Kinder Morgan, Inc. (NYSE: KMI) Monday announced that its Texas Intrastate Pipelines group has entered into a 20-year firm transportation services agreement with SK E&S LNG, LLC (SK LNG), a subsidiary of SK E&S Co. LTD. Under the agreement, KMI will invest more than $150 million to provide more than 320,000 dekatherms per day of firm natural gas transportation services to support SK LNG’s Train III liquefied natural gas export capacity at Quintana Island, Texas. This Train is part of Freeport LNG Development’s Freeport LNG export facility which in total will liquefy up to 13.2 million tonnes per annum once fully operational.
KMI will construct and operate approximately 40 miles of pipeline extending from its existing Kinder Morgan Tejas mainline to an interconnection point with Freeport LNG’s existing pipeline located in Stratton Ridge, Texas. KMI will also expand and construct additional compression on its existing Kinder Morgan Texas and Kinder Morgan Tejas pipeline systems to provide these services upon the startup of Train III, which is expected to occur in the third quarter of 2019. This transportation services agreement provides for the required expansion of the KMI intrastate system by over 1 billion cubic feet per day and will provide additional capacity to the Freeport and Chocolate Bayou areas.
“We are delighted to enter into this business relationship with SK, an emerging leader in the LNG export arena in the United States,” said Duane Kokinda, president of Kinder Morgan’s Midstream Group. “Our extensive network of assets on and near the Gulf Coast of Texas is uniquely positioned to provide SK with access to a variety of gas supply sources for its requirements at the Freeport LNG facility. LNG exports are one of the catalysts driving the growing demand for more natural gas in the United States.”
The agreements are subject to certain conditions, as well as making a final investment decision to construct the Freeport LNG Train III Liquefaction Project.