| CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||||
| 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 | |
| Revenues | ||||
| Natural gas sales | $686,200,000 | $2,183,300,000 | $2,291,800,000 | $6,369,200,000 |
| Services | 690,200,000 | 700,200,000 | 2,003,700,000 | 2,053,700,000 |
| Product sales and other | 284,300,000 | 349,300,000 | 797,000,000 | 1,025,900,000 |
| Total Revenues | 1,660,700,000 | 3,232,800,000 | 5,092,500,000 | 9,448,800,000 |
| Operating Costs, Expenses and Other | ||||
| Gas purchases and other costs of sales | 665,200,000 | 2,179,400,000 | 2,240,500,000 | 6,405,700,000 |
| Operations and maintenance | 280,300,000 | 353,500,000 | 797,600,000 | 948,100,000 |
| Depreciation, depletion and amortization | 202,900,000 | 166,800,000 | 616,200,000 | 490,500,000 |
| General and administrative | 83,700,000 | 73,100,000 | 238,800,000 | 222,700,000 |
| Taxes, other than income taxes | 36,400,000 | 48,000,000 | 98,800,000 | 147,000,000 |
| Other expense (income) | (14,500,000) | 4,100,000 | (18,100,000) | 1,300,000 |
| Total Operating Costs, Expenses and Other | 1,254,000,000 | 2,824,900,000 | 3,973,800,000 | 8,215,300,000 |
| Operating Income | 406,700,000 | 407,900,000 | 1,118,700,000 | 1,233,500,000 |
| Other Income (Expense) | ||||
| Earnings from equity investments | 59,800,000 | 34,600,000 | 139,900,000 | 118,500,000 |
| Amortization of excess cost of equity investments | (1,400,000) | (1,400,000) | (4,300,000) | (4,300,000) |
| Interest, net | (103,000,000) | (98,300,000) | (296,200,000) | (293,800,000) |
| Other, net | 12,900,000 | 4,300,000 | 43,800,000 | 30,500,000 |
| Total Other Income (Expense) | (31,700,000) | (60,800,000) | (116,800,000) | (149,100,000) |
| Income from Continuing Operations Before Income Taxes | 375,000,000 | 347,100,000 | 1,001,900,000 | 1,084,400,000 |
| Income Taxes | (11,300,000) | (14,200,000) | (42,800,000) | (35,800,000) |
| Income from Continuing Operations | 363,700,000 | 332,900,000 | 959,100,000 | 1,048,600,000 |
| Discontinued Operations | ||||
| Adjustment to gain on disposal of North System | 0 | 0 | 0 | 1,300,000 |
| Income from Discontinued Operations | 0 | 0 | 0 | 1,300,000 |
| Net Income | 363,700,000 | 332,900,000 | 959,100,000 | 1,049,900,000 |
| Net Income attributable to Noncontrolling Interests | (4,200,000) | (3,100,000) | (11,900,000) | (11,200,000) |
| Net Income attributable to Kinder Morgan Energy Partners, L.P. | 359,500,000 | 329,800,000 | 947,200,000 | 1,038,700,000 |
| Calculation of Limited Partners' interest in Net Income Attributable to Kinder Morgan Energy Partners, L.P.: | ||||
| Income from Continuing Operations | 359,500,000 | 329,800,000 | 947,200,000 | 1,037,400,000 |
| Less: General Partner's interest | (236,200,000) | (205,600,000) | (692,700,000) | (588,900,000) |
| Limited Partners' interest | 123,300,000 | 124,200,000 | 254,500,000 | 448,500,000 |
| Add: Limited Partners' interest in Discontinued Operations | 0 | 0 | 0 | 1,300,000 |
| Limited Partners' interest in Net Income | 123,300,000 | 124,200,000 | 254,500,000 | 449,800,000 |
| Limited Partners' Net Income per Unit: | ||||
| Income from Continuing Operations | 0.43 | 0.48 | 0.92 | 1.76 |
| Income from Discontinued | $0 | $0 | $0 | $0 |
| Net Income | 0.43 | 0.48 | 0.92 | 1.76 |
| Weighted Average Number of Units Used in Computation of Limited Partners' Net Income per Unit | 286.6 | 258.8 | 277.9 | 255.5 |
| Per unit cash distribution declared | 1.05 | 1.02 | 3.15 | 2.97 |
| CONSOLIDATED BALANCE SHEETS (USD $) | ||
| In Millions | Sep. 30, 2009
| Dec. 31, 2008
|
| Current Assets | ||
| Cash and cash equivalents | 168.8 | 62.5 |
| Restricted deposits | 10.1 | 0 |
| Accounts, notes and interest receivable, net | 683.2 | 987.9 |
| Inventories | 56.6 | 44.2 |
| Gas imbalances | 15.7 | 14.1 |
| Gas in underground storage | 51.9 | 0 |
| Fair value of derivative contracts | 24.4 | 115.3 |
| Other current assets | 20.8 | 20.4 |
| Total current assets | 1031.5 | 1244.4 |
| Property, Plant and Equipment, net | 13873.2 | 13241.4 |
| Investments | 2555.7 | 954.3 |
| Notes receivable | 189.9 | 178.1 |
| Goodwill | 1097.6 | 1058.9 |
| Other intangibles, net | 199.3 | 205.8 |
| Fair value of derivative contracts | 411.9 | 796 |
| Deferred charges and other assets | 195.5 | 206.9 |
| Total Assets | 19554.6 | 17885.8 |
| Current Liabilities | ||
| Current portion of debt | 155.6 | 288.7 |
| Cash book overdrafts | 33.2 | 42.8 |
| Accounts payable | 411.4 | 855.6 |
| Accrued interest | 91 | 172.3 |
| Taxes Payable Current | 87.2 | 51.9 |
| Deferred revenues | 64.9 | 41.1 |
| Gas imbalances | 8.2 | 12.4 |
| Fair value of derivative contracts | 198.3 | 129.5 |
| Accrued other current liabilities | 123.9 | 187.8 |
| Total current liabilities | 1173.7 | 1782.1 |
| Long-Term Liabilities and Deferred Credits | ||
| Long-term debt Outstanding | 10247.4 | 8274.9 |
| Value of interest rate swaps | 574.6 | 951.3 |
| Total Long-term debt | 10,822 | 9226.2 |
| Deferred revenues | 11.8 | 12.9 |
| Deferred income taxes | 200.3 | 178 |
| Asset retirement obligations | 84.1 | 74 |
| Fair value of derivative contracts | 292.9 | 92.2 |
| Other long-term liabilities and deferred credits | 367 | 404.1 |
| Total other long term liabilities and deferred credits | 11778.1 | 9987.4 |
| Total Liabilities | 12951.8 | 11769.5 |
| Partners' Capital | ||
| Common Units | 3874.1 | 3458.9 |
| Class B Units | 82.7 | 94 |
| i-Units | 2658.9 | 2577.1 |
| General Partner | 215.9 | 203.3 |
| Accumulated other comprehensive loss | -306.2 | -287.7 |
| Total Kinder Morgan Energy Partners, L.P. Partners' Capital | 6525.4 | 6045.6 |
| Noncontrolling interests | 77.4 | 70.7 |
| Total Partners' Capital | 6602.8 | 6116.3 |
