall-Buck Marine 100.0 15.9 14.9 1.0 Pier IX 28.0 5.5 4.9 0.6 SRT Original 2.0 Blue Circle 1.3 2nd Dock 3.1 35.0 6.8 6.4 0.4 Milwaukee Bulk 25.0 5.0 4.9 0.1 Delta 12
Slide 89: Terminals Overview
Terminals Overview Bulk Terminals – 33 Dry Bulk Terminals Operated – 2,000,000 Tons of Covered Storage; 14,000,000 Tons of Open Storage – 55,000,000 Tons of Product Handled – Own River Consulting, Inc., a nationally recognized bulk material handling design and construction management firm with $25M
Slide 90: Bulk Terminals
89 Bulk Terminals Tonnage Handled = 55 Million Tons Major Industries By Commodity: – Coal 28.0 Million 51% – Petcoke 7.8 Million 14% – Fertilizers 4.0 Million 7% – Iron Ore 3.8 Million 7% – Salt 2.5 Million 5% – Cement 2.2 Million 4% – Other 6.7 Million 12% 55.0 Million 100%
Slide 91: Industries
90 Industries 14% Petroleum Coke - Terminaling 7% Fertilizer - Terminaling - In Plant Services at Refineries - Import, Export, and Domestic - Domestic and Export 5% Salt - Terminaling 51% Coal - Terminaling - Domestic and Import - West Coast (Rail to Barge; Export) - East Coast (Rail to Barge; Expor
Slide 92: Market Share (2001)
91 Market Share (2001) Petroleum Coke (Waterborne) Cement Imports U.S. (Qtrs. 1-3) 9.9 Million Tons U.S. Production - 17.6 Million Tons 2.3 Million Tons Handled (23%) - 1.5 Million by KMBT (8%) Coal Iron Ore (Great Lakes Region) - U.S. Exports 34.0 Million Tons - 31.0 Million Tons Direct Ship. 3.32
Slide 93: Customers
92 Customers Petroleum Coke Fertilizer - Producers - Refineries - Traders/Marketers Salt - Producers - End Users (Utilities; Industrial Iron Ore Users) - Steel Companies Coal - Producers - Utilities (Domestic and Foreign) - Producers - Traders/Marketers Cement - Producers - Ready Mix Cooperatives
Slide 94: Customer Base: Bulk Terminals
93 Customer Base: Bulk Terminals RANK CUSTOMER NAME 2001 REVENUE ($) PERCENT 1 TVA 14.9M 8.8% 2 ANSAC 8.1M 4.8% 3 ALCOA 6.5M 3.8% 4 EXXONMOBIL 4.6M 2.7% 5 MASSEY COAL 4.2M 2.5% 6 TAMPA ELECTRIC 3.7M 2.2% 7 BLUE CIRCLE CEMENT 3.3M 2.0% 8 LAXT 3.2M 1.9% 9 HOLCIM 3.2M 1.9% 10 INDIANA KENTUCKY ELECTRIC
Slide 95: Competitors by Industry
94 Competitors by Industry No National Competitors Petroleum Coke Fertilizer - Aimcor - Private Terminals of Major - Trans Global Solutions (TGS) Fertilizer - Traders/Marketers (e.g. Koch, Companies Oxbow) - Public Ports w/ or w/o Regional Coal Operator - Railroads - Public Ports Salt - Regional Ter
Slide 96: KMBT's Strategic Focus
95 KMBT’s Strategic Focus Location, Location, Location - Provide Terminals w/ Logistic Advantage Service, Service, Service -Provide superior customer services Focus on Acquisitions that benefit from KMP’s unique Financial Structure - Qualifying Revenues and Low Cost of Capital - Acquisition - New Co
Slide 97: KMBT's Strategic Focus
96 KMBT’s Strategic Focus Diversification - Business covers numerous dry bulk industries helping to avoid cycle effects Target Multiple Commodity Facilities (Liquid, Bulk, & Others) Capitalize on Benefits from Recent KMLT Acquisitions w/ - Low Dock Utilization - Available Real Estate - Geographical/
Slide 98: KMBT's Geographic Focus
97 KMBT’s Geographic Focus Acquisitions - East Coast - Short Term - Miss. River/Gulf Coast/Midwest - Mid Term New Construction - Customer Requirements - Location Advantages
Slide 99: KMBT's Growth Strategies
98 KMBT’s Growth Strategies Inside the Fence Growth Acquisition of New Terminals Construction of New Terminals
