Kinder Morgan and Arch Coal Sign Throughput Agreement to Further Expand Coal Terminal Network
January 24 2012 - 4:11PM
Business Wire
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today announced
plans to invest approximately $140 million to further expand its
coal handling facilities along the Gulf Coast. Concurrently, Arch
Coal (NYSE: ACI) has signed a long-term throughput agreement with
KMP that will help support the expansion of these export
facilities. Also, Arch and KMP are in final discussions to include,
in the throughput agreement, port space for coal shipments at
KMP-owned facilities on the East Coast.
Upon completion of the proposed terminal upgrades and subject to
certain rail service agreements, Arch will ship coal at guaranteed
minimum volume levels through KMP-owned terminals. The expansion of
KMP’s export facilities along the Gulf Coast and East Coast will
provide incremental port capacity for Arch’s growing seaborne coal
volumes.
“The demand for export coal continues to grow and we are pleased
to offer Arch and other customers options in various markets
through our multi-location terminal network,” said Jeff Armstrong,
president of Kinder Morgan Terminals. “We are also extending
existing long-term coal agreements with Arch at our upriver
terminals (Cora, Cahokia and Kellogg) in Illinois.”
“This strategic partnership with Kinder Morgan, a company with a
proven track record of running successful terminal operations, will
allow Arch to significantly increase our participation in the
global coal market,” said John W. Eaves, Arch’s president and chief
operating officer. “This dedicated capacity directly underpins our
long-term strategy to grow Arch’s coal exports by fourfold in the
next decade, and is consistent with our view that a global coal
supply shortfall will persist over that time frame.”
Specific to the expansions on the Gulf Coast, KMP will install a
new shiploader and a railcar loop track to handle three 135-car
unit trains at its Deepwater terminal in Houston. Following
completion of the project, the Deepwater terminal will have
throughput capacity of 10 million tons of coal per year. The
projects are expected to be immediately accretive to cash available
to KMP unitholders upon completion, which is anticipated in the
second quarter of 2014.
KMP’s Deepwater and East Coast facilities offer dual rail access
from Class 1 railroads, while International Marine Terminal (IMT)
provides barge access to the inland waterway system. The Deepwater
terminal will be capable of handling panamax- and post panamax-size
vessels, while one East Coast terminal and IMT will be capable of
handling cape-size vessels. These multiple transportation options
will allow Arch to unlock incremental value for its domestic coal
production and coal reserves over the next 10 years. Anticipated
throughput volumes will consist of metallurgical and thermal coal
from Arch’s major coal producing regions, including Appalachia, the
Powder River Basin, the Western Bituminous Region and eventually
the Illinois Basin.
“Securing additional port capacity further supports the
expansion of Arch’s international coal platform,” said Eaves.
“Along with the acquisition of the ICG assets, the opening of new
business offices in Singapore and London, and previous equity
investments in port terminals on the East Coast and West Coast,
this agreement strengthens Arch’s position as one of the top U.S.
suppliers in the seaborne coal trade.”
About Arch Coal
U.S.-based Arch Coal is a top five global coal producer and
marketer. Arch is the most diversified American coal company, with
mining complexes across every major U.S. coal supply basin. Its
core business is supplying cleaner-burning, low-sulfur thermal and
metallurgical coal to power generators and steel manufacturers on
four continents.
About Kinder Morgan
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading
pipeline transportation and energy storage company in North
America. KMP owns an interest in or operates approximately 29,000
miles of pipelines and 180 terminals. Its pipelines transport
natural gas, gasoline, crude oil, CO2 and other products, and its
terminals store petroleum products and chemicals and handle such
products as ethanol, coal, petroleum coke and steel. KMP is also
the leading provider of CO2 for enhanced oil recovery projects in
North America. One of the largest publicly traded pipeline limited
partnerships in America, KMP and Kinder Morgan Management, LLC
(NYSE: KMR) have an enterprise value of over $40 billion. The
general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI).
Combined, KMI, KMP and KMR constitute the largest midstream energy
entity in the United States with an enterprise value of
approximately $65 billion. For more information please visit
www.kindermorgan.com.
Forward-Looking Statements: This press release contains
“forward-looking statements” – that is, statements related to
future, not past, events. In this context, forward-looking
statements often address our expected future business and financial
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the risk factors described from time to time in the reports Arch
files with the Securities and Exchange Commission.
This news release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
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believes that its expectations are based on reasonable assumptions,
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Important factors that could cause actual results to differ
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