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Kinder Morgan mulling expansion of Double H crude pipeline

Houston — Growing crude oil volumes out of the Bakken Shale in North Dakota and Montana have prompted Kinder Morgan to mull expansion of its Double H Pipeline, the company's top executive said late Wednesday.

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Kinder Morgan CEO Steven Kean said the company is "actively" looking at expanding the 84,000 barrels/day Double H, which runs more than 500 miles to the Guernsey, Wyoming, hub from the Bakken, where production volumes are increasing again after years of declines and stagnant output during an industry downturn.

"We continue to work on solutions for our customers to get [their crude] through to Cushing," Kean said during a fourth-quarter earnings call. "There is some expansion ability on Double H."

The company is also investing in expanding Bakken gathering assets, which are "constrained," he added.

Bakken Shale oil production, which dipped under 1 million b/d in January 2017, is heading north. Output hit 1.2 million b/d in the middle of last year and crossed 1.3 million b/d in September.

S&P Global Platts Analytics sees production hitting 1.4 million b/d in April 2019, and averaging 1.461 million b/d in December.

In Q4 2018, Kinder Morgan's crude and condensate delivered volumes totaled 373,000 b/d, up 10% from 339,000 b/d in the same period of 2017.

Kinder's total refined product delivery volumes in Q4 averaged 1.704 million b/d, up about 1% from the same period a year ago. While gasoline volumes of 1.024 million b/d were essentially flat versus a year ago, diesel volumes rose 3.5% to 377,000 b/d and jet fuel rose 2% to 303,000 b/d.

Executives noted the recent crude production curtailments in Alberta, Canada, ordered to address excess supply amid limited pipeline takeaway capacity, do not have a financial impact on Kinder Morgan since its contracts are take or pay.

At its Alberta crude terminal, Kinder saw record volumes of 146,000 b/d in Q4, versus an average of 70,000 b/d, and in December alone were up to 168,000 b/d, Executive Vice President Dax Sanders said.

Volumes have fallen off "a little" in January but have no impact on the bottom line, Sanders said.

Kinder's refined product exports were at "record volumes" on the Houston Ship Channel, Kean said.

"We were up almost 8.5% from a volumetric standpoint [in full-year 2018] over our ship docks and 10.1% on total volume," he said, adding in Houston alone, gasoline was up 8% and distillates were up 6%.

-- Starr Spencer, starr.spencer@spglobal.com

-- Edited by Jim Levesque, newsdesk@spglobal.com