| Total Liabilities and Partners' Capital | 19554.6 | 17885.8 |
| CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
| In Millions | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
| Cash Flows From Operating Activities | ||
| Net Income | 959.1 | 1049.9 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation, depletion and amortization | 616.2 | 490.5 |
| Amortization of excess cost of equity investments | 4.3 | 4.3 |
| Income from the allowance for equity funds used during construction | -22.6 | 0 |
| Income from the sale of property, plant and equipment and investments | -18.1 | (13) |
| Earnings from equity investments | -139.9 | -118.5 |
| Changes in components of working capital: | ||
| Distributions from equity investments | 153.1 | 115.3 |
| Proceeds from termination of interest rate swap agreements | 144.4 | 0 |
| Accounts receivable | 227.3 | -13.6 |
| Other current assets | -52.7 | 11.1 |
| Inventories | -11.8 | -6.8 |
| Accounts payable | -346.2 | -90.6 |
| Accrued interest | -81.3 | -65.3 |
| Accrued liabilities | (59) | 68.4 |
| Accrued taxes | 35.4 | 18.9 |
| Rate reparations, refunds and other litigation reserve adjustments | -15.5 | -10.7 |
| Other, net | -15.7 | -6.8 |
| Net Cash Provided by Operating Activities | 1,377 | 1433.1 |
| Cash Flows From Investing Activities | ||
| Acquisitions of assets | -27.5 | (9) |
| Repayments for Trans Mountain Pipeline | 0 | 23.4 |
| Repayments from customers | 109.6 | 0 |
| Capital expenditures | -1075.4 | -1914.4 |
| Sale of property, plant and equipment, and other net assets net of removal costs | 9.1 | 48.8 |
| Investments in margin deposits | -13.2 | 40.3 |
| Contributions to equity investments | -1619.1 | -341.6 |
| Distributions from equity investments | 0 | 89.1 |
| Natural gas stored underground and natural gas liquids line-fill | 0 | -2.5 |
| Net Cash Used in Investing Activities | -2616.5 | -2065.9 |
| Cash Flows From Financing Activities | ||
| Issuance of debt | 5871.9 | 6575.7 |
| Payment of debt | -4025.4 | -5293.8 |
| Repayments from related party | 2.5 | 1.8 |
| Debt issue costs | -12.3 | -11.2 |
| Increase (Decrease) in cash book overdrafts | -9.6 | 51.7 |
| Proceeds from issuance of common units | 815.5 | 384.3 |
| Contributions from noncontrolling interests | 11 | 6.7 |
| Common units | -599.2 | -501.9 |
| Class B units | -16.7 | -15.2 |
| General Partner | -680.3 | -557.6 |
| Noncontrolling interests | -16.3 | -13.9 |
| Other, net | -0.3 | 3.1 |
| Net Cash Provided by Financing Activities | 1340.8 | 629.7 |
| Effect Of Exchange Rate On Cash And Cash Equivalents | 5 | (3) |
| Increase in Cash and Cash Equivalents | 106.3 | -6.1 |
| Cash and Cash Equivalents, beginning of period | 62.5 | 58.9 |
| Cash and Cash Equivalents, end of period | 168.8 | 52.8 |
| Noncash Investing and Financing Activities | ||
| Assets acquired by the assumption or incurrence of liabilities | 3.7 | 3.4 |
| Assets acquired by the issuance of units | 5 | 116 |
| Cash paid during the period for interest (net of capitalized interest) | 387.8 | 352.3 |
| Cash paid during the period for income taxes | 2.3 | $35 |
| Organization | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| General | |
| General | 1.General Organization Kinder Morgan Energy Partners, L.P. is a leading pipeline transportation and energy storage company in North America, and unless the context requires otherwise, references to we, us, our, KMP or the Partnership are intended to mean Kinder Morgan Energy Partners, L.P. and its consolidated subsidiaries.We own an interest in or operate more than 28,000 miles of pipelines and 170 terminals, and conduct our business through five reportable business segments (described further in Note 8).Our pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide and other products, and our terminals store petroleum products and chemicals and handle bulk materials like coal and petroleum coke.We are also the leading provider of carbon dioxide for enhanced oil recovery projects in North America.Our general partner is owned by Kinder Morgan, Inc., formerly Knight Inc., a private company discussed following. Kinder Morgan, Inc., Kinder Morgan G.P., Inc. and Kinder Morgan Management, LLC Kinder Morgan, Inc., referred to as KMI in this report, is owned by investors led by RichardD. Kinder, Chairman and Chief Executive Officer of Kinder Morgan G.P., Inc. (our general partner), and Kinder Morgan Management, LLC (our general partners delegate).For a period, KMI was known as Knight Inc., the surviving legal entity from its May 30, 2007 going-private transaction.On July 15, 2009, Knight Inc. changed its name back to Kinder Morgan, Inc.For additional information regarding KMIs going-private transaction, see Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008, referred to in this report as our 2008 Form 10-K. KMI indirectly owns all the common stock of our general partner.In July 2007, our general partner issued and sold 100,000 shares of Series A fixed-to-floating rate term cumulative preferred stock due 2057.The consent of holders of a majority of these preferred shares is required with respect to a commencement of or a filing of a voluntary bankruptcy proceeding with respect to us or two of our subsidiaries, SFPP, L.P. and Calnev Pipe Line LLC. Kinder Morgan Management, LLC, referred to as KMR in this report, is a Delaware limited liability company. Our general partner owns all of KMRs voting securities and, pursuant to a delegation of control agreement, has delegated to KMR, to the fullest extent permitted under Delaware law and our partnership agreement, all of its power and authority to manage and control our business and affairs, except that KMR cannot take certain specified actions without the approval of our general partner.More information on these entities and the delegation of control agreement is contained in our 2008 Form 10-K. Basis of Presentation We have prepared our accompanying unaudited consolidated financial statements under the rules and regulations of the Securities and Exchange Commission.Under such rules and regulations, we have condensed or omitted certain information and notes normally included in financial statements prepared in conformity with accounting principles generally accepted in the Uni |
