Kinder Morgan's COO Sits Down With The Motley Fool

Kinder Morgan's COO Sits Down With The Motley Fool

Steve Kean, the President and COO of Kinder Morgan, joins the Fool to discuss the energy industry and his company's contribution to it as the largest midstream energy company in North America. The Kinder Morgan family includes Kinder Morgan, , Kinder Morgan Energy Partners, L.P. , Kinder Morgan Management, LLC , and El Paso Pipeline Partners .

In this interview, Kean sits down with Taylor Muckerman to look at Kinder Morgan's corporate structure and the culture that drives it. He also explains how the company has responded to -- and benefited from -- shifts in the global energy market, and what may lie ahead as the U.S. looks to make the most of its natural gas reserves.

A full transcript follows the video.

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Taylor Muckerman: Taylor Muckerman here with Steve Kean, COO and President of Kinder Morgan. We're here down in Houston, Texas, at their headquarters. Thank you for having us.

Steve Kean: Great to be here.

Muckerman: Just a few questions. To get started right off with the industry of the MLP space; really been driving growth here with investors, trafficking pretty regularly to the MLP industry.

I was just wondering if you had a feeling on whether or not it was largely to do with the low interest rate environment right now, with investors seeking dividends, or if it was more to do with just the dynamic growth that the industry has been seeing recently.

Kean: It's a combination. Certainly what we offer and what a lot of MLPs offer is nice, steady distributions; cash flow going back to investors. In our case, or MLPs trade at a yield of about 6-6.5%, and then on top of that we were able to grow our distributions. We're currently expecting 5-6% over about a four-year period.

That's a good return for investors. We think it's an attractive alternative, versus what else they're looking at out there, and the growth part of it is a big piece of it.

Right now in North American energy there's a massive growth in production, and that production needs to get from where it is to where it's needed. It needs to be transported, it needs to be stored. That's where we come in. We do that for a fee. It's a nice stable, but growing, investment opportunity.

Muckerman: I'd like to follow up on both of those topics. You mentioned a $14 billion backlog. Where do you see the majority of that being directed as far as geographically, and maybe even in terms of resources; natural gas versus liquids and oil?

Kean: About 90% of that backlog is directed to fee-based pipelines and terminal facilities. The other 10% is in the part of our business where we have oil production. The vast majority of it is directed to fee-based assets and it's scattered, really, across them.

The biggest single project in that backlog is we've got about a $5.4 billion expansion on our Canadian pipeline, to move more oil from the oil sands to the West Coast, where it can feed refineries and then be loaded into ships and transported to markets overseas. That's a big piece.

In our natural gas business unit, we've got about $2.8 billion of project backlog, another $2.1 in our terminals business. It's really across the country.

In our terminals business in particular, there's a fair amount of concentration in Edmonton and Houston because that's where a lot of the energy is either being produced or it needs to be handled somehow, so there's a lot of investment there. But on our pipelines, it's really across the continent.

Muckerman: Yeah, it really does span Canada, and even down to Mexico, I believe.

Kean: Yes.

Muckerman: Then to target the interest rates, very widely believed that they should start to rise in the near future. You mentioned distribution growth of 5-6% on an annual basis, but from a capital structure standpoint how are you going to address financing in a rising interest rate environment, because MLPs do typically use a lot of debt to finance growth projects?

Kean: We do. We're an investment-grade entity, so we've been able to raise capital in good times and in bad. We think that investment-grade rating, and our substantial existing capital structure, and our asset footprint, that becomes a competitive advantage for us, not a disadvantage.

I think that's the way you need to look at it, is on a relative basis. We're well positioned to succeed in this market with the balance sheet that we have.

Our interest rate target generally has been ... typically, when we raise capital, we're raising 50% equity, 50% debt. Then within that debt, it's 50/50 fixed and floating. Gradually in our MLPs we've been migrating a little bit more to fixed, so we've taken a little bit of that risk off the table.