Slide 100: Existing Terminal Strategies
99 Existing Terminal Strategies Achieve Benefits from Recent KMLT Acquisitions - Logistical/Geographical Advantages - Facilities w/ Low Dock Utilization and Available Real Estate Market Incremental Volumes 2nd Customers for Existing Sites (ex. SRT)
Slide 101: Kinder Morgan Liquids Terminals LLC (KMLT)
KINDER MORGAN LIQUIDS TERMINALS LLC (KMLT) Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and securities values of Kinder Morgan Inc and Kinder Morgan Energy Partners, L.P. (collectively known as “Kinder Morgan”) ma
Slide 102: Industry Overview: North American Market Share
101 Industry Overview: North American Market Share Independent Bulk Liquid Terminal Companies – Total = 328,721,000 – KM = 53,940,000 – Market Share of 16.4% Total Storage Capacity – Independent & Captive = 730,000,000 – KM = 53,000,000 – KM Market Share of 7.26% The Top Ten Companies Represent 76.5
Slide 103: Terminal Overview: Liquids Terminals
102 Terminal Overview Liquids Terminals – Eleven (11) Liquid Terminals – 35,000,000 barrels of storage – 457,000,000 barrels of Petroleum Products Throughput – 34,500,000 barrels of Chemical and Other Products Throughput – Combined with KMP Products Pipeline – we are the largest independent liquid t
Slide 104: Segment Overview: Liquids Terminals - 2001
103 Segment Overview: Liquids Terminals - 2001 Storage Throughput Location No. Barrels Percentage Barrels Percentage Houston 2 18.2M 52% 359M 73% New Jersey 2 8.6M 25% 105M 21% Chicago 2 3.1M 9% 13.5M 3% New Orleans 1 2.9M 8% 8M 1.6% Philadelphia 1 1.2M 3% 3M .6% Other 3 1.0M 3% 2.5M .5% Total1 11 3
Slide 105: Segment Overview: Liquids Terminals Throughput for 2002
104 Segment Overview: Liquids Terminals Throughput for 2002 Throughput Location No. Gasoline/Gasoline Distillate Chemical Total Blendstock Houston 2 207M 152M 11M 370M New Jersey 2 86M 15.1M 7M 108M Chicago 2 6M 5.4M 5M 16M New Orleans 1 0M 0M 3M 3M Philadelphia 1 0M 0M 2M 2M Other 3 1M 0M 2M 3M Tot
Slide 106: Industry Overview: KMLT Regional Market Share
105 Industry Overview: KMLT Regional Market Share Midwest Northeast Total 115 Total 184 Independent 50 Independent 51 KM 3.1 KM 10 KM % Total 3.0% KM % Total 5.5% KM% Independent 6% KM % Independent 19.7% Gulf Southeast Total 256 Total 78 Independent 86 Independent 22 KM 18.2 KM 2.8 KM % Total 7% KM
Slide 107: KMLT Carteret Terminal
106 KMLT Carteret Terminal Terminal Services • Vessel Loading/Unloading • Vapor Recovery/Incineration • Pipeline Receipt/Shipment • Additive Handling/Injection • Tank Car Loading/Unloading • Denatured Spirits Handling • Tank Truck Loading/Unloading • Nitrogen Blanketing • Tank Truck Weighing • Autom
Slide 108: KMLT Argo Terminal
107 KMLT Argo Terminal Terminal Services • Vessel Loading/Unloading • Product Heating • Pipeline Receipt/Injection • Vapor Recovery/Incineration • KMLT Laboratory Testing • Additive Handling/Injection • Tank Car Loading/Unloading • Denatured Spirits Handling • Tank Truck Loading/Unloading • Nitrogen
Slide 109: KMLT Harvey Terminal (Port of New Orleans)
108 KMLT Harvey Terminal (Port of New Orleans) Terminal Services • Bulk Liquid Storage • Products are shipped and received • Warehousing through dedicated pipelines to each • Cold Storage tank. • Direct Transfers • Drumming Services • Package Filling Transportation Modes • Servicing Body of Water •
Slide 110: KMLT Galena Park Terminal
