Kinder Morgan seeks to expand CO₂ business in clean energy push

“What we’re trying to do is augment and supplement that business and grow that side of the business by capturing, transporting and providing carbon sequestration services,” said Jesse Arenivas, the president of Kinder Morgan Energy Transition Ventures, in an exclusive interview with Bloomberg. “We see our CO₂ business as a growth vehicle, not a dying business.”

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Pipeline giant Kinder Morgan Inc . plans to expand its carbon-capture business, joining the ranks of major oil and gas companies capitalizing on clean energy investing.

finviz dynamic chart for  KMI

Fueled by a push to eliminate greenhouse gas emissions, carbon capture and renewable energy projects are sprouting up alongside Kinder Morgan’s massive network of pipelines crisscrossing the U.S., and the midstream operator sees the potential for new business opportunities. Through a unit launched earlier this month, Kinder Morgan will invest in technology and partner with companies on carbon capture, biofuels and hydrogen projects, among other initiatives.

“What we’re trying to do is augment and supplement that business and grow that side of the business by capturing, transporting and providing carbon sequestration services,” said Jesse Arenivas, the president of Kinder Morgan Energy Transition Ventures, in an exclusive interview with Bloomberg. “We see our CO₂ business as a growth vehicle, not a dying business.”

Energy companies including Occidental Petroleum Corp., Halliburton Co. and NextDecade Corp. have already formed ventures in the past year dedicated to the transition to low-carbon energy following growing pressure from investors to address climate change and develop new corporate strategies focused on sustainability. Climate scientists have long considered carbon capture as essential in meeting climate goals, but high costs have typically slowed the adoption process.

Carbon dioxide

is not a new business for Kinder Morgan. The company transports about 1.5 billion cubic feet per day of naturally-occurring carbon dioxide through its largest CO₂ pipeline from a geological formation in Colorado to the Permian Basin of West Texas, where it is used to boost the productivity of oil wells. It uses the CO₂ for its own drilling projects and also sells it to others. In 2019, Kinder Morgan was said to consider a sale of its carbon dioxide unit, but ultimately decided to keep the unit.

Carbon capture investing

“We were always a marketer, transporter and user of CO₂, and now we’re looking to invest upstream in the form of carbon capture,” said Arenivas, who has overseen the company’s carbon dioxide segment for more than six years.

Kinder Morgan expects its CO₂ business segment, including enhanced oil recovery in the Permian Basin, to account for about 7 percent of earnings before depreciation and amortization, or EBDA, this year. Arenivas said the energy transition ventures unit and its carbon capture services have the potential to add new customers and partners, ranging from oil and natural gas well operators to power plants and industrial sites.

“We certainly concede that you’re going to have a different power generation mix in the future,” said Arenivas. “Renewables will play a larger role as we move forward, but we’ll continue to do what we do, which is transport the end product to a very energy-thirsty market.”

While technologies such as drawing carbon dioxide directly from the air or adding ducts and processing equipment to smoke stacks remain too expensive for widespread adoption and commercial use, Arenivas said new innovations and tax credits could change that.

“The Biden administration understands that the current incentive structure is not going to get us to the goal of carbon reduction and use,” Arenivas said. “We expect that there will be expanded programs and they will be needed to facilitate most of the newer technologies.”

Source: Houston Chron

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Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor.   He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino. Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.