Kinder Morgan's (KMI) Sierrita Expansion Gets FERC Approval

Kinder Morgan, Inc.’s KMI Sierrita Gas Pipeline recently received approval from the Federal Energy Regulatory Commission (FERC) for a proposed expansion. Sierrita Gas Pipeline LLC, a unit of Kinder Morgan, is in charge of the natural gas pipeline.

The 61-mile pipeline has a diameter of 36-inch and runs from El Paso Natural Gas pipeline system, near Tucson, AZ, to the Mexican border near Sasabe, AZ. The expansion project will increase its transportation capacity from 200,846 dekatherms per day (Dth/d) to around 323,000 Dth/d. Notably, the pipeline connects with an IENova-owned pipeline in Mexico. Following the expansion, the Sierrita pipeline will transport more natural gas produced in the United States to meet the growing demand in northwest Mexico. It will supply gas to a power plant located in the state of Sonora. No adverse environmental effect is expected to be caused as a result of the expansion project.

Per the project plans, a new compressor station will be built in Arizona, costing around $56.4 million. Kinder Morgan has 35% stake in the pipeline. Petróleos Mexicanos or PEMEX, the state-run petroleum company of Mexico, has 35% interest in the pipeline as well, while the remaining 30% is owned by Japan's Mitsui company.

With ongoing lookout for sustainable and cleaner energy sources, usage of natural gas has increased drastically. The pipeline is expected to be crucial to the U.S. energy sector, which recently witnessed a surge in natural gas exports.

Kinder Morgan has one of the largest natural gas transmission networks in North America, with around 70,000 miles of natural gas pipelines. The pipelines cover almost all significant natural gas resource plays in North America. Recently, it initiated a binding open season for another expansion project (Roanoke Expansion) on the Plantation Pipe Line System to secure commitments.

Over the past year, Houston, TX-based Kinder Morgan’s shares have lost 4.5% compared with the industry’s 12.3% collective decline.

 

 

Zacks Rank & Stocks to Consider

Kinder Morgan currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the oil and gas sector are Petroleo Brasileiro S.A. PBR or Petrobras, Shell Midstream Partners, L.P. SHLX and CNX Resources Corporation CNX, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines, and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.

CNX Resources is an independent oil and gas exploration and production company. The company delivered a positive earnings surprise of 250.0% in the last reported quarter.

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