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ConocoPhillips and Kinder Morgan Poised for LNG Growth
In a move to capitalize on the anticipated surge in global LNG demand, ConocoPhillips and Kinder Morgan are expanding their LNG portfolios. According to S&P Global Commodity Insights, LNG feed gas demand in the United States is expected to double by 2030, while global LNG demand is forecast to increase by about 60% by 2040.
ConocoPhillips is making strategic moves to expand its global LNG footprint. The company has joined two new joint ventures with Qatar Energy to invest in the North Field East and North Field South projects. These projects will increase LNG capacity to 126 million tonnes per year by 2027, from the current 77 million tonnes.
In addition, ConocoPhillips has secured a 30% stake in Sempra’s Port Arthur LNG Phase 1 project. The company has also signed an offtake agreement for 5 million tonnes per year, with the facility expected to begin commercial service in 2027-2028.
Kinder Morgan, on the other hand, operates the largest natural gas transportation network in the U.S., with over 60,000 miles of pipeline. The company currently supplies 8 billion cubic feet per day (Bcf/d) of gas to U.S. LNG export terminals, accounting for about 40% of all feed gas to these terminals. Kinder Morgan aims to increase its LNG feed volume to 12 Bcf/d by 2028 as more LNG export capacity comes online.
The growth in LNG volumes should provide Kinder Morgan with substantial incremental income in the coming years. The company is also pursuing a "substantial number" of additional opportunities to supply gas to LNG terminals.
Both companies benefit from their strategic infrastructure and long-term contracts committed to supplying LNG export terminals. This gives them a competitive edge to capture LNG market growth fueled by the global pivot to cleaner-burning natural gas. Kinder Morgan’s strong dividend yield (~4.2%) also reflects its cash flow strength from pipeline operations supporting LNG exports.
Richard Kinder, co-founder of Kinder Morgan, stated that this should be a real positive for the company. ConocoPhillips, with its large, diversified, global oil and gas business, is also well positioned for multi-year LNG growth alongside its traditional operations.
Furthermore, ConocoPhillips has secured long-term LNG supply agreements, including a 20-year deal to receive 2.2 million tonnes of LNG per year from Mexico Pacific's Saguaro export facility. The company is also leveraging its strategic positions, such as securing space in several regasification facilities in Europe, enabling it to import LNG to those countries.
In conclusion, ConocoPhillips and Kinder Morgan are well poised to capitalize on the expected substantial growth in LNG demand worldwide. Their strategic investments, infrastructure, and long-term contracts position them to benefit significantly from the anticipated increase in LNG demand.
- The expected surge in global LNG demand presents an opportunity for investing in the LNG industry, an opportunity that ConocoPhillips seeks to seize through strategic investments in projects like the North Field East and North Field South.
- Kinder Morgan, with its expansive natural gas transportation network in the United States, aims to increase its LNG feed volume to 12 billion cubic feet per day by 2028, leveraging its strong dividend yield of around 4.2% from pipeline operations supporting LNG exports.
- ConocoPhillips' long-term LNG supply agreements, such as the 20-year deal with Mexico Pacific's Saguaro export facility and positions in multiple European regasification facilities, empower the company to import LNG and profit from the anticipated increase in global LNG demand.