| Acquisitions, Joint Ventures and Divestitures | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Acquisitions, Joint Ventures and Divestitures | |
| Acquisitions and Joint Ventures | 2. Acquisitions, Joint Ventures and Divestitures Acquisitions General The provisions of the Codifications Topic 805, Business Combinations, are to be effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.Accordingly, we adopted the provisions of Topic 805 on January 1, 2009. Topic 805 requires that (i) the acquisition method of accounting be used for all business combinations; and (ii) an acquirer be identified for each business combination.It applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquiree), including combinations achieved without the transfer of consideration.The adoption of Topic 805 did not have a material impact on our consolidated financial statements. Significant provisions of Topic 805 concern principles and requirements for how an acquirer (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.This Topic also amends the provisions related to the initial recognition and measurement, subsequent measurement and disclosure of assets and liabilities arising from contingencies in a business combination.It requires that acquired contingencies in a business combination be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the allocation period.Otherwise, companies would typically account for the acquired contingencies in accordance with the provisions of the Contingencies Topic of the Codification. Megafleet Towing Co., Inc. Assets Effective April 23, 2009, we acquired certain terminals assets from Megafleet Towing Co., Inc. for an aggregate consideration of approximately $21.7 million.Our consideration included $18.0 million in cash and an obligation to pay additional cash consideration on April 23, 2014 (five years from the acquisition date) contingent upon the purchased assets providing us an agreed-upon amount of earnings, as defined by the purchase and sale agreement, during the five year period.The contingent consideration had a fair value of $3.7 million as of the acquisition date, and there has been no change in the fair value during the post-acquisition period ended September 30, 2009. The acquired assets primarily consist of nine marine vessels that provide towing and harbor boat services along the Gulf coast, the intracoastal waterway, and the Houston Ship Channel.The acquisition complements and expands our existing Gulf Coast and Texas petroleum coke terminal operations, and all of the acquired assets are included in our Terminals business segment.We allocated $7.1 million of our combined purchase price to Property, Plant and Equipment, net, $4.0 million to Other I |
| Intangibles | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Intangibles | |
| Intangibles | 3. Intangibles Goodwill We evaluate goodwill for impairment on May 31 of each year.For this purpose, we have six reporting units as follows: (i) Products Pipelines (excluding associated terminals); (ii) Products Pipelines Terminals (evaluated separately from Products Pipelines for goodwill purposes); (iii) Natural Gas Pipelines; (iv) CO2; (v) Terminals; and (vi) Kinder Morgan Canada. There were no impairment charges resulting from our May 31, 2009 impairment testing, and no event indicating an impairment has occurred subsequent to that date.The fair value of each reporting unit was determined from the present value of the expected future cash flows from the applicable reporting unit (inclusive of a terminal value calculated using market multiples between six and ten times cash flows) discounted at a rate of 9.0%.The value of each reporting unit was determined on a stand-alone basis from the perspective of a market participant and represented the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. Changes in the carrying amount of our goodwill for the nine months ended September 30, 2009 are summarized as follows (in millions): Products Pipelines Natural Gas Pipelines CO2 Terminals Kinder Morgan Canada Total Balance as of December 31, 2008 $ 263.2 $ 288.4 $ 46.1 $ 257.6 $ 203.6 $ 1,058.9 Acquisitions and purchase price adjustments. - - - 10.6 - 10.6 Currency translation adjustments - - - - 28.1 28.1 Balance as of September 30, 2009 $ 263.2 $ 288.4 $ 46.1 $ 268.2 $ 231.7 $ 1,097.6 In addition, we identify any premium or excess cost we pay over our proportionate share of the underlying fair value of net assets acquired and accounted for as investments under the equity method of accounting.This premium or excess cost is referred to as equity method goodwill and is also not subject to amortization but rather to impairment testing.No event or change in circumstances that may have a significant adverse effect on the fair value of our equity investments has occurred during the first nine months of 2009, and as ofboth September 30, 2009 and December 31, 2008, we reported $138.2 million in equity method goodwill within the caption Investments in our accompanying consolidated balance sheets. Other Intangibles Excluding goodwill, our other intangible assets include customer relationships, contracts and agreements, lease value, and technology-based assets.These intangible assets have definite lives, are being amortized on a straight-line basis over their estimated useful lives, and are reported separately as Other intangibles, net in our accompanying consolidated balance sheets.Following is information related to our intangible assets subject to amortization (in millions): September 30, 2009 December 31, 2008 Customer relationships, contracts and agreements Gross carrying amount $ 247.6 $ 246.0 Accumulated amortization |