But we capture that sensitivity and identify it for our investors. For example, 100 basis points rise in interest rates for a full year, on a full year basis in KMP, is a little over $50 million, and that's on a segment earnings before DD&A of about $5.7 billion, so that gives you a little bit of an order of magnitude on the exposure there.

Muckerman: Yeah, it doesn't seem like it's going to affect you too much, especially given the fact that they probably won't let the interest rates rise too rapidly, so it seems to be pretty well set up.

Then the MLP space from a competitive side, it seems like it's kind of in vogue for major corporations to spin off MLPs. Phillips 66 fairly recently, and Valero spinning off their midstream as well. How has that changed the competitive landscape, as far as attracting equity investors?

Kean: Well, two ways. One, in a very positive way, it has expanded interest in the sector. It's made it grow into more of an asset class that investors want to own, or want to own a piece of their portfolio in. It's good from that standpoint; it's attracted interest in the sector.

On the other hand, not all MLPs are the same, so when somebody sets up a refinery MLP or an MLP that's built around a specific plant for example, we have to make sure that we are continuing to educate our investors on the difference between an MLP like us and an MLP like that.

Frankly, I don't think it's that hard for people to sort that out. I think it's generally been a good thing. We believe -- and certainly other companies are showing this by their actions -- that this is the right structure to own these kinds of assets.

There's the tax advantage, there's the capital raising capability that's been demonstrated both by our track record and those of others. It's a good way to own these assets. It's a good vehicle for expanding infrastructure in the United States, which we desperately need, so it works, we think for everybody.

Muckerman: That sounds great.

To hone in on the four different options within the Kinder Morgan family, obviously investors can get broad exposure with KMI, but if you could just briefly give our readers and viewers an overview of the different advantages of KMP, KMR, and El Paso as well.

Kean: Sure. We have four securities. The heart of it is the two MLPs, so that's EPB and KMP. When I was talking about the growth numbers before, I was referring really to those MLP assets having the 5-6% growth on top of a good 6-6.5% yield.

Those are kind of the heart of the business. That's where most of the assets are owned, and those are the things that we're getting up every day to try and grow.

Now a related security to KMP is KMR. The big difference there is that KMR, instead of making cash distributions, is making its distributions to shareholders in the form of additional shares so it's an easier thing for institutions to own. You don't have the K-1s to deal with. You don't have certain other tax considerations that you need to be concerned about.

It's a good thing for the Kinder Morgan family because we raise the cash in KMP -- we generate the cash in KMP -- to cover the cash that would be associated with those shares if they were being distributed in cash. What that means is it raises equity for us in KMP; money that comes in that we don't have to go out and separately raise by floating additional KMP units.

Those are the MLPs, and those are where our assets are, and that's what we're trying to grow every day. KMI is a little bit leveraged to the growth of those MLPs, so we can look at a 9-10% growth rate at KMI. Effectively what KMI is, is the general partner of both KMP and EPB. It is getting the incentive distribution rights from those MLPs without having to put additional capital in.

It's a very good, very strong growth vehicle. It's a C corp; it's a tax-paying entity at that level, so again I think good and easy for institutions to own.

Muckerman: Yeah, I think The Motley Fool readers -- subscribers and just casual readers alike -- definitely believe in KMP and KMI. We recommend both of those very heavily. I think the full suite is an excellent option for investors.

Talking about some of your operations a little bit more, with enhanced oil recovery you're one of the leaders of this in the Permian Basin, along with the likes of Denbury and Occidental Petroleum .

I was just wondering how you see that growing, as part of KMP, with the Kinder Morgan carbon business, and just wondering what's the future you see with that, maybe outside of Texas, or would you just leave that mainly in the state?

Kean: It's a very important and valuable part of our business. We get very attractive returns for the capital that we deploy in those businesses, so it's definitely something that we look to continue doing, and we are investing additional money in it now.

