Kinder Morgan Energy Partners, L.P., a Delaware limited partnership with
its common units traded on the New York Stock Exchange under the symbol "KMP,"
was formed in August 1992. Kinder Morgan Energy Partners, L.P. is the largest
publicly-traded pipeline limited partnership in the United States and owns and
operates the second largest products pipeline system based on volume delivered.
Since February 1997, when current management assumed control of the operations
of Kinder Morgan Energy Partners, L.P., quarterly common unit distributions have
more than tripled from $0.315 per common unit to $0.95 per common unit. The
operations of Kinder Morgan Energy Partners, L.P. are grouped into the following
four reportable business segments:
- PRODUCT PIPELINES: Over 10,000 miles of pipelines and associated
terminals delivering gasoline, diesel, jet fuel and natural gas liquids
to various markets. Includes Pacific Operations, 51% of Plantation Pipe
Line Company, North System, Cypress Pipeline, 32.5% of Cochin Pipeline
System, 50% interest in Heartland Pipeline Company and transmix
- NATURAL GAS PIPELINES: Includes Kinder Morgan Interstate Gas
Transmission LLC, Kinder Morgan Texas Pipeline, L.P., a 66 2/3% interest
in Trailblazer Pipeline Company, a 49% interest in Red Cedar Gathering
Company, the Casper and Douglas gathering system, a 25% interest in
Thunder Creek Gas Services LLC and a 50% interest in Coyote Gas Treating
- CO(2) PIPELINES: Transports via pipeline and markets CO(2) for use in
enhanced oil recovery projects. Assets include 50% of Cortez Pipeline,
Central Basin Pipeline, 81% of CRC Pipeline, 13% of Bravo Pipeline, 45%
of McElmo Dome, 11% of Bravo Dome, and interests in four unitized fields
in West Texas; and
- BULK TERMINALS: Includes over 25 owned and operated bulk terminal
facilities handling over 40 million tons of coal, petroleum coke and
other bulk products annually.
On November 30, 2000, Kinder Morgan Energy Partners, L.P. announced a
definitive agreement with GATX Corporation to purchase GATX Corporation's
domestic pipeline and terminal businesses for approximately $1.15 billion.
Primary assets included in the transaction are:
- CALNEV PIPE LINE COMPANY: A 550-mile refined petroleum products pipeline
system originating in Colton, California and extending to the Las Vegas,
- CENTRAL FLORIDA PIPELINE COMPANY: A 195-mile refined petroleum products
pipeline system consisting of a 16-inch gasoline pipeline and a 10-inch
jet fuel and diesel pipeline, transporting product from Tampa to the
Orlando, Florida market; and
- LIQUIDS TERMINALS: 12 liquids terminals with a storage capacity of 35.6
million barrels, the largest of which are located in Houston, New York
Harbor, Los Angeles and Chicago, with a total capacity of approximately
31.2 million barrels.
When the GATX transaction closes, CALNEV Pipeline Company, Central Florida
Pipeline Company and those terminals located on the West Coast will be included
in our Product Pipelines segment. The remaining terminals will comprise a new
business segment called Liquids Terminals.
Management's objective is to grow Kinder Morgan Energy Partners, L.P. by:
- focusing on stable, fee-based assets which are core to the energy
infrastructure of growing markets;
- increasing utilization of assets while controlling costs;
- leveraging economies of scale from incremental acquisitions; and
- maximizing the benefits of the financial structure of Kinder Morgan
Energy Partners, L.P.
Since February 1997, Kinder Morgan Energy Partners, L.P. has announced 20
acquisitions valued at over $4.7 billion. These acquisitions and associated cost
reductions have assisted Kinder Morgan Energy Partners, L.P. in growing from
$17.7 million of net income in 1997 to $278.3 million of net income in 2000.
Kinder Morgan Energy Partners, L.P. regularly considers and enters into
discussions regarding potential acquisitions, including those from Kinder
Morgan, Inc. or its affiliates, and is currently contemplating potential
acquisitions. While there are currently no unannounced purchase agreements for
the acquisition of any material business or assets, such transactions can be
effected quickly, may occur at any time and may be significant in size relative
to Kinder Morgan Energy Partners, L.P.'s existing assets or operations.
Kinder Morgan Energy Partners, L.P. primarily transports and/or handles
products for a fee and generally is not engaged in the purchase and resale of
commodity products. As a result, Kinder Morgan Energy Partners, L.P. does not
face significant risks relating directly to shifts in commodity prices.
Kinder Morgan Energy Partners, L.P. has four business segments.
In the Product Pipelines segment, management plans to continue to expand
its presence in the rapidly growing refined products markets in the western and
southeastern United States through incremental expansions and complementary
In the Natural Gas Pipelines segment, management plans to focus on cost
reductions, expansions and storage opportunities as well as to identify and
serve significant customers with demand for capacity on its pipeline systems.
In the CO(2) Pipelines segment, management plans to continue to implement
its strategy in the Permian Basin of offering customers "one-stop shopping" for
carbon dioxide supply, transportation and technical support service. Outside the
Permian Basin, management plans to compete aggressively for new supply and
In the Bulk Terminals segment, management plans to grow its bulk terminals
business through selective acquisitions, expansions, and the development of new
After the GATX acquisition closes, some of the acquired terminals will form
a fifth business segment called Liquids Terminals.
KINDER MORGAN, INC.
Since the merger of the parent of the general partner of Kinder Morgan
Energy Partners, L.P. and KN Energy, Inc. on October 7, 1999, Kinder Morgan,
Inc. has strengthened its position as one of the largest midstream energy
companies in the United States. Kinder Morgan, Inc.'s assets include:
- NGPL: Kinder Morgan, Inc.'s NGPL segment includes Natural Gas Pipeline
Company of America, a 10,000 mile pipeline system that serves the key
Chicago market and the states of Illinois, Iowa, Wisconsin, Indiana,
Missouri, Arkansas and Texas. In 2000, the NGPL segment contributed
$342.9 million of Kinder Morgan Inc.'s operating income.
- RETAIL: These operations provide retail natural gas distribution service
for approximately 225,000 residential, commercial, industrial and
agricultural customers in Colorado, Nebraska and Wyoming. In 2000, Kinder
Morgan, Inc.'s Retail segment contributed $49.7 million of Kinder Morgan,
Inc.'s operating income.
- POWER AND OTHER: These operations include two 550 MW natural gas power
plants in construction outside Little Rock, Arkansas and Jackson,
Michigan and interests in three plants in Colorado and other operating
assets not included in other segments. In 2000, the Power and Other
segment contributed $31.3 million of Kinder Morgan, Inc.'s operating
- KINDER MORGAN ENERGY PARTNERS, L.P.: As Kinder Morgan Energy Partners,
L.P.'s distributions per unit increase, so does total cash flow received
by Kinder Morgan, Inc., through its indirect general partner interest and
its limited partner interest in Kinder Morgan Energy Partners, L.P.
Kinder Morgan Energy Partners, L.P. generated $149.9 million in cash for
Kinder Morgan, Inc. for the year 2000.
The principal executive offices of Kinder Morgan, Inc. and Kinder Morgan
Energy Partners, L.P. are located at One Allen Center, Suite 1000, 500 Dallas
Street, Houston, Texas and the phone number at this address is (713) 369-9000.
The following chart depicts our pro forma organizational structure and
operating relationship with Kinder Morgan, Inc. and Kinder Morgan Energy
Partners, L.P. following the offering.