Kinder Morgan, Inc.‘s (KMI – Free Report) subsidiary Kinetrex Energy recently began construction work on three renewable natural gas (RNG) facilities located in Indiana. Kinetrex has an electric cooperative, namely Wabash Valley Power Alliance, as a partner in the project.
Last August, Kinder Morgan completed the $ 310 million acquisition of Kinetrex from a subsidiary of private equity firm, Parallel49 Equity. This decision was aimed at strengthening its exposure to green energy. Under the deal, Kinder Morgan acquired a 50% stake in a massive renewable natural gas unit located in Indiana. Kinetrex supplies liquefied natural gas to the US Midwest.
The start of construction of three landfill units follows plans previously announced by the company. The total RNG production from the three facilities will likely be 3.5 billion cubic feet per year. Operations are scheduled to begin in fall 2022. Kinetrex plans to invest a total of $ 146 million and build facilities that will process gas purchased from the Wabash Valley Power Alliance. The new facilities are expected to be operated by Waste Management and located at the Prairie View landfill in Wyatt, the Twin Bridges landfill in Danville and the Liberty landfill in Monticello.
RNG is developed from renewable sources such as organic waste in landfills, wastes from agricultural operations and wastewater treatment. The process of decomposing this organic waste creates methane, which is captured by the company. The production process decreases greenhouse gas emissions. Kinder Morgan expects RNG facilities to produce enough to reduce greenhouse gas emissions by nearly 280,000 tonnes per year.
As investor pressure to reduce emissions in the energy spectrum increases, several companies are increasing investment in green energy. Last March, Kinder Morgan created the Energy Transition Ventures group within the company to seek out low-carbon energy opportunities. He intends to be part of the wider movement of energy transition, which has accelerated amid the coronavirus pandemic. Kinetrex’s latest development is expected to further strengthen Kinder Morgan’s focus on energy transition.
Shares of Kinder Morgan were up 3.7% in the past month compared to a 1.7% rise in the industry it belongs to.
Image source: Zacks Investment Research
Rank of Zacks and other key choices
The company currently has a Zacks Rank # 2 (Buy). Other top-ranked stocks in the energy sector include Oil and Gas Extraction, Inc. (XOG – Free report), Cheniere Energy, Inc. (LNG – Free report), and Schlumberger Limited (SLB – Free Report), each carrying a Zacks Rank # 2. You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Zacks’ consensus estimate for oil and gas extraction for 2021 is set at $ 13.07 per share, indicating a huge improvement over last year’s loss of $ 2.54.
Cheniere Energy’s net income for the third quarter of 2021 is expected to grow 239.1% year-over-year.
Schlumberger’s net income for 2021 is expected to increase 83.8% year-over-year.