Kinder Morgan KMI has temporarily shut down two crucial fuel pipelines in Los Angeles due to power outages caused by the region’s most destructive wildfires in history, per a Reuters report. The SFPP West and CALNEV pipelines, which collectively span over 1,080 miles, ceased operations on Jan. 8.
Wildfires Disrupt Kinder Morgan's LA Operations
The SFPP West pipeline, extending 515 miles, supplies fuel from the Los Angeles Basin to Colton, Imperial, CA, and Phoenix, AZ. Meanwhile, the 566-mile CALNEV pipeline delivers gasoline, diesel and jet fuel from Colton to Barstow, CA, and Las Vegas, NV. Despite being unaffected by the flames, the pipelines have remained idle due to widespread power outages in the region.
Kinder Morgan stated that the pipelines would resume operations once power is restored. However, the outage has raised concerns about potential supply-chain disruptions. A West Coast fuel trader emphasized the significance of the pipelines, highlighting their role in transporting fuel to key regions like Phoenix, Las Vegas and San Diego.
Impact of KMI's Pipeline Shutdowns on Fuel Supply
California refineries reportedly held 5.2 million barrels of CARB gasoline in stockpiles as of Jan. 3, according to the California Energy Commission. This inventory could help mitigate immediate supply concerns, although a trader cautioned that recovery depends on existing inventory levels.
So far, no refinery outages have been reported in California due to the wildfires. However, more than 300,000 customers across the state were without power as of Thursday, according to utility Southern California Edison.
The shutdown highlights the vulnerability of critical energy infrastructure to natural disasters, particularly in regions prone to wildfires. As Los Angeles battles uncontained flames, the resumption of Kinder Morgan's pipelines will depend on the restoration of power and a stable operating environment.
For now, the energy supply chain and fuel traders remain watchful, hoping for a swift resolution to the outages and minimal long-term disruptions.
KMI’s Zacks Rank & Key Picks
Kinder Morgan currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Sunoco LP SUN, TechnipFMC plc FTI and Oceaneering International, Inc. OII. While Sunoco presently sports a Zacks Rank #1 (Strong Buy), TechnipFMC and Oceaneering carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. Sunoco is poised to benefit from the strategic acquisitions aimed at diversifying its business portfolio.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. It focuses on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.
Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. With a geographically diverse asset portfolio and a balanced revenue mix between domestic and international operations, the company effectively mitigates risk. As a leading provider of offshore equipment and technology solutions to the energy sector, OII benefits from strong relationships with top-tier customers, ensuring revenue visibility and business stability.
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