Its part of our portfolio has changed. Our mix has changed a little bit. Because of the El Paso acquisition and then the drop-downs of the El Paso assets into KMP, the enhanced oil recovery part of our business mix has gotten a little smaller.

If you look at it at a KMI level, it's about 14% and at KMP it's about 18% of segment earnings before DD&A, so it has shrunk a little bit, but again that's a business we like and it's a business that we expect to continue to invest in.

Now, that's kind of the enhanced oil recovery part of it. The CO2 part of that business is a little more like our other businesses. We're getting CO2, we're moving it down pipelines, we're selling it. We're not only using it ourselves, we're selling it to others as well.

That business, we can't get enough CO2 to fill the need right now, so we have a number of expansion projects to try to take care of that. If you look at our CO2 business unit, of that $14 billion backlog that I mentioned, about $2.7 billion of it is in CO2 and that's split about 50/50 between the CO2 part of that business and the enhanced oil recovery part of that business.

We are in the unfortunate -- although in some respects enviable -- position of having to prorate CO2 right now. We have about 100 million cubic feet a day that our customers want, that we can't get to them. That's why we're investing in additional CO2 resources, to be able to feed our enhanced oil recovery operations, but also be able to feed it for third parties.

It's a good and growing part of our CO2 business -- that is, the CO2 itself; producing it, transporting it.

Muckerman: Do you extract all the CO2 that these customers are looking for, or do you also open the pipelines up to other CO2 providers?

Kean: There are multiple sources of CO2 coming into the pipeline at work. Most of it is our production, and about 1/3 of what's moving down the pipe is going to us. The other 2/3 is going to our customers.

Muckerman: OK, that's excellent.

One of the sides of business I find that investors don't necessarily know that you're involved in is coal exportation with Peabody Energy and a few other big miners down in the Houston area. You export that, and you're doing some expansion there.

I was wondering the future you see, because domestic use of coal has really taken a hit but they're talking about exports continually growing for 10-15 more years, so I was wondering if that's a core business or if that's going to be just mainly a cash generator for the long term?

Kean: It's an interesting example about how one sector that we're in can affect another sector. The growth in natural gas production and the increasing use of natural gas because it's clean, abundant, environmentally sound, and cheap, has displaced some of what coal was serving in the electric generation market previously, so those coal producers are looking for other outlets.

The expansions you're referring to are primarily to give those coal producers a way to reach the international market, which is growing. The gas sector, which we operate in, is driving coal out of the U.S. market to some extent.

Muckerman: Unfortunately for them, yup.

Kean: The way we participate in that, and the way they adapt, is that they underwrite expansions at our facilities to increase the exports, so it's a good opportunity for us. It is a fee for service business for us. They rent the space, if you will, hold the capacity, and then they pay us fees for what we actually handle or move.

Muckerman: OK, so it's not a take-or-pay. They actually pay on a quantity basis then?

Kean: No, it is a take-or-pay; take-or-pay in the sense of, they are paying to reserve the space -- the ability to store a certain number of millions of tons of space -- and then they pay volumetric charges to actually handle it; the offloading of it, and then the onloading of it to outbound ships, for example.

Muckerman: Very interesting.

Sticking with growth opportunities, China -- one of the big buyers of coal -- has obviously got vast shale resources and severely lacking in infrastructure, much like the United States was 10-15 years ago.

Would that be a move that Kinder Morgan might make, either on the build-out side, or maybe just the outsourcing of your general know-how to countries like China or Argentina, that really are going to be needing pipeline infrastructure?

Kean: We are very much focused on the MLP structure, which is a U.S. phenomenon. It is a U.S. structure.

We would never say never to international, but right now for us "international" is Canada and Mexico. There are a lot of difficulties in running an intercontinental business, let's call it; all kinds of complications. What we would have to be convinced of is that the returns were going to be so superior for us taking on that additional risk and that additional complication, for us to make that leap.

