Kinder Morgan Targets $1.4B Gas Expansion

Kinder Morgan expects to approve at least $1.4 billion in new natural gas infrastructure by the end of the year. This investment is designed to restore the company’s project backlog to levels exceeding $10 billion, reversing a recent decline as existing projects entered service. Management identifies natural gas as the primary growth driver, accounting for roughly two-thirds of the firm's total business activities.

The strategic push is underpinned by projections that U.S. natural gas demand will rise from 115 billion cubic feet per day in 2025 to 160 billion cubic feet per day by 2035. This growth is largely attributed to increased liquefied natural gas exports and higher power generation requirements. Kinder Morgan currently operates 80,000 miles of pipeline, handling 40% of U.S. gas demand and a significant share of export volumes to Mexico and LNG facilities.

Backlog Quality and Contract Security

The company’s backlog, which stood at approximately $9.6 billion in the second quarter, consists of board-approved projects rather than preliminary opportunities. Approximately 90% of these projects are secured through take-or-pay contracts, providing a stable revenue foundation. A separate opportunity set of about $10 billion exists outside the sanctioned backlog, though management does not expect to secure all potential projects.

Financially, the current backlog is estimated to generate roughly $1.7 billion in incremental EBITDA using a 5.6x multiple. The average in-service date for these projects is targeted for the first half of 2028, with significant contributions expected in 2028 and 2029. Additional projects slated for sanctioning this year are projected to extend this growth trajectory into late 2029 and 2030.

Regional Pipeline Expansion Plans

Key expansion areas include the Appalachian and Southeast regions, as well as Texas and the Permian basin. A major proposed project involves expanding the Tennessee Gas Pipeline to move more than 500 million cubic feet per day from the Marcellus and Utica regions in Pennsylvania to areas near Nashville. The company recently completed a nonbinding open season for this project, reporting strong interest from prospective customers.

Kinder Morgan is currently following up with these customers to finalize delivery locations and demand timing before seeking binding commitments. The company states it can fund more than $3 billion in annual expansion spending through internal cash flow while maintaining leverage near the low end of its target range. These developments were highlighted in coverage by GN auto stocks/energy-stocks: natural gas demand, underscoring the sector's focus on infrastructure reliability.