“Segment earnings also received a boost from good results at our liquids terminals on the Houston Ship Channel and in New York Harbor (resulting from increased volumes, new contracts and incremental tank capacity), and at Fairless Hills (resulting from increased steel volumes),” Kinder said. Acquisitions that contributed to growth versus the third quarter last year included an additional equity investment in December of 2011 in Watco Companies, which owns the largest privately held short line railroad business in the United States.

In the third quarter, this segment handled 15.7 million barrels of ethanol, up slightly compared to the same period last year. Combined, the terminals and products pipelines business segments handled about 24.6 million barrels of ethanol compared to 23.5 million barrels in the third quarter of 2011. KMP continues to handle approximately 30 percent of the ethanol used in the United States.

Kinder Morgan Canada produced third quarter segment earnings before DD&A and certain items of $56 million, up 15 percent from $48 million for the same period last year, and currently is expected to slightly exceed its published annual budget of 1 percent growth.

“Highlights in the third quarter compared to the same period last year included the impact of the 2012 toll agreement on the Trans Mountain pipeline system, favorable book taxes, strong throughput on Trans Mountain and at the Westridge Terminal, and continued good results from the Express-Platte Pipeline,” Kinder said. Trans Mountain volumes increased compared to the third quarter last year due to a pressure restriction in 2011 that was lifted earlier in 2012.

2012 Outlook

As previously announced, KMP expects to declare cash distributions of $4.98 per unit for 2012, an 8 percent increase over the $4.61 it distributed for 2011. Due to deteriorating NGL prices, KMP now expects to generate 2012 distributable cash flow slightly above its distributions, but below budget. Excluding the dropdown transactions discussed below and expansion projects associated with those assets, KMP now expects to invest approximately $2.2 billion in expansions (including contributions to joint ventures) and acquisitions for 2012. Approximately $500 million of the equity required for this investment program is expected to be funded by Kinder Morgan Management, LLC (NYSE: KMR) dividends. As previously announced, and related to KMI’s acquisition of El Paso Corporation, the average annual growth rate in KMP distributions per unit and KMR dividends per share is expected to be around 7 percent from 2011 through 2015.

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