Kinder Morgan, Energy Transfer and Williams could benefit from cheap natural gas
U.S. natural gas prices are down about 24% this year while the amount in storage sits slightly above the five-year average. Midstream operators can benefit from higher throughput because much of their revenue comes from fees tied to transporting and processing gas. Kinder Morgan, Energy Transfer and Williams are the three pipeline operators highlighted for their scale, networks and exposure to natural gas demand. Cheap natural gas is pressuring drillers, but the pipeline operators that process and transport the gas are making a killing. When natural gas prices are depressed and supply is overflowing, the physical volume of gas moving through the country’s pipelines will respond to satisfy the surging power demands of industrial hubs and, increasingly, artificial intelligence data centers. This puts midstream infrastructure giants like Kinder Morgan , Energy Transfer LP and Williams Companies in a sweet spot. Natural gas prices have collapsed almost 28% year-to-date, with about 15% decline this week alone. The November contract was down 5.2% Friday, to $2.65 per million British thermal units. For most commodities, one would suspect that lower prices would result in less production. But about 37% of the U.S. gas pulled from the ground in 2024 was an unavoidable byproduct of rigs drilling in the nation’s five major oil producing regions, according to the Energy Information Administration . As this year’s higher crude oil prices made drilling more lucrative, the associated volumes of gas coming to market have also risen, regardless of the commodity’s price or demand. Unseasonably mild weather has added to the glut and pushed natural gas stockpiles above the historical five-year average of 3,609 billion cubic feet, the EIA said Thursday. Natural gas in storage rose by 77 Bcf in the week ended Oct. 16 from the prior week, to 3,644 Bcf. Yet, the glut is moving through a largely fixed network. Interstate pipeline construction has been effectively choked off by aggressive regulatory litigation and environmental gridlock, which means existing infrastructure operates as a collection of high-barrier, government-sanctioned monopolies over the nation’s energy flows. The supply and demand mismatch allows midstream operators to translate super-high throughput into secure, fee-based cash flow and dividend distributions. Kinder Morgan The premier beneficiary of this dynamic is Kinder Morgan, which physically moves about 40% of all natural gas consumed in the United States. Kinder Morgan operates a dominant, interconnected web of steel pipelines that links oversupplied shale basins directly to major demand centers and Gulf Coast export complexes. On Wednesday, Kinder Morgan reported record third-quarter adjusted earnings of 35 cents per share, up 21% year over year. For all of 2026, Kinder Morgan said it expects adjusted EPS of $1.36. Kinder also said it would invest $4.7 billion in two natural gas pipeline projects, bringing its backlog to $14.4 billion, with the vast majority — a record $13.2 billion — targeted to natural gas projects. “We continue to see significant, incremental project opportunities across our natural gas pipeline network driven primarily by power and LNG, and we will continue to pursue them aggressively,” Dax Sanders, Kinder’s president, said on the earnings conference call Wednesday. Through Thursday’s close, Kinder Morgan stock is ahead more than 23% year to date. Several Wall Street firms increased price targets on the stock in the wake of the results. KMI 3M mountain Kinder Morgan stock over the last three months Energy Transfer Operating right alongside Kinder Morgan is Energy Transfer , which leverages 140,000 miles of gas, oil, and product pipelines that connect major U.S. production basins to key domestic utilities and international transport hubs, generating cash flows that are insulated from commodity fluctuations. Its stock is up more than 20% year to date. Energy Transfer offers a uniquely attractive total return profile by combining a market leading 6.5% distribution yield with an aggressive consolidation strategy. Ninety percent of the company’s business is entirely fee based . Energy Transfer trades at a substantial discount to its peers due to higher leverage and its complex structure. As a master limited partnership, Energy Transfer has the liquidity of a regular stock and the tax benefits of a private partnership. An MLP pays no corporate income tax. Instead, the majority of its cash flow is distributed to investors, who are responsible for the tax. ET’E 3M mountain Energy Transfer stock over the last three months Williams Cos. Rounding out this elite tier is Williams, whose irreplaceable Transco pipeline system serves as the primary artery feeding the booming, high-demand data center alleys in Virginia and the southeastern U.S. As tech giants build out gas-fired generation to power their massive AI clusters, they are heavily dependent on the Transco. Williams stock is up more than 17% year to date. By capturing predictable fees on a massive, permanent baseline of cheap American energy, these three midstream powerhouses represent a high-quality structural play for investors. WMB 3M mountain Williams stock over the past three months THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. 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