| Debt | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Debt | |
| Debt | 4. Debt We classify our debt based on the contractual maturity dates of the underlying debt instruments or as of the earliest put date available to the holders of the applicable debt.As of September 30, 2009, our outstanding short-term debt was $155.6 million, and our outstanding long-term debt (excluding the value of interest rate swap agreements) was $10,247.4 million.The weighted average interest rate on all of our borrowings (both short-term and long-term) was approximately 4.35% during the third quarter of 2009 and approximately 5.30% during the third quarter of 2008.For the first nine months of 2009 and 2008, the weighted average interest rate on all of our borrowings was approximately 4.66% and 5.46%, respectively. As of September 30, 2009, our outstanding short-term debt balance consisted of(i) $110 million in outstanding borrowings under our bank credit facility (discussed below); (ii) $23.7 million in principal amount of tax-exempt bonds that mature on April 1, 2024, but are due on demand pursuant to certain standby purchase agreement provisions contained in the bond indenture (our subsidiary Kinder Morgan Operating L.P. B is the obligor on the bonds); (iii) a $9.8 million portion of a 5.40% long-term note payable (our subsidiaries Kinder Morgan Operating L.P. A and Kinder Morgan Canada Company are the obligors on the note); (iv) a $6.8 million portion of 5.23% senior notes (our subsidiary Kinder Morgan Texas Pipeline, L.P. is the obligor on the notes); and (v) $5.3 million in principal amount of adjustable rate industrial development revenue bonds that mature on January 1, 2010 (the bonds were issued by the Illinois Development Finance Authority and our subsidiary Arrow Terminals L.P. is the obligor on the bonds). Credit Facility Our $1.85 billion unsecured bank credit facility is with a syndicate of financial institutions, and Wachovia Bank, National Association is the administrative agent.The credit facility permits us to obtain bids for fixed rate loans from members of the lending syndicate, and the facility can be amended to allow for borrowings of up to $2.0 billion.Interest on our credit facility accrues at our option at a floating rate equal to either (i) the administrative agents base rate (but not less than the Federal Funds Rate, plus 0.5%); or (ii) LIBOR, plus a margin, which varies depending upon the credit rating of our long-term senior unsecured debt. The outstanding balance under our credit facility was $110 million as of September 30, 2009.As of December 31, 2008, there were no borrowings under the credit facility.The credit facility matures August 18, 2010 and currently, we plan to negotiate a renewal of the credit facility before its maturity date.Borrowings under our credit facility can be used for partnership purposes and as a backup for our commercial paper program. During the first quarter of 2009, following Lehman Brothers Holdings Inc.s filing for bankruptcy protection in September 2008, we amended the credit facility to remove Lehman Brothers Commercial Bank as a lender, thus reducing the borrowing capacity under the facility by $63.3 million.The commitments of the other banks remain unc |
| Partners' Capital | |
| 1/1/2009 - 9/30/2009
USD / shares | |
| [PartnersCapitalAbstract] | |
| Partners' Capital | 5. Partners Capital Limited Partner Units As of September 30, 2009 and December 31, 2008, our partners capital included the following limited partner units: September 30, 2009 December 31, 2008 Common units 199,876,437 182,969,427 Class B units 5,313,400 5,313,400 i-units 83,754,953 77,997,906 Total limited partner units 288,944,790 266,280,733 The total limited partner units represent our limited partners interest and an effective 98% ownership interest in us, exclusive of our general partners incentive distribution rights.Our general partner has an effective 2% ownership interest in us, excluding its incentive distribution rights. As of September 30, 2009, our total common units consisted of 183,506,009 units held by third parties, 14,646,428 units held by KMI and its consolidated affiliates (excluding our general partner), and 1,724,000 units held by our general partner.As of December 31, 2008, our common unit total consisted of 166,598,999 units held by third parties, 14,646,428 units held by KMI and its consolidated affiliates (excluding our general partner) and 1,724,000 units held by our general partner. As of both September 30, 2009 and December 31, 2008, all of our 5,313,400 Class B units were held by a wholly-owned subsidiary of KMI.The Class B units are similar to our common units except that they are not eligible for trading on the New York Stock Exchange.All of our Class B units were issued to a wholly-owned subsidiary of KMI in December 2000. As of both September 30, 2009 and December 31, 2008, all of our i-units were held by KMR.Our i-units are a separate class of limited partner interests in us and are not publicly traded.The number of i-units we distribute to KMR is based upon the amount of cash we distribute to