Kinder Morgan Plans $4.2 Billion Gas Pipeline to Feed Data Center Hub

what happened

Kinder Morgan said it has reached a deal to construct a 434-mile natural gas line running through West Texas and the Panhandle, according to Seeking Alpha, which cited Bloomberg. The Permian Link project carries an estimated cost of $4.2 billion, with Kinder Morgan's own share near $1.6 billion. The line would move 2.8 billion cubic feet of gas per day to an unnamed hyperscaler rated A, backed by long-term contracts with take-or-pay terms.

The company also approved the 470-mile Southeast Connector, capable of carrying up to 2.6 billion cubic feet per day. Permian Link is slated to start operating in the third quarter of 2030, while the Southeast Connector will come online in phases from the fourth quarter of 2030. Together the approvals lifted the project backlog to $14.4 billion, including a record $13.2 billion in gas projects. Quarterly revenue reached $4.53 billion, up 9.3% year over year, and per-share earnings of $0.35 beat expectations. Shares rose 2.1% in after-hours trading on Wednesday.

why it matters

Long-term contracts with take-or-pay terms make cash flows from such projects more predictable, and tying growth to data center demand links pipeline expansion to electricity consumption trends. For gas markets, the plan signals rising demand for moving Permian supply to the north, which could support regional flows over the coming decade. Midstream investors will watch construction progress against the planned 2030 start dates.

market impact

Kinder Morgan (KMI) and Permian gas flows: long-term contracts and data center demand support the project backlog

tags

instruments