Kinder Morgan
Careers at Kinder Morgan
Mission
Kinder Morgan’s mission is to do business the right way, every day.
Business segments
Kinder Morgan is an energy infrastructure company. The firm operates six reportable business segments:
- Natural Gas Pipelines – Engaged in the operation of major interstate and intrastate natural gas pipeline and storage systems; natural gas and crude oil gathering systems and natural gas processing and treating facilities; NGL fractionation facilities and transportation systems; and LNG facilities.
- CO2 — Engaged in the production, transportation, and marketing of carbon dioxide to oil fields that use it as a flooding medium for recovering crude oil from mature oil fields to increase production; the operation of oil fields and gas processing plants in West Texas; and the operation of a crude oil pipeline system in West Texas.
- Terminals — Engaged in the operation of liquids and bulk terminal facilities located throughout the U.S. and portions of Canada that transload and store refined petroleum products, crude oil, condensate, and bulk products, including coal, petroleum coke, cement, alumina, salt and other bulk chemicals and the operation of Jones Act tankers.
- Products Pipelines — Engaged in the operation of refined petroleum products and crude oil and condensate pipelines that deliver refined petroleum products (gasoline, diesel fuel, and jet fuel), NGL, crude oil, condensate and bio-fuels to various markets, as well as the operation of associated product terminals and petroleum pipeline transmix facilities.
- Kinder Morgan Canada — Engaged in the operation of the Trans Mountain pipeline system that transports crude oil and refined petroleum products from Edmonton, Alberta, Canada to marketing terminals and refineries in British Columbia, Canada, and the state of Washington, as well as the Jet Fuel aviation turbine fuel pipeline that serves the Vancouver (Canada) International Airport.
- Other — Engaged in the ownership of other miscellaneous assets and liabilities including the firm’s corporate headquarters in Houston, Texas; several physical natural gas contracts with power plants associated with legacy trading activities; and other miscellaneous legacy assets and liabilities.
History
Richard Kinder, William Morgan, and Kenneth Lay were old college friends. Lay was working as an executive at Florida Gas Transmission and hired Morgan, who then hired Kinder. Florida Gas was purchased by Houston Natural Gas in 1984, which merged with InterNorth in 1985 to form Enron. Lay headed Enron, and Kinder advanced at the company, ultimately becoming its President in 1990.
In 1996 Lay signed onto a five-year term as Chairman of Enron. Kinder, realizing he would not achieve top management status, left. He wanted to start his own company, and Morgan (who was no longer at Enron) persuaded him to join him in a venture. They negotiated a deal to acquire Enron Liquids Pipeline, a general partnership, in 1997. The business had been struggling for some time.
Enron Liquids Pipeline had many attractive assets, including natural gas liquids pipelines, a carbon dioxide pipeline, and a rail-to-barge coal terminal. After purchasing it, the men took it public as Kinder Morgan Energy Partners (KMP). They aimed to focus their attention on midstream fee-based pipeline businesses, acting as a conduit for commodities rather than the marketing or drilling sectors.
Kinder brought his renowned management expertise to the company, cutting $5 million in expenses and instituting a variety of cost-saving measures. Within only six months the firm increased the dividend paid to unit holders by 50%. By the end of its first year it made its first significant acquisition, purchasing Santa Fe Pacific Pipeline Partners, which gave them a west coast presence.
Feeling confident, in 1998 the men prepared to file an initial public offering for their company, now called Kinder Morgan, Inc. (KMI). However, they observed the debt-ridden firm KN Energy, and plotted a reverse merger instead. They realized they could obtain corporation status while garnering several valuable assets. KN Energy had a 16,000-mile, natural gas pipeline network at the time.
The men formed an agreement to combine KMI’s assets with those of KN Energy in 1999. Specifically, KN Energy acquired KMI, though KMI took over its corporate structure. KN Energy changed its name to Kinder Morgan, Inc., and the new entity was listed on the New York Stock Exchange. In 2012 KMI acquired El Paso Corporation and became the largest midsteram energy firm in America.
Business model of Kinder Morgan
Customer Segments
Kinder Morgan has a niche market business model, with a specialized customer segment. The company targets its offerings at firms in the energy industry, including oil companies, energy producers and shippers, and local distribution companies.
Value Proposition
Kinder Morgan offers three primary value propositions: accessibility, risk reduction, and brand/status.
The company creates accessibility by providing a wide variety of options. Its pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide, and more. It handles a variety of materials at its terminals, including gasoline, jet fuel, ethanol, coal, petroleum coke, and steel.
The company reduces risk by maintaining high safety standards. It spends hundreds of millions of dollars per year on integrity management and maintenance programs to operate its assets safely and to protect the public, its employees, contractors, and the environment. Operationally, it claims to perform better than its industry peers regarding environmental, health, and safety measures.
The company has established a strong brand due to its success. It is the largest energy infrastructure company in the U.S. It operates or owns an interest in 84,000 miles of pipelines and 180 terminals. It also claims to be a market leader in each of its businesses – Natural Gas Pipelines, Products Pipelines, CO2, Terminals, and Kinder Morgan Canada. Other rankings include the following:
- Largest natural gas network with 69,000 miles of pipelines. The firm is connected to every major U.S. natural gas resource play, and moves one-third of the natural gas consumed in the U.S.
- Largest independent transporter of petroleum products, transporting 2.1 million barrels of product per day.
- Largest transporter of carbon dioxide, transporting 1.2 billion cubic feet per day.
- Largest independent terminal operator. Its liquids terminals can hold 152 million barrels.
Kinder Morgan has also won many honors, including recognition by Fortune magazine as one of the Most Admired Companies in America and as the top firm among all industries for "Quality of Management."
Channels
Kinder Morgan’s main channel is its business development team. The company promotes its offerings through its website, social media pages, and participation in conferences.
Customer Relationships
Kinder Morgan’s customer relationship is primarily of a personal assistance nature. The company operates its pipelines and transports energy products to its customers.
Key Activities
Kinder Morgan’s business model entails developing energy products and transporting them to its customers.
Key Partners
Kinder Morgan’s key partners are the suppliers that provide it with the materials and equipment it needs to manage its operations.
Key Resources
Kinder Morgan’s main resources are its physical resources, which include the 84,000 miles of pipelines and 180 terminals it operates. It also maintains important human resources in the form of the employees who develop and transport its energy products.
Cost Structure
Kinder Morgan has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of operations/maintenance and administration, both fixed costs.
Revenue Streams
Kinder Morgan has two revenue streams: revenues it generates from sales of natural gas and other products and revenues it generates from sales of related services to customers.