the owners of our common units.When cash is paid to the holders of our common units, we issue additional i-units to KMR.The fraction of an i-unit paid per i-unit owned by KMR will have a value based on the cash payment on the common units. Changes in Partners Capital For each of the three and nine month periods ended September 30, 2009 and 2008, changes in the carrying amounts of our Partners Capital attributable to both us and our noncontrolling interests, including our comprehensive income (loss) are summarized as follows (in millions): Three Months Ended September 30, 2009 2008 KMP Noncontrolling interests Total KMP Noncontrolling interests Total Beginning Balance $ 6,267.7 $ 74.3 $ 6,342.0 $ 3,185.7 $ 42.5 $ 3,228.2 Units issued as consideration in the acquisition of assets - - - 116.0 - 116.0 Units issued for cash 145.9 - 145.9 (0.2 ) - (0.2 ) Distributions paid in cash (448.1 ) (5.5 ) (453.6 ) (377.2 ) (5.0 ) (382.2 ) Express/Jet Fuel Pipelines acquisition - - - 77.7 2.0 79.7 KMI going-private transaction expen |
| Risk Management | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Risk Management | |
| Risk Management | 6. Risk Management Certain of our business activities expose us to risks associated with unfavorable changes in the market price of natural gas, natural gas liquids and crude oil.We also have exposure to interest rate risk as a result of the issuance of our debt obligations.Pursuant to our managements approved risk management policy, we use derivative contracts to hedge or reduce our exposure to certain of these risks. Energy Commodity Price Risk Management We are exposed to risks associated with changes in the market price of natural gas, natural gas liquids and crude oil as a result of the forecasted purchase or sale of these products.Specifically, these risks are associated with unfavorable price volatility related to (i) pre-existing or anticipated physical natural gas, natural gas liquids and crude oil sales; (ii) natural gas purchases; and (iii) natural gas system use and storage.The unfavorable price changes are often caused by shifts in the supply and demand for these commodities, as well as their locations. Our principal use of energy commodity derivative contracts is to mitigate the risk associated with unfavorable market movements in the price of energy commodities.Our energy commodity derivative contracts act as a hedging (offset) mechanism against the volatility of energy commodity prices by allowing us to transfer this price risk to counterparties who are able and willing to bear it. For derivative contracts that are designated and qualify as cash flow hedges pursuant to generally accepted accounting principles, the portion of the gain or loss on the derivative contract that is effective in offsetting the variable cash flows associated with the hedged forecasted transaction is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in revenues when the hedged transactions are commodity sales).The remaining gain or loss on the derivative contract in excess of the cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the ineffective portion), is recognized in earnings during the current period.The effectiveness of hedges using an option contract may be assessed based on changes in the options intrinsic value with the change in the time value of the contract being excluded from the assessment of hedge effectiveness.Changes in the excluded component of the change in an options time value are included currently in earnings.During the current period we recognized a net loss of $5.4 million related to crude oil hedges, which resulted from hedge ineffectiveness and amounts excluded from effectiveness testing. During the three and nine months ended September 30, 2009, we reclassified losses of $21.0 million and $34.3 million, respectively, of Accumulated other comprehensive loss into earnings, and for the same comparable periods last year, we reclassified losses of $203.7 million and $630.7 million, respectively into earnings.All amounts reclassified into net income during the first nine months |
| Fair Value | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Fair Value | |
| Fair Value | 7.Fair Value Our fair value measurements and disclosures are made in accordance with the Fair Value Measurements and Disclosures Topic of the Codification.This Topic establishes a single definition of fair value in generally accepted accounting principles and prescribes disclosures about fair value measurements. We adopted the provisions of this Topic for our financial assets and financial liabilities effective January 1, 2008, and the adoption did not have a material impact on our balance sheet, statement of income, or statement of cash flows since we already applied its basic concepts in measuring fair values.With regard to our non-financial assets and non-financial liabilities, we adopted the provisions of this Topic effective January 1, 2009.This includes applying the provisions to (i) nonfinancial assets and liabilities initially measured at fair value in business combinations; (ii) reporting units or nonfinancial assets and liabilities measured at fair value in conjunction with goodwill impairment testing; (iii) other nonfinancial assets measured at fair value in conjunction with impairment assessments; and (iv) asset retirement obligations initially measured at fair value.The adoption for non-financial assets and liabilities did not have a material impact on our balance sheet, statement of income, or statement of cash flows since we already applied its basic concepts in measuring fair values. The Codification emphasizes that fair value is a market-based measurement that should be determined based on assumptions (inputs) that market participants would use in pricing an asset or liability.Inputs may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs.Accordingly, the Codification establishes a hierarchal disclosure framework that ranks the quality and reliability of information used to determine fair values.The hierarchy is associated with the level of pricing observability utilized in measuring fair value and defines three levels of inputs to the fair value measurement processquoted prices are the most reliable valuation inputs, whereas model values that include inputs based on unobservable data are the least reliable.Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety. The three broad levels of inputs defined by the fair value hierarchy are as follows: Level 1 Inputsquoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; Level 2 Inputsinputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability; and Level 3 Inputsunobservable inputs for the asset or liability.These unobservable inputs reflect the entitys own assumptions about the assumptions that |
| Reportable Segments | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Reportable Segments | |
| Reportable Segments | 8. Reportable Segments We divide our operations into five reportable business segments.These segments and their principal source of revenues are as follows: Products Pipelines the transportation and terminaling of refined petroleum products, including gasoline, diesel fuel, jet fuel and natural gas liquids; Natural Gas Pipelinesthe sale, transport, processing, treating, storage and gathering of natural gas; CO2the production and sale of crude oil from fields in the Permian Basin of West Texas and the transportation and marketing of carbon dioxide used as a flooding medium for recovering crude oil from mature oil fields; Terminalsthe transloading and storing of refined petroleum products and dry and liquid bulk products, including coal, petroleum coke, cement, alumina, salt and other bulk chemicals; and Kinder Morgan Canadathe transportation of crude oil and refined products. We evaluate performance principally based on each segments earnings before depreciation, depletion and amortization, which excludes general and administrative expenses, third-party debt costs and interest expense, unallocable interest income and income tax expense, and net income attributable to noncontrolling interests.Our reportable segments are strategic business units that offer different products and services.Each segment is managed separately because each segment involves different products and marketing strategies. Selected financial information by segment follows (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2009 2008 2009 2008 Revenues Products Pipelines Revenues from external customers $ 216.7 $ 205.6 $ 611.6 $ 602.5 Natural Gas Pipelines Revenues from external customers 838.8 2,359.4 2,751.2 6,916.6 CO2 Revenues from external customers 262.3 305.2 749.4 900.2 Terminals Revenues from external customers 282.8 306.0 814.2 886.4 Intersegment revenues 0.2 0.2 0.7 0.7 Kinder Morgan Canada Revenues from external customers 60.1 56.6 166.1 143.1 Total segment revenues 1,660.9 3,233.0 5,093.2 9,449.5 Less: Total intersegment revenues (0.2 ) (0.2 ) (0.7 ) (0.7 ) Total consolidated revenues $ 1,660.7 $ 3,232.8 $ 5,092.5 $ 9,448.8 Three Months Ended September 30, Nine Months Ended September 30, 2009 2008 2009 2008 Segment earnings before depreciation, depletion, amortization and amortization of excess cost of equity investments(a) Products Pipelines(b) $ 167.9 $ 130.4 $ 468.3 $ 408.7 Natural Gas Pipelines 197.8 185.0 560.7 555.7 CO2 193.2 203.3 563.3 619.7 Terminals 155.2 120.1 432.8 386.3 Kinder Morgan Canada 47.7 |
| Related Party Transactions | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Related Party Transactions | |
| Related Party Transactions | 9.Related Party Transactions Plantation Pipe Line Company Note Receivable We have a long-term note receivable bearing interest at the rate of 4.72% per annum from Plantation Pipe Line Company, our 51.17%-owned equity investee.The note provides for semiannual payments of principal and interest on December 31 and June 30 each year, with a final principal payment due July 20, 2011.The outstanding note receivable balance was$86.1 million as of September 30, 2009, and $88.5 million as of December 31, 2008.Of these amounts, $2.6 million and $3.7 million were included within Accounts, notes and interest receivable, net, on our accompanying consolidated balance sheets as of September 30, 2009 and December 31, 2008, respectively, and the remainder was included within Notes receivable at each reporting date. Express US Holdings LP Note Receivable In conjunction with the acquisition of our 33 1/3% equity ownership interest in the Express pipeline system from KMI on August 28, 2008, we acquired a long-term investment in a C$113.6 million debt security issued by Express US Holdings LP (the obligor), the partnership that maintains ownership of the U.S. portion of the Express pipeline system.As of our acquisition date, the value of this unsecured debenture was equal to KMIs carrying value of $107.0 million.The debenture is denominated in Canadian dollars, due in full on January 9, 2023, bears interest at the rate of 12.0% per annum, and provides for quarterly payments of interest in Canadian dollars on March 31, June 30, September 30 and December 31 each year.As of September 30, 2009 and December 31, 2008, the outstanding note receivable balance, representing the translated amount included in our consolidated financial statements in U.S. dollars, was $106.1 million and $93.3 million, respectively, and