Kinder Morgan billionaire sees big fortunes in oil by train and tanker

One of the richest men in America is boasting about the massive profits to be made from the transport of “tremendous” new volumes of oil from Alberta tar sands and U.S. shale oil deposits.

Kinder Morgan’s reclusive billionaire CEO Rich Kinder said his company’s pipelines, including the proposed Trans Mountain expansion project through British Columbia, are not enough to handle this surge of new oil, measured in millions of barrels per day.

Consequently, he told analysts last week on a teleconference call that his company is investing a combined $1.1 billion on a new oil tanker fleet and a crude-oil-by-rail terminal near Edmonton, to get the oil to market.

“We’re primarily a pipeline company of course… but there are reasons why pipelines don’t satisfy everybody’s needs. An outgrowth of that is obviously crude by rail. Another outgrowth of that is the Jones Act,” said Kinder, from Houston, Texas.

The “Jones Act” is a reference to the transport of oil and gas by ocean tanker. It’s not clear if the tankers would move petroleum out of Burnaby, or simply U.S. ports.

Kinder Morgan stock pumped

Kinder said for an “old Texas oil man” like himself, he’s never seen brighter days ahead for oil transport.

As proof, the former Enron president bragged about his purchase of roughly $26 million USD of “undervalued” Kinder Morgan stock in December. He even goaded other investors to sell their stocks, so he could snap them up.

“You sell, I buy, and we’ll see who comes out best in the long run,” sniped Kinder.

The CEO also spoke about the company’s steadily increasing footprint of pipelines and terminals. The company now controls 130,000 km of pipelines – enough to circle the Earth three times.

“I look out there and I see this huge damn footprint across North America, and every time we turn around, we see more ability to extract value out of it,” said Kinder.

Rich Kinder’s annual salary is famously reported as just one U.S. dollar — even though he made $60.9 million in one-year from other forms of compensation.

Oil by rail

Kinder Morgan’s new Edmonton train terminal, announced in December, is a 50 per cent partnership with Imperial Oil. It will soon rail out 250,000 barrels of crude per day, or half the volume of Northern Gateway.

By the Vancouver Observer’s estimate, that’s three full trains, totaling 350 rail cars, discreetly moving explosive and toxic diluted bitumen through communities and wilderness, every single day.

Not easing concerns has been the flurry of recent oil-by-rail derailments in the industry, including most dramatically, the nighttime explosion of railed crude in Lac-Mégantic, Quebec last July. That incidence killed 42.

Trans Mountain pipeline expansion is company’s “biggest project”

The Kinder Morgan quarterly update also revealed just how important Canada is to the profits of the company.

“Of course our biggest project is in Canada – the $5.4 billion Trans Mountain expansion,” said Steve Kean, President of Kinder Morgan.

The executive trumpeted the new speedier process by which the Texas-based company hopes to have its pipeline considered by federal authorities, and ultimately, the Harper cabinet.

“We did cross a key milestone… our voluminous facilities application is now with the National Energy Board, which starts that process under a defined time frame,” said Kean.

When stacked, the 15,000 page application stands more than 2 metres (7 ft.) in height, with 37 binders.

The pipeline would intersect B.C’s densely populated urban areas, rivers, reserves, and provincial parks.

Unlike past mega-pipeline projects, the public must apply to participate in the NEB hearings, due to new Harper government rules.

The process has been heavily criticized, with many saying the amount of red tape involved is intentionally restricting public participation at the hearings. Controversially, Kinder Morgan will also get a copy of every application to participate at the hearings, and can argue to have any person or group removed.

It’s not clear if the board will allow the type of oral presentations, given by 1,179 people at the Northern Gateway hearings, for example.

The board says it has tried to improve is application process with a new online form. A citizen, however, must have either a government user ID number, or a bankcard with one of five financial institutions, to begin the online application.

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