The Terminals segment is on track to exceed its published annual budget of 21 percent annual growth due to the recent American Petroleum Tankers (APT) acquisition.

“Approximately 70 percent of the growth in this segment versus the first quarter of 2013 was organic, with the remaining 30 percent coming primarily from the APT transaction which closed in January,” Kinder said.

“The increase in earnings was driven by incremental earnings from various expansions coming online (including the Edmonton Terminal, BP Whiting, BOSTCO, International Marine Terminal and additional liquids tankage at Galena Park).

Strong performance by our Gulf Coast liquids terminals, improved petcoke results due to refineries coming out of turnaround and stronger volumes, and our recent acquisition of APT also contributed nicely to first quarter earnings.”

Export coal tonnage declined significantly and domestic coal volumes remained weak compared to the first quarter last year. However, there was little impact on segment earnings because of the long-term minimum tonnage commitments the company has with many of its customers.

For the first quarter, Terminals handled 16.5 million barrels of ethanol, up from 15.2 million barrels for the same period last year. Combined, the terminals and products pipelines business segments handled 26.2 million barrels of ethanol, up 10 percent from 23.9 million barrels for the first quarter of 2013. KMP continues to handle approximately 30 percent of the ethanol used in the United States.

Terminals

Battleground Oil Specialty Terminal Company (BOSTCO): The 185-acre terminal project located on the Houston Ship Channel is continuing to progress toward completion, with 45 of the 51 storage tanks being constructed in phase one now in service.

The remaining tanks will come online during the first half of 2014. Phase two construction continues and involves building an additional 900,000 barrels of storage capacity, which is expected to begin service in the third quarter of 2014. The approximately $520 million BOSTCO terminal is fully subscribed for a total capacity of 7.1 million barrels and is able to handle ultra-low sulfur diesel, residual fuels and other black oil terminal services. KMP owns 55 percent of and operates BOSTCO.

Edmonton Terminal: KMP brought three additional tanks online at its Canadian terminal in the first quarter of 2014, marking the completion of the facility’s phase one expansion which added nine tanks and 3.4 million barrels of capacity in total. Construction continues on phase two, which will add an incremental 1.2 million barrels of storage capacity and is expected to be completed by late 2014. The approximately $427 million project is supported by long-term contracts with major producers and refiners.

Kinder Morgan Partners has started site work on the 42-acre site along the Houston Ship Channel for construction of a new ship dock to handle ocean going vessels and 1.5 million barrels of liquids storage tanks. The approximately $172 million project is supported by a long-term contract with a major ship channel refiner to construct the tanks and add connectivity to KMP’s Galena Park terminal and to the refiner’s location. Tank construction is scheduled to begin in the second quarter of 2014 and the project is expected to be in service in the second quarter of 2016.

The previously announced $65 million phase three expansion of the International Marine Terminal in Louisiana and the $29 million expansion of the Pier IX Terminal in Virginia were both completed and placed into service in the first quarter of 2014. The combined 6.5 million ton increase in coal export capacity is fully subscribed and supported by long-term take or pay agreements.

In January, KMP completed its acquisition of American Petroleum Tankers (APT) and State Class Tankers (SCT) for $960 million in cash. The transaction was immediately accretive to cash available to KMP unitholders. The vessels are engaged in the marine transportation of crude oil, condensate and refined products in the United States’ domestic trade, commonly referred to as the Jones Act trade. KMP purchased five operating vessels and will invest an additional $214 million to complete funding for the construction of four new Jones Act-qualified vessels, which will be delivered between November 2015 and October 2016.