we included these amounts within Notes receivable on our accompanying consolidated balance sheets. KMI Asset Contributions In conjunction with our acquisition of (i) certain Natural Gas Pipelines assets and partnership interests from KMI in December 1999 and December 2000; and (ii) all of the partnership interest in TransColorado Gas Transmission Company from two wholly-owned subsidiaries of KMI on November 1, 2004, KMI agreed to indemnify us and our general partner with respect to approximately $733.5 million of our debt.KMI would be obligated to perform under this indemnity only if we are unable and/or our assets are insufficient to satisfy our obligations. Significant Investors Fair Value of Energy Commodity Derivative Contracts As a result of the May 2007 going-private transaction of KMI (formerly Knight Inc.), as discussed in our 2008 Form 10-K, a number of individuals and entities became significant investors in KMI.By virtue of the size of their ownership interest in KMI, two of those investors became related parties to us (as that term is defined in authoritative accounting literature): (i) American International Group, Inc., referred to in this report as AIG, and certain of its affiliates; and (ii) Goldman Sachs Capital Partners and certain of its affiliates. We and/or our affiliates enter into transactions with certa |
| Litigation, Environmental and Other Contingencies | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Litigation, Environmental and Other Contingencies | |
| Litigation, Environmental and Other Contingencies | 10.Litigation, Environmental and Other Contingencies Below is a brief description of our ongoing material legal proceedings, including any material developments that occurred in such proceedings during the nine months ended September 30, 2009.Additional information with respect to these proceedings can be found in Note 16 to our consolidated financial statements that were filed with our 2008 Form 10-K.This note also contains a description of any material legal proceedings that were initiated against us during the nine months ended September 30, 2009. In this note, we refer to SFPP, L.P. as SFPP; Calnev Pipe Line LLC as Calnev; Chevron Products Company as Chevron; Navajo Refining Company, L.P. as Navajo; ARCO Products Company as ARCO; BP West Coast Products, LLC as BP WCP; Texaco Refining and Marketing Inc. as Texaco; Western Refining Company, L.P. as Western Refining; ExxonMobil Oil Corporation as ExxonMobil; Tosco Corporation as Tosco; Ultramar Diamond Shamrock Corporation/Ultramar Inc. as Ultramar; Valero Energy Corporation as Valero; Valero Marketing and Supply Company as Valero Marketing; America West Airlines, Inc., Continental Airlines, Inc., Northwest Airlines, Inc., Southwest Airlines Co. and US Airways, Inc., collectively, as the Airlines; the United States Court of Appeals for the District of Columbia Circuit as the D.C. Circuit; and the Federal Energy Regulatory Commission, as the FERC. Federal Energy Regulatory Commission Proceedings FERC Docket Nos. OR92-8, et al.Complainants/Protestants: Chevron, Navajo, ARCO, BP WCP, Western Refining, ExxonMobil, Tosco, and Texaco (Ultramar is an intervenor)Defendant: SFPPSubject:Complaints against East Line and West Line rates; appeals pending at the D.C. Circuit. FERC Docket No.OR92-8-025Complainants/Protestants:BP WCP; ExxonMobil; Chevron; ConocoPhillips; and UltramarDefendant: SFPPSubject:Complaints against East Line and West Line rates and Watson Station Drain-Dry Charge; appeal pending at the D.C. Circuit. FERC Docket Nos. OR96-2, et al.Complainants/Protestants: All Shippers except Chevron (which is an intervenor)Defendant: SFPPSubject:Complaints against all SFPP rates; FERC Docket No. OR02-4Complainant/Protestant: ChevronDefendant: SFPP; Subject:Complaint against SFPP rates; dismissed and Chevron appeal pending at the D.C. Circuit; FERC Docket Nos. OR03-5, OR04-3, OR05-4 OR05-5Complainants/Protestants: BP WCP, ExxonMobil, ConocoPhillips, the Airlines (other shippers intervened)Defendant: SFPPSubject:Complaints against all SFPP rates; FERC Docket Nos. OR07-1 OR07-2Complainant/Protestant: TesoroDefendant: SFPPSubject:Complaints against North Line and West Line rates; held in abeyance; FERC Docket Nos. OR07-3 OR07-6Complainants/Protestants: BP WCP, Chevron, ConocoPhillips, ExxonMobil, Tesoro, and Valero MarketingDefendant: SFPPSubject:Complaints against 2005 and 2006 indexed rate increases; dismissed by FERC; appeal pending at D.C. Circuit; FERC Docket No. OR07-4Complainants/Protestants: BP WCP, Chevron, and ExxonMobilDefendants: SFPP, Kinder Morgan G.P., Inc., and KMISubject:Complaints against all SFPP rates; held in abeyanc |
| Regulatory Matters | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Regulatory Matters | |
| Regulatory Matters | 11.Regulatory Matters The following updates the disclosure in Note 17 to our audited financial statements that were filed with our 2008 Form 10-K, with respect to developments that occurred during the nine months ended September 30, 2009. Order on Rehearing and Clarification - Standards of Conduct for Transmission Providers Docket No. RM07-1-001 On October 15, 2009, the FERC issued Order No. 717-A, an order on rehearing and clarification regarding FERCs Affiliate Rule - Standards of Conduct.The FERC clarified a lengthy list of issues relating to: the applicability, the definition of transmission function and transmission function employees, the definition of marketing function and marketing function employees, the definition of transmission function information, independent functioning, transparency, training, and North American Energy Standards Board business practice