Kinder Morgan Energy Partners (NYSE: KMP) is a premier publicly traded pipeline limited partnership in North America with approximately 28,000 miles of pipelines, 180 terminals and an enterprise value of over $29 billion. KMP returned 45 percent to its limited partners in 2009 and has delivered a compound annual return of 27 percent since KMP was founded in early 1997.

Our large, diversified footprint of unmatched assets operates like a giant toll road and we have minimal exposure to commodity prices. We primarily receive fees for transporting, storing and handling various energy products such as natural gas, refined petroleum products, crude oil, ethanol, biodiesel, coal, petroleum coke and CO2. Our customers include producers, shippers, oil companies, utilities and more.

In the United States, KMP is the largest independent transporter of petroleum products, the second largest transporter of natural gas, the largest provider of contracted natural gas treating services, the largest transporter of CO2 and the largest independent terminal operator. We are also the second largest oil producer in Texas and the only oilsands pipeline serving Vancouver, British Columbia, and Washington state.

Business Segments

In 2009, all five of KMP’s business segments outperformed their 2008 results, producing a total of $2.96 billion in segment earnings before DD&A. For 2010, we expect to generate approximately $3.36 billion in total segment earnings before DD&A.

Products Pipelines produced 2009 segment earnings before DD&A and certain items of $635.1 million, up 11 percent from 2008. Highlights included beginning commercial transportation of biodiesel on our Plantation and Oregon pipelines, constructing a new tank farm facility for the military at Miramar, Calif., constructing new storage tanks and related facilities for both ethanol and petroleum products at company terminals in California and Florida, modifying our Southeast Terminals to provide automated ethanol blending services, and acquiring the jet fuel pipeline that serves the Portland International Airport in Oregon. While the increasing use of ethanol tends to reduce pipeline transport volumes in this segment, our investments in ethanol storage and blending infrastructure at various facilities have produced new revenues and cash flow to offset that decline.

For 2010, the Products Pipelines budget projects $698.6 million in segment earnings before DD&A, which would be a 10 percent increase over 2009. Growth in this segment will be driven by expansions and identified terminal acquisitions. In 2010, Products Pipelines expects to invest approximately $103 million in expansion capital projects to further grow this segment. Projects include building new tanks to increase refined petroleum products storage capacity, primarily in California, and additional ethanol related investments system wide. We also plan to pursue and conclude potential terminal acquisitions as the major oil companies continue to divest certain assets. Finally, we continue to assess additional capital investments and shipper support for transporting more biofuels on our pipelines.

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