Kinder Morgan Is Investing $1.1 Billion to Turn Trash Into Cash
Kinder Morgan (NYSE: KMI) can see the writing on the proverbial wall. The global economy is rapidly shifting toward cleaner alternative energy solutions to ward off the potentially devastating effects of climate change. That leaves the fossil fuel-focused infrastructure company with two options. It can put its head in the sand and ignore this shift, or it can change with the rest of the world.
The pipeline company chose the latter option. It formed a new energy transition ventures group last year to identify, analyze, and pursue commercial opportunities from the transition to lower carbon energy sources. That business unit hit the ground running, making three acquisitions aimed at turning methane produced at landfills into renewable natural gas (RNG). The company expects these investments to turn trash into cash and support its 6%-yielding dividend.
Kinder Morgan launched its RNG business last year by purchasing Kinetrex Energy for $310 million. It owned two small-scale domestic liquified natural gas (LNG) production and fueling facilities, a 50% interest in a landfill RNG facility, and three more landfill-based RNG facilities under development, all located in Indiana. Kinder Morgan has since started construction on those three facilities at landfills owned by WM (NYSE: WM). It's investing $146 million on those projects, which it expects will start entering commercial service this fall. Once operational, the four Kinetrex Energy facilities will produce 4 billion cubic feet (Bcf) of RNG per year by capturing methane produced from the decomposition of organic waste at the landfills.
Source Fool.com