standards.The FERC generally reaffirmed its determinations in Order No. 717, but granted rehearing on and clarified certain provisions.Order No. 717-A aims to make the Standards of Conduct clearer and to refocus the rules on the areas where there is the greatest potential for abuse.The Order addresses requests for rehearing and clarification of the following issues: (i) applicability of the Standards of Conduct to transmission owners with no marketing affiliate transactions; (ii) whether the Independent Functioning Rule applies to balancing authority employees; (iii) which activities of transmission function employees or marketing function employees are subject to the Independent Functioning Rule; (iv) whether local distribution companies making off-system sales on nonaffiliated pipelines are subject to the Standards of Conduct; (v) whether the Standards of Conduct apply to a pipelines sale of its own production; (vi) applicability of the Standards of Conduct to asset management agreements; (vii) whether incidental purchases to remain in balance or sales of unneeded gas supply subject the company to the Standards of Conduct; (viii) applicability of the No Conduit Rule to certain situations; and (ix) applicability of the Transparency Rule to certain situations.The rehearing and clarification granted are not anticipated to have a material impact on the operation of our interstate pipelines. Notice of Proposed Rulemaking Natural Gas Price Transparency- Docket No. RM08-2-000 On November 20, 2008, the FERC issued Order 720 establishing new reporting requirements for interstate and major non-interstate natural gas pipelines.Interstate pipelines are required to post no-notice activity at each receipt and delivery point three days after the day of gas flow.Major non-interstate pipelines are required to daily post design capacity, scheduled volumes and available capacity at each receipt or delivery point with a design capacity of 15,000 MMBtus of natural gas per day or greater.The final rule became effective January 27, 2009 for interstate pipelines.On January 15, 2009, the FERC issued an order granting an extension of time for major non-interstate pipelines to comply until 150 days following the issuance of an order addressing the pending requests for rehearing. On J |
| Recent Accounting Pronouncements | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Recent Accounting Pronouncements | |
| Recent Accounting Pronouncements | 12.Recent Accounting Pronouncements Securities and Exchange Commissions Final Rule on Oil and Gas Disclosure Requirements On December 31, 2008, the Securities and Exchange Commission issued its final rule Modernization of Oil and Gas Reporting, which revises the disclosures required by oil and gas companies.The SEC disclosure requirements for oil and gas companies have been updated to include expanded disclosure for oil and gas activities, and certain definitions have also been changed that will impact the determination of oil and gas reserve quantities.The provisions of this final rule are effective for registration statements filed on or after January 1, 2010, and for annual reports for fiscal years ending on or after December 31, 2009.We are currently reviewing the effects of this final rule. SFAS Nos. 166 and 167 On June 12, 2009, the FASB published SFAS No. 166, Accounting for Transfers of Financial Assetsan amendment of FASB Statement No. 140, and SFAS No. 167, Amendments to FASB Interpretation No. 46(R).These two Statements change the way entities account for securitizations and special-purpose entities, and both remain authoritative until such time that each is integrated into the Codification. SFAS No. 166 will require more information about transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets.SFAS No. 167 changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated.Both Statement Nos. 166 and 167 will be effective at the start of an entitys first fiscal year beginning after November 15, 2009 (January 1, 2010 for us).We do not expect the adoption of these Statements to have a material impact on our consolidated financial statements. Accounting Standards Updates In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value.This ASU amends the Fair Value Measurements and Disclosures Topic of the Codification to provide further guidance on how to measure the fair value of a liability.ASU No. 2009-05 is effective for the first reporting period beginning after issuance (September 30, 2009 for us), and the adoption of this ASU did not have a material impact on our consolidated financial statements. In September 2009, the FASB issued five separate Accounting Standards Updates (ASU 2009 07-11) that make technical corrections to the Codification and codify certain SEC Observer comments made in conjunction with previous accounting issues.None of the five Accounting Standards Updates change existing accounting requirements. |
| Document Information | |
| 9 Months Ended
Sep. 30, 2009 USD / shares | |
| Document Information [Line Items] | |
| Document Type | 10-Q |
| Document Period End Date | 2009-09-30 |
| Amendment Flag | false |
| Entity Information (USD $) | ||
| In Hundreds, except Share data | 9 Months Ended
Sep. 30, 2009 | Jun. 30, 2008
|
| Entity Information [Line Items] | ||
| Entity Registrant Name | KINDER MORGAN ENERGY PARTNERS L P | |
| Entity Central Index Key | 0000888228 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Well-known Seasoned Issuer | No | |
| Entity Voluntary Filers | No | |
| Entity Current Reporting Status | No | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Public Float | 90439815.4 | |
| Entity Common Stock, Shares Outstanding | 288,944,790 |
