Kinder Morgan and partner Phillips 66 announced a second open season for the Western Gateway Pipeline on January 16 2026, adding new capacity that will allow shippers in the Los Angeles and San Diego markets to secure long‑term transport commitments. The joint venture now includes a reversed segment of the San Francisco‑to‑Port Monetary (SFPP) line between Watson and Colton, California, and a new 1,200‑mile corridor from Borger, Texas, to Phoenix, Arizona, capable of moving 200,000 barrels per day of refined products and a comparable volume of natural gas to the West Coast.
The expansion is part of Kinder Morgan’s broader strategy to capture growing demand from LNG exports, power generation, and the rapidly expanding AI data‑center sector. CEO Kim Dang highlighted that the pipeline’s new capacity will “enable the company to meet the rising energy needs of data‑center operators while reinforcing its position as a critical midstream infrastructure provider.” The company’s operating margin of 27.16% and net margin of 16.61% in Q3 2025 demonstrate the financial strength that underpins this investment.
Financially, the pipeline’s additional capacity is expected to generate fee‑based revenue that will offset the company’s modest debt‑to‑equity ratio of 1.06 and current ratio of 0.63. The expansion also aligns with Kinder Morgan’s 2025 guidance, which projects a 4% growth in Adjusted EBITDA and an 8% increase in Adjusted EPS compared to 2024, reflecting confidence in sustained demand from the West Coast market.
Management’s commentary underscores the strategic importance of the project. CFO David Michaels noted that “the growing demand for reliable natural gas supplies to support AI and data‑center operations is reshaping the energy landscape, and the Western Gateway Pipeline positions Kinder Morgan to capture a significant share of that growth.” The company’s focus on long‑term contracts and fee‑based revenue streams is designed to provide stable cash flow as the pipeline reaches full operational capacity by 2029.
Analysts have noted the expansion’s potential to enhance Kinder Morgan’s market moat. While the company’s valuation remains above the sector average, the pipeline’s capacity expansion is expected to drive incremental revenue and strengthen the company’s competitive position in a market where refinery closures on the West Coast are increasing the need for reliable natural gas transport.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.