Kinder Morgan CEO: In The Long Run You Have Expensive Offshore Facilities That Can't Make It To This Level Of Crude Price

Although the fall in crude prices impacted most of oil and energy infrastructure companies and MLPs, Kinder Morgan Inc KMI turned out to be an exception. Shares of the company are on a consistent uptrend since last year up more than 30 percent.

Richard Kinder, Kinder Morgan CEO, was on CNBC to discuss the sweet spot for oil prices and whether will increase pipelines in North East.

The Sweet Spot

Kinder was asked if like other industry veterans he also thinks $75 per barrel oil is ‘the sweet spot’. He replied, “Well that’s kind of the talk right now again and I think it depends a lot on what kind of efficiencies we are able to [re-mire] the system, but it’s a complicated scenario because it’s not just a matter of the U.S. onshore drilling that’s heavily influenced obviously by the shale plays and fracking.”

“But it’s a question of in the long run you have enormously expensive offshore facilities that can’t make it to this level of price, what that right level is I don’t know.”

The North East

On whether Kinder Morgan will increase its pipelines in the North East, Kinder said, “I think we will and the main problem here is it’s just ironic that the highest price for electricity and natural gas in the U.S. is in New England and just a few 100 miles away you got gas desperate to get out of the [marcrellus…] selling at a huge discount and there needs to be a connectivity between the two.”

He continued, “All of the pipes that run there now, including our own Tennessee system are completely full in the winter time. All that capacity spoken for by the LDC, so, if we are going to continue to try to drive price down and to have adequate supply to replace all the [cold] plants and the nuclear plant that’s being mothballed, we have got to have more natural gas.