Kinder Morgan’s gas pipeline business is seeing record demand, largely fueled by LNG.
It’s starting to see significant demand growth from the power sector to support AI data centers.
This catalyst could fuel its growth for years to come.
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Technology stocks have been among the early leaders in cashing in on the AI boom. From semiconductor companies to cloud computing giants, the bulk of the early AI gains have come to companies developing compute power. They provide the GPUs and other specialized hardware needed to process data.
However, these chips require a tremendous amount of electricity to operate at maximum capacity and need large cooling systems to prevent overheating. That’s fueling a power boom. One of the early beneficiaries of this power surge is natural gas pipeline giant Kinder Morgan (NYSE: KMI).
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Kinder Morgan’s natural gas pipeline segment delivered record-setting performance last year, primarily fueled by robust gas demand by liquified natural gas (LNG) terminals. The company currently has contracts to move 8 billion cubic feet per day (Bcf/d) of gas to LNG facilities, which will rise to 12 Bcf/d by 2028. It sees even more growth ahead, as LNG gas demand should rise 17% by 2030.
Additionally, Kinder Morgan is seeing growing demand for natural gas from the power generation sector, fueled in part by AI data centers. The gas pipeline giant is actively pursuing more than 10 Bcf/d of opportunities to service this demand. It’s in a strong strategic position to capitalize on the robust growth in gas power demand in the coming years. Nearly 70% of future power demand from data centers under development is in states served by its gas infrastructure assets.
Kinder Morgan has already secured $10 billion in growth capital projects across its platform, which it expects to complete by the middle of 2030. About 90% of those projects are gas infrastructure, and nearly 60% of the total will support power generation demand. For example, the company is building three large-scale natural gas pipeline projects to support growing gas demand. Long-term contracts and government-regulated rate structures underpin these projects. As a result, they’ll supply the company with incremental sources of stable cash flow as they enter commercial service.
The company has another $10 billion of potential projects under development, the bulk of which would support rising gas power demand. It sees significant demand potential ahead from utilities. For example, Kinder Morgan’s management team highlighted on the fourth-quarter conference call that electric utility Georgia Power is projecting 53 gigawatts of power demand by the early 2030s, which is equivalent to roughly 10 Bcf/d of gas demand. That’s one utility in one state. The company is seeing similar demand stories from other utilities across its pipeline network.
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