Frankly, so long as we find ourselves in the position that we are right now -- which is that we've got a lot to do right here in North America, in markets that we understand, on a continent that we understand, in business sectors that we understand -- we don't feel a lot of pressure to go looking to establish a position in China or in Europe or Africa or anywhere else.

Again, never say never, but we would really have to be confident that we were going to be adequately compensated, to take on that additional risk and that additional complication in our business.

Muckerman: It certainly seems like you have your hands full here.

One of the things I think might lead to even more business is the exportation of natural gas -- in the form of liquid natural gas -- from the United States.

Just a general question about, if the pipeline infrastructure already exists for that and the general focus will be on the terminal business, or if there will, you think, be a need for greater pipelines to service these companies hoping to export natural gas?

Kean: Good question. There will be both. There will need to be both. Our project right now -- we are working on developing a second one, but we have a project already under contract -- for our Elba Island facility near Savanna, Georgia. The joint venture partner and the customer there is Shell .

It's under contract, it has free trade agreement approval, which is an important distinction, meaning it can go today -- we've got to build it, we've got to get the final permitting -- but we don't need any further Department of Energy approval in order to get that project done.

But it is driving the need for additional pipeline infrastructure. Originally that was a regasification facility. Not that long ago we thought the United States were going to need to import about 15 BCF a day, and now we're looking at exporting potentially a similar quantity ultimately, so the pipelines are going the other way.

They need to be turned around, but there also need to be additional infrastructure built around it ... but less here than there would need to be, really, on any other continent in the world because we have a very robust natural gas infrastructure; a well-developed pipeline grid with 300,000 miles of pipelines, a vast amount of storage resources.

This is the best place, I think, for people to source gas because if you can get hooked up, you can buy it. The market is very robust and we're very well developed.

We're going to invest $850 million into our share in this first phase of this one LNG export facility. Then there are related pipeline investments upstream, and then there are related pipeline investments on our network to serve other people's LNG facilities along the gulf coast.

The other aspect of it, though, is it will change the flow dynamics really across the grid, and that will drive other investment that we don't yet see today. It will drive demand, I believe, for storage resources -- which again in the United States we're blessed with a vast amount of storage capability -- so as we're exporting this product, it's going to drive additional investment needs for midstream companies like us.

Muckerman: Now, would this export facility for a free trade agreement ... is it in the thought process to maybe apply for non-free trade agreement?

Kean: Already have.

Muckerman: Oh, you already have? OK. I wasn't aware of that.

Kean: Already have, and we're in the queue. A lot of people in the queue, but we're in a decent spot, we think, and we've got a good, viable project. The DOE seems to be processing those applications now, so we think that's generally a good sign for us.

Muckerman: Yeah, it's driving a lot of news recently, with Dominion the most recent. Obviously Ernest Moniz is pretty well focused on getting these approvals done in a very diligent manner.

Kean: He's gotten things going.

Muckerman: He certainly has. It took Cheniere Energy long enough and then it seems like four or five have come pretty rapidly.

Talking about other tailwinds, one final one is the chemical industry, talking about building out ... Dow Chemical says up to $100 billion could be built in the Gulf Coast. While I think that's inflated, their group that they're in with Huntsman and Nucor obviously benefiting from cheap natural gas and ethane production here in the United States.

Just wondering what you feel like, on a scale of $0 to $100 billion, what Kinder Morgan's feeling is on the potential there?

Kean: Yeah. It's hard to know how big it's going to be, but it's likely to be quite large. Whether that's $50 billion or whether it's $75 or some other number, it's likely to be quite large.

The reason for that is that, again, we have this very robust natural gas infrastructure but we've also got a lot more gas to exploit. As gas prices came down, people started focusing the rigs on the richer plays. As they did that, they left behind dry gas that they know where it is, they know how to get it out, they can go back at it.

I've seen estimates that another 25 BCF -- we're about 70 BCF market today, growing to 80 and ultimately to 90 BCF when you get into the middle part of next decade, but about a 70 BCF market call today -- another 25 BCF a day is estimated to be out there in dry gas plays, and available at less than $5.

