Kinder Morgan, Inc. Wolfe Research Utilities, Midstream & Clean Energy Conference 2026-Virtual

Okay, great. We're continuing our midstream fireside chats here. Very happy to have David Michels, CFO of Kinder Morgan, joining us. David, why don't you give some opening remarks on the company, please?

Sure. First, thanks for having us here, Keith. Appreciate it. A good set of meetings so far. Looking forward to the rest of the day. As we'll talk about more during this meeting, this is a pretty opportunity-rich environment for midstream companies. Natural gas infrastructure development opportunities are as strong as we've seen in decades. It's creating a lot of interesting opportunities for us for additional growth. Our base business remains very solid. We'll talk about the full utilization of networks across the space, which has led to the ability for us all to capture additional value when we see periods of time of disruptions, weather events. Then on top of that, these new opportunities to satisfy growth in the LNG space, growth in the power generation space, is allowing us to add projects and add additional EBITDA on top of our base business.

It's a great place to be right now, and it's very exciting. We're pretty enthusiastic about the outlook for the company and looking forward to the conversation to get into that a little bit more.

Great. So maybe we could start high level. I think about a year ago now, you put out a $10 billion shadow backlog. You talked to $3 billion plus per year of CapEx. I think you've sanctioned about $2 billion of projects since that time. How are you feeling on executing that shadow backlog and the ability to get to a $3 billion plus CapEx type profile over the next five years or so?

First, let me just remind everybody. Our project backlog is, because everybody defines it a little bit differently, our project backlogs are projects that have been sanctioned by the board. They have binding contractual commitments with off-takers for, in most cases, north of 90% of the capacity for the infrastructure that we are building. They are real projects, and in most cases, they are under construction. We are highly confident that those are going to be brought to market and add to the EBITDA of our business. The projects that are outside of that in this shadow backlog have not yet been sanctioned and are not as certain. But in this current environment, we are continuing to see very strong interest in new infrastructure development.

We feel pretty confident given where we are in the negotiations and how the shipper conversations have progressed, that we will continue to see more projects being sanctioned to at least replenish the projects that are being put into service in the coming quarters. We talked about in the second quarter that a billion plus would be sanctioned between, at that point was July, until through the end of the year. I think we are pretty confident we are going to see that happen, and maybe even some more.

What gives you confidence on the billion plus? You have contracts in hand that are just getting finalized, or how do you have visibility you have over $1 billion of projects to move forward before year-end?

We are working on multiple projects at the same time. Some of those are smaller and do not get the public attention. But those are likely to contribute to some degree to the billion plus. Then we have a handful of larger projects, some that have gotten some publicity, that are in various stages of development, but a couple that have progressed to a point where it feels more likely than not that we will see one or two of those get sanctioned between now and the end of the year.

Some of your projects obviously are feeding a lot of utility demand centers, and a lot of the utility demand growth is driven by data center build-out. Are you seeing any pause in your conversations with utilities on what their gas needs might be, just given some of the uncertainty on the data center development and the ultimate power demand growth?

Not really. It's certainly been a topic of conversation with us and the shippers, but the order of magnitude of the demand that we're seeing in certain areas is so large that even if there is a little bit of pause or postponement in some of the development of data centers, the underlying power generation growth is still there, and these projects are still going to be needed at some point. We've had some conversations, but they really haven't paused the development of the specific contractual arrangements that we're talking about.

Okay. Do you see a scenario, I guess there is a scenario, though, where the utilities. The utilities are going to procure the gas for their power needs. You're contracted on that, so from your end, that's done, and then if the data centers are slower to develop, from your contractual perspective, you're locked in anyway on your investment.

That's right. That's how we go about trying to protect ourselves in these situations. The utilities have, and again, this is speaking to the point that I just made, have a big enough demand pull on their grid that even if you have one or two of these data center development facilities that get postponed or don't get developed at all, we're seeing not just data center development, but you're also seeing population migration, electrification of certain industries, industrial demand that are all contributing to additional power generation needs in these utilities' grid. So I think that's helped facilitate these conversations, even though in some states there have been some pauses in data center development or some conversation about pausing data center development.

Maybe we could go to some exciting news 2 weeks ago. You put out this open season with Southern Company on the Southeast Connector for the SNG pipeline. You only put it out 2 weeks ago, and it already ends next week, I think. You have one customer in place based on that document. Can you talk to the strategic drivers of this project? In particular, you are already expanding SNG. I do not even know if you have started construction on South System Expansion 4, but that comes on in late 2028 and late 2029.

Right. Now you are doing an open season for yet another expansion of the SNG system.