Kinder Morgan

Kinder Morgan (KMI) has signed a definitive agreement worth $568m with Philly Tankers to take assignment of contracts for the construction of four, new 50,000dwt, Tier II tankers.

The agreement also proposes the construction of vessels at the Aker Philadelphia Shipyard in Philadelphia, Pennsylvania.

Kinder Morgan Terminals president John Schlosser said: "There continues to be strong demand for domestic waterborne transportation to move petroleum products and crude oil, and our fleet of highly efficient tankers will provide stable, fee-based cash flow to KMI shareholders for many years to come through multi-year contracts.

"This latest transaction clearly underscores Kinder Morgan’s commitment to marine transportation of crude oil, condensate and refined products in the US domestic trade."

With a capacity of 337,000 barrels, the new LNG-conversion-ready tankers aim to provide Kinder Morgan with cargo flexibility, improved fuel efficiency along with latest environmental protection features, including a Ballast Water Treatment System.

Expected to be delivered between November 2016 and November 2017, the new additions will expand Kinder Morgan’s Jones Act tanker fleet to 16 ships.

The first two vessels are under long-term contract to a creditworthy oil company.

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Currently, the company has seven product tankers on the water and five tankers in various stages of design and construction at the Nassco shipyard in San Diego.

Equipped with conversion-capable, dual-fuel-capable engines, the tankers will be able to accommodate a future installation of an LNG fuel-gas system and type-C LNG tanks.

These vessels are scheduled for delivery between late 2015 and mid-2017.

Image: The new additions will expand Kinder Morgan’s Jones Act tanker fleet to 16 ships. Photo: courtesy of Kinder Morgan.