If that projection is right, then we have the ability to offer to these chemical companies -- and they look at a world market -- we have the ability to offer to those chemical companies here in the United States to invest in a place with abundant current resources and clear visibility to additional resources, and the most robust infrastructure in the world.

I think that's a pretty good combination -- in a good legal system, a stable economic environment, etcetera, the rule of law -- all the things that you look for when you're going to make significant capital investments.

I think that's a pretty good combination. If you think the world market is going to continue to demand the output of these chemical manufacturing facilities, the United States, given that mix, is a pretty good place to put them.

What we're seeing, what we can tell you that we specifically see, is we're seeing facilities that were mothballed in the Houston ship channel reopen and approach our natural gas pipeline folks about signing up for capacity.

We see customers under contract that, as they're renewing, want to renew for longer terms because they can see this coming. We're starting to feel the ground rumble a little bit as these guys are bringing their capital in to fund these additional projects.

Muckerman: You just mentioned the huge potential addition to the 70 billion cubic feet that we're currently producing. What do you see as far as natural gas prices, given that huge influx that could potentially come online if prices slowly start to creep up?

How long do you think it could take for prices to really become uneconomical in the United States for exportation, and for the use of these petrochemical companies?

Kean: We try to stay out of the business of predicting gas prices.

Muckerman: Fair enough, yeah. Probably a good idea.

Kean: Our customers are in that business, or they're investing based on their expectations. For us, where that comes to bear is when they're willing to sign up for capacity. I don't have any special insight into gas prices, but I can point you back to the statistics I gave you to say it looks like this has been a massive game change in what these producers have been able to do -- and all the credit to them.

They've been able to enter into a world where they don't drill dry holes anymore, where they can go out and exploit this resource and practically manufacture the stuff. They get so good at it, and then they get better as time goes on.

It used to be, there would be dry holes and then there would be some good wells, and the good wells would come on the front end. It seems like they've turned both of those things around. They know where to find it, they know where to go back to it if they want to go back and exploit it, and they keep getting better at extracting as they drill additional wells.

That's a big game change, and I think that puts -- at least for a foreseeable future -- kind of a natural ceiling on gas prices.

Now what you may see though, and you do see it in some places, you'll see regional dislocations. Again, that's where we come in. If there's a dislocation in price between what it's going for in the Marcellus, which there is right now in Pennsylvania versus what it's going for in Boston, that's when additional pipeline transport capacity needs to be developed.

I think you'll see those kinds of dislocations and that will drive additional infrastructure investment. We've got about $800 million worth of projects just getting gas out of the Marcellus alone, and I think there's more of that to come.

I think overall, gas production here and what the producers have been able to accomplish puts kind of a natural ceiling on that price, but you'll see the dislocations that will need to be bridged with additional infrastructure investment.

Muckerman: Sounds like a great runway for you guys.

Just to touch on potential, maybe, headwinds for not just you but the energy industry as a whole -- or the fossil fuel energy industry -- you look at solar and wind power becoming more and more affordable for consumers, and electric vehicles with Tesla slowly starting to take off.

As you look really far down the road, is Kinder Morgan doing anything in particular to prepare for this, addressing some of the issues that might come up?

Kean: Our participation in renewable fuels has been like our participation, if you will, in other commodities, which is that we will store and handle it for the people who make it. We handle, by our estimate, about 30% of the biofuels in the U.S.

Muckerman: I wasn't aware of that.

Kean: When I say that, I mean we're not producing it. Again, we're handling it, so we're blending it, we're storing it for people, and we getting paid to do that.

We saw that trend emerging and our customers -- as is usually the case -- saw it first. We got to them to try to get our share of it, if you will, by building the storage, building the blending facilities to handle it. We even converted one of our pipelines to be able to batch ethanol, so we participate that way.

