Kinder Seeks Nod to Add Capacity

Texas-based Kinder Morgan Inc.’s (KMI - Analyst Report) Kinder Morgan Texas Pipeline LLC (KMPT) has requested for an approval from the U.S. federal energy regulators for transporting additional natural gas from Texas to Mexico.

Currently, the company is permitted to transfer 425 million cubic feet per day (mmcfd) of natural gas on the Mier-Monterrey pipeline, which is 95 miles long. Kinder Morgan has filed an application with the U.S. Federal Energy Regulatory Commission to alter a presidential permit and authorization under the Natural Gas Act to enhance this capacity to 700 mmcfd.

The Mier-Monterrey pipeline moves through international borders between Starr County, Texas, into Monterrey, Mexico, where it is attached to a 1,000 megawatt power plant complex and linked with Pemex-Gas Y Petroquimica Basica's natural gas transportation system.

The pipeline will require alterations to its non-jurisdictional facilities upstream KMTP's cross-border facility to accommodate the increase in its capacity. With Mexican state owned petroleum company Petróleos Mexicanos or Pemex already using the pipeline for gas deliveries, Kinder Morgan has requested for authorization prior to June 1, 2013.

Initially, the firms that had spent on the construction of terminals to import liquefied natural gas into the US are now looking to renovate those and build new terminals to export gas after the output increased. Kinder Morgan wants to benefit from the increased fuel prices in global markets where it is nearly five-to-six times the U.S. price. Thus, natural gas export is gaining momentum and major companies have queued up to capitalize on this domestic natural gas shale boom.

Kinder Morgan holds a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, there are other stocks in the oil and gas sector – Memorial Production Partners LP (MEMP - Snapshot Report), Calumet Specialty Products Partners L.P. (CLMT - Snapshot Report) and EPL Oil & Gas, Inc (EPL - Snapshot Report) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.