Kinder Morgan Is Said to Weigh Sale of Carbon Dioxide Unit

(Bloomberg) -- Pipeline giant Kinder Morgan Inc. is weighing a sale of the largest transporter of carbon dioxide in North America, which could fetch more than $5 billion, according to people familiar with the matter. Its shares rose on the news.

The Houston-based company is working with advisers to seek buyers for its CO2 business, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and Kinder Morgan could opt to keep the segment, they said.

Its shares reversed losses to climb 2 percent to $17.81 at 2:17 p.m. in New York trading, giving the company a market of about $39.3 billion.

A representative for Kinder Morgan declined to comment.

The potential sale comes as Kinder Morgan considers paring other parts of its massive network of terminals, pipelines and other infrastructure that handles natural gas and petroleum products. Kinder Morgan sold the Trans Mountain oil pipeline for $3.5 billion last year and is in the process of a strategic review for affiliate Kinder Morgan Canada Ltd. that could lead to an outright sale or merger with Kinder Morgan Inc., among other options.

CO2 Slump

Analysts have long-questioned Kinder Morgan’s commitment to the CO2 unit, which collects the greenhouse gas from underground deposits for so-called enhanced oil recovery, or the process of retrieving hydrocarbons from aging fields where they don’t flow easily. Kinder Morgan uses the CO2 for its own drilling projects and sells it to others.

Wild swings in oil prices in recent years have depressed the business. Operating income in Kinder Morgan’s CO2 unit has fallen about 46 percent in the last five years, to $759 million in 2018, according to company filings.

It’s also costly to run. The business makes up about $1.6 billion of Kinder Morgan’s $5.7 billion spending backlog, Chief Executive Officer Steven Kean said in an earnings call with analysts this week.

The division transports about 1.2 billion cubic feet per day of CO2, according to its website.

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