Overall I think the story on renewables is, if you look at the rate of growth, the rate of growth is certainly increasing, but it's coming on a very small base and there are other big moving parts in that base.

If you look at, really over multiple decades -- probably a 60 to 70 year period -- fossil fuels have provided between 85-95% of the energy that we use in North America, and with very few bumps in that, or very few divots in that; the two biggest ones being hydro power, which took a share -- but we're not building a lot of new dams.

Muckerman: No, we're certainly not.

Kean: In fact, we tend to decommission them.

The other one that took a bite, or left a mark if you will, is nuclear. A similar kind of issue there, which is that big question about whether those licenses will be renewed, ultimately, and about what the true cost of nuclear is; questions that have been around for a long time, and people have been struggling with or coming to terms with.

But I think when you put something like wind and solar in the mix with those bigger pieces, I don't know that we're going to see much of a decline in the relative share of fossil energy. So long as we're continuing to grow as an economy and grow as a country, you'd expect there to be a little bit of growth in what we need, in terms of fossil energy as well.

We look at renewables as an opportunity where it presents itself as an opportunity, but we keep our focus on the fossil energy sector and believe that's a pretty good and productive place for us to focus for the coming decades.

Muckerman: Agreed. Yeah, it seems like natural gas might be one of the last power options to go in light of coal and nuclear and geothermal, maybe even like you mentioned, and the hydro power as well. It seems like natural gas might have the longest lifespan.

Kean: And gas also has a role to play a backup for renewable power.

Muckerman: Sure.

Kean: Renewables, in the sense that most people think of them -- solar and wind -- are intermittent. You need 100% or near 100% reliability on the electric grid, and natural gas can sometimes provide the capacity component to the renewable energy, to help make that viable as well.

Muckerman: Maybe just a couple more questions, if you don't mind, one being addressing the onset or the growth in rail transportation of crude oil. I know natural gas and natural gas liquids seem to be the bulk of your business, but there is some oil transportation going on there.

I was just wondering if you see this as a threat, or maybe this is just stepping in while pipelines catch up to the growth in the Bakken and the oil sands in Canada.

Kean: Yeah, all good points. We see it as an opportunity because we have rail terminalling facilities as well. We have several projects under development, including one larger one recently announced. There is a need, and we believe a fairly long-term need for some crude to move by rail.

Now pipelines are, in the long run ... well, in the short or the long run, they're safer, they're cheaper, and ultimately as flow patterns establish themselves, it will make more sense to move by pipeline.

For example, if you start to see a steady stream of oil movement from the Permian to, say, Southern California, as that flow establishes itself with enough permanence that people are willing to sign up for pipe capacity, you can take your $12 a barrel or $10 a barrel rail costs and turn it into a $5 a barrel tariff and move the product more reliably and right into your refinery, at pressure and all of those kinds of things that pipelines bring to bear.

We've got about $450 million worth of identified projects. That's not all in the backlog because we look at those as high probability projects, not just the ones we're working. We probably won't get all of that, but we have I think four active terminals today, two bigger projects -- one announced, one we think we'll still get to come -- so it's an opportunity for us for that short term opportunity, and we believe our pipeline options will be the most competitive in the long term.

Again, just to elaborate on that a little bit, one of our projects is a crude by rail terminal in Edmonton. Well, our big pipeline expansion that I mentioned -- the Trans Mountain expansion for $5.4 billion, expanding that pipeline from 300,000 barrels to 890,000 barrels -- well, that rail option is a good option between now and 2017 to those, call it Northwest Washington refineries, until that pipeline comes online, and it might continue to be a good option as an origin for eastbound oil movements into the Northeast U.S., which aren't currently piped.

I think, in summary, what rail brings is you can pay for the capital with shorter-term commitments, and there's greater origin and destination flexibility. While there are big price differentials across the continent, those options give rail an edge on at least the new movements.

