Questions of Safety Dog Kinder Morgan's Trans-Mountain Pipeline over the Coquihalla

Will Kinder Morgan be Forced to Close Down the Trans-Mountain Pipeline for the Entire Winter Due to Poor Maintenance?

by David Ellis, Independent pipeline critic

After spending several days last week again "running the pipeline", this time in the Hope area of British Columbia, I have to conclude that analyst Kevin Kaiser was dead on, and Kinder Morgan has clearly let even basic maintenance get far ahead of it on this 61 year old pipeline.

In the high altitude Coquihalla, as over 35 emergency repair sites are being water tested far too late, as winter snows set in (25 feet of snow falls at the Coquihalla summit) they may just fail, leading the National Energy Board having to close down the pipeline for the winter, or force it to continue to run at 80% normal operating pressure all winter, as it has, all summer. As oil deliveries drop or stop as the pipeline is closed down so often for repairs, tar sands/dilbit and other orders/contracts will increasingly not be met and the company also now faces 100s of millions in emergency maintenance bills.

With 8 security stations to prevent public witness of the foolish 900 psi "water test" mess now unfolding in the Coquihalla area, I shifted to the Hope area and found 2 unreported spill sites now under stalled repair as a Kinder Morgan employee noted to me "the big panic up in the Coquihalla right now" pulls away all workers.

I also found the right of way here over grown by raincoast vegetation which will makes spills impossible to quickly access (see my separate "Hope Trans Mountain Report"). This is also a nightmare scenario for the people of B.C. who are trying to protect one of their largest economic assets, the water of the Fraser and Thompson rivers, the greatest wild salmon rivers in the world.

Kinder Morgan chairman denies skimping on maintenance
by Anna Driver
Kinder Morgan's billionaire chairman on Wednesday denied the U.S. pipeline company skimps on maintenance spending, hitting back at allegations by a young analyst that have rattled the company's shares. The analyst, Kevin Kaiser, 26, of research firm Hedgeye Risk Management, published a 45-page report on September 10 alleging, among other things, that Kinder Morgan has cut maintenance work to boost cash distributed to investors in its partnerships.

"Our policy is not, is not to skimp on maintenance capex," Chairman Rich Kinder told investors on a conference call held specifically to discuss Kaiser's report. 

AND THEN

Research firm rebuts Kinder Morgan’s rebuttal
by Claudia Assis

Energy analyst Kevin Kaiser of Hedgeye Risk Management took aim at Kinder Morgan again on Thursday, saying in a research note the pipeline operator is “defending the indefensible” and its maintenance practices are still questionable. Kaiser caused a twitter storm a few weeks back calling Kinder Morgan KMI a “house of cards” and issuing a report saying the company skimped on maintenance expenses to boost cash payments to shareholders and to fund the general partner that controls the company. Kinder Morgan shares fell as much as 8% following the criticism, and, quite incredibly, Chief Executive Richard Kinder reacted to the note and the sharp share drop by calling a webcast last week to rebuff Kaiser’s research.

Shares of Kinder Morgan were up less than 0.1% Thursday, in line with energy peers on the S&P 500 Index. Although Kinder didn’t mention the analyst by name, he urged investors to consider Kinder Morgan management’s combined “hundreds of years of experience” over the opinion of one analyst. Kinder also said some of the numbers in the report wrong. 

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