By Vallari Srivastava
(Reuters) -American pipeline and terminal operator Kinder Morgan (NYSE:) said Wednesday it expects data center-driven electricity to be a key driver of demand after missing Wall Street estimates for second-quarter earnings and revenue.
The company reiterated in its post-earnings call that AI operations and data centers will boost demand for natural gas, adding that the fuel’s reliability will help increase reliance on other renewable sources.
“We are in commercial discussions on more than 5 billion cubic feet per day (bcf/d) of energy demand opportunities, and that includes the 1.6 of data center demand,” a company executive said on the call.
The company’s bullish outlook comes at a time when natural gas prices () have fallen nearly 17.5% since the beginning of the year.
Adjusted core profit from the company’s natural gas pipeline segment rose nearly 2.5% to $1.23 billion as higher transportation and gathering volumes helped offset the impact of asset divestitures and lower commodity prices.
However, adjusted core profit from CO2 transportation fell approximately 6.3% to $164 million in the quarter, due to lower crude oil and natural gas volumes and lower CO2 sales.
The company launched a binding open season for the proposed South System Expansion 4 project, intended to increase the capacity of the South Natural Gas (SNG) Pipeline on the South Line by 1.2 bcf/d.
“This (SNG South Line) expansion is a $3 billion effort designed to meet demand for AI and data centers, and is also highly capital efficient… it is likely to deliver very attractive returns for investors,” according to Morningstar- analyst Stephen Ellis.
The terminal operator posted adjusted earnings of 25 cents per share in the reported quarter, below analyst estimates of 26 cents per share, LSEG data showed.
Kinder’s net sales were $3.57 billion, also below estimates of $4.13 billion.
The company’s shares fell 2.9% in extended trading.