109 KMLT Galena Park Terminal Terminal Services • Vessel Loading/Unloading • Product Heating • Pipeline Receipt/Shipment • Product Chilling • KMLT Laboratory Testing • Free Trade Zone (FTZ) • Tank Car Loading/Unloading • Vapor Recovery/Incineration • Tank Truck Loading/Unloading • Additive Handling
Slide 111: KMLT Pasadena Terminal
110 KMLT Pasadena Terminal Terminal Services • Vessel Loading/Unloading • Additive Handling/Injection • Pipeline Receipt/Shipment • Free Trade Zone • KMLT Laboratory Testing • Nitrogen Blanketing • Tank Truck Loading/Unloading • Automated Truck Rack • Product Blending • Additional Services Available
Slide 112: Industry Overview: Customer Base
111 Industry Overview: Customer Base TOP CUSTOMERS 2001 REVENUE Total 2001 Revenue 3% DOW CHEMICAL COMPANY 7.83% BP AMOCO CORPORATION 7.44% MIECO PRODUCT SERVICES, LP 6.56% VALERO 5.99% GEORGE E WARREN CORPORATION 5.57% BASF CORPORATION 4.91% KOCH PETROLEUM GROUP 3.96% SHELL CHEMICAL COMPANY 3.46% 4
Slide 113: Chemical Market Fundamentals
112 Chemical Market Fundamentals C a p a c ity U tiliz a tio n - C h e m ic a ls Percen t 86 N o te : S h a d e d A r e a s R e p r e s e n t R e c e s s io n P e r io d s H isto rica l 84 A vera g e 82 80 78 76 74 L o w est R a te S in ce 72 1 9 8 2 R ecessio n ! 70 JC U 2 8 68 80 82 84 86 88 90 92
Slide 114: Chemical Imports
113 Chemical Imports $100,000 $90,000 $80,000 (Millions of Dollars) $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 1995 1996 1997 1998 1999 2000 2001 Source: Years 1995 – 2000 American Chemistry Council Year 2001 was extrapolated from January – October
Slide 115: Petroleum Market Fundamentals: Distillate Inventories
114 Petroleum Market Fundamentals US Distillate Inventories 160 Actual 150 140 Million Barrels 130 120 110 100 Normal Range 90 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Sources: EIA; Stocks of Distillate Fuel Oil by Petroleum Administration for Defense District (PADD), 2000 to P
Slide 116: Petroleum Market Fundamentals: Gasoline Inventories
115 Petroleum Market Fundamentals Gasoline Inventories 250 Gasoline Actual 225 Million Barrels 200 175 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 NOTE: Colored Band is Normal Stock Range Sources: EIA; Projections: Short-Term Energy Outlook, March 2001 and EIA; Stocks of Motor Gas
Slide 117: Excess Capacity is Gone
116 Excess Capacity is Gone U.S. Operable Capacity & Gross Inputs 20 Thousand Barrels Per Calendar Day 18 Operable Capacity 16 14 12 10 8 Gross Inputs 6 4 2 0 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Slide 118: U.S. East Coast is Dependent on Gasoline Imports
117 U.S. East Coast is Dependent on Gasoline Imports 3500 Gasoline 3000 Demand Thousand Barrels Per Day 2500 2000 1500 Imports 1000 500 0 PADD 1 PADD 2 PADD 3 PADD 4 PADD 5 Kinder Morgan market share equals 33%
Slide 119: KMLT Delivery Market Access
118 KMLT Delivery Market Access Ne wC ons truc tion Pipeline Routes: Kinder Morgan (CALNEV, CFPL, PLANTATION KMP (WEST) Orion Seaway Colonial Phillips Explorer Kaneb & Chase TEPPCO Williams Longhorn Aspen Centennial Eagle/Citgo
Slide 120: KMLT Focus 2002
119 KMLT Focus 2002 Performance Management and Efficient Safe Operations – Spills – 676 barrels in 2001 (0.0013767%) 602 barrels were from Tropical Storm Allison (0.0000154% – Accidents – Six (6) lost work days Grow existing business within our fence line. – 830,000 barrels in Houston, TX – 400,000