But over time, as patterns establish themselves, pipeline transportation is maybe 1/3 the cost, and significantly safer -- although rail is fairly safe too -- it's significantly safer, so in the long run pipelines provide the answer.

Muckerman: Yeah, you've already seen the spread between the U.S. price in WTI and international Brent collapse quite significantly. Are you hearing from refiners, any choice that they'd rather see rail or pipeline, or is it just whichever one is able to serve them quicker?

Kean: If you talk to West Coast refiners, what they want to see is the flexibility to get it from multiple locations because, again, those price differentials. You're right, they've come in some, but there's still enough that it justifies moving by rail, particularly when they're competing against a world oil price, or they're buying more based on a world oil price.

They're happy to see pipelines when they come, but not willing to commit until they see a little more steady flow, I think.

I think on the East Coast, that's likely to be a longer-term phenomenon in terms of rail serving it, because the pipelines are harder to get there. TransCanada has a project to get to Quebec and Ontario, maybe ultimately export as well, but it's a harder build. The infrastructure isn't there as strong today, so that might be more of a persistent rail market.

Muckerman: Just one or two questions on Kinder Morgan's management. It's something The Motley Fool believes in very highly. Management is one of the first things that we often look at.

You believe in transparency, both in terms of your financials and your overall health and safety record, so I was just wondering if you could touch on if that started at the very beginning of Kinder Morgan or if it's evolved over time?

Kean: It's been in place a long time. Rich Kinder has set the tone at the top, and spread it throughout the organization, that we are extremely attentive to detail, very attentive to detail. When we go into every Monday meeting, which we do every single Monday, like clockwork, and bring all the business units together, we are updating our Operations, updating Commercial, updating Financial.

When we're updating our Financial, we're updating our current month, we're updating our quarter, and we're updating our year, so if we're sitting here in September we're looking at September, and we're looking at October, November, and December. If a contract didn't renew, or it did renew at a higher rate in December it's showing up, and it's showing up this week. There isn't an opportunity, there isn't a risk that gets a week old without getting acted on.

Part of what that attention to detail enables you to do is to be transparent in what you're presenting to the public, whether that's our safety statistics, which we update for the public every month, or our financial performance and our commercial outlook and our strategy, which we're updating in our annual investor conference, but also in our quarterly calls and any other investor conferences that we do in the interim.

It's that attention to detail that drives our ability to do that, and it drives a number of other things, too; how we manage our business, the attention and focus that we have on our operations and on our safety, when people have to report what's gone wrong, or they have to report exceptions in their compliance activities and things like that. We list them, we track them to closure, and we complete them.

That's really, I think, the hallmark of our culture, that we're able to do that and that drives things like our ability to be transparent with our investors.

Muckerman: Then just to wrap things up, are there any companies or management teams elsewhere -- in not just energy, but in the S&P 500 or just generally in the United States or globally -- that are talked about here at Kinder Morgan, as far as different styles that you try to emulate, or different ideas that you might try to bring in-house, or anything like that?

Kean: Not really. There are many, many very, very respectable and deeply respected management teams out there, and organizations. We think that the thing that has been put together here is well-suited for our business, and the kind of business that we're in.

Again, I'll come to the attention to detail. When you're running a large asset network like this, you need to always have your eye on the ball. You need to have your eye on the ball financially, commercially, and also operationally, so things that work here might not work in those other companies.

I think we find this as we sometimes acquire companies. One of the hardest things that people have to get used to around here is that attention to detail.

We think we've built a good mousetrap for what we specifically do, and it works here. There aren't necessarily a lot of other analogies that we feel like we can comfortably draw on. We just try to do the best job we can with what's in front of us every single day.

Muckerman: That's great, Steve. I really appreciate your time. I think you've provided our readers with some excellent insight into Kinder Morgan and the entire energy industry; what's taking place right now and what they can look forward to in the future.

Kean: All right.

Muckerman: I really appreciate your time.

Kean: Thank you very much.

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