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Kinder Morgan Reports Lower-Than-Expected Profits But Remains Upbeat

Kinder Morgan reported a lower-than-expected net result for the third quarter of the year but said the outlook over the short term was positive, largely thanks to expectations of stronger natural gas demand.

“This quarter KMI continued to benefit from strong demand for our natural gas transportation and storage services,” chief executive Kim Dang said.

“And the future is bright as we 1 expect natural gas demand to grow by more than 20% through 2028, led by liquefied natural gas (LNG) exports, exports to Mexico and power generation,” Dang also said.

Taking a stab at wind and solar, the CEO of Kinder Morgan noted that the company’s extensive natural gas pipeline network and 700 billion cubic feet of storage capacity were “particularly useful in backstopping intermittent renewable electricity resources.”

At the same time, the company acknowledged several challenges that affect its performance, including higher borrowing costs because of higher rates, lower-than-expected commodity prices this year, and higher expenses.

The company had made its budget calculations based on an oil price of $85 per barrel and a gas price of $5.50 per million British thermal units. While oil prices could yet surprise to the upside, gas prices are unlikely to reach the level Kinder Morgan assumed thanks to growing production.

The International Energy Agency this week forecast that natural gas exports from the United States to Mexico are set for a 20% increase in the period between 2022 and 2026. The increase, the IEA said, will be mainly driven by new LNG capacity relying on feed gas from the U.S.

Production of natural gas in the U.S., meanwhile, has broken another record, rising to 103.6 billion cubic feet per day, beating the previous record of 103.1 billion cubic feet, set in July. Flows of gas to liquefaction facilities also rose, nearing record highs.

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By Charles Kennedy for Oilprice.com

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