Welcome to the quarterly earnings conference call. All lines will stay in listen-only mode until the question-and-answer session. This call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Mr. Richard Kinder , the Vice Chairman of Kinder Morgan. Sir, take it away.
Okay. Thank you, Kim. Before we begin, as usual, I'd like to remind you that today's earnings releases by KMI and KML, and this call includes forward-looking and financial outlook statements within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Exchange Act of 1934, and applicable Canadian provincial and territorial securities laws, as well as certain Non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking and financial outlook statements and use of Non-GAAP financial measures set forth at the end of KMI's and KML's earnings releases. To review our latest filings with the SEC and Canadian provincial and territorial securities commissions for a list of important material assumptions, expectations, and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking and financial outlook statements.
Before turning the call over to Steve and the team, let me make a few quick remarks. As you can see from our excellent 2018 results and our 2019 budget overview already released, the assets at KMI are generating strong and growing cash flow. This is obviously a very good thing, but the question is how to deploy that cash in the most effective way to benefit our shareholders. On that question, we get lots of suggestions from analysts and investors. As we have said so frequently, we can use the cash for four different purposes, to pay it out as dividends, to buy back shares, to pay down debt, and to reinvest in capital projects. Over the past three years, we have used our cash for all of those purposes in varying degrees.
We paid off over $8 billion of debt and reduced our debt-to-EBITDA ratio to our targeted 4.5 level and have had our credit rating upgraded by both S&P and Moody's. We've raised the dividend from $0.50 in 2017 to $0.80 in 2018 and reiterated our intention to increase it to $1 in 2019 and to $1.25 in 2020. We have bought back over $500 million worth of shares, and we have funded our growth capital without needing to access external sources. Now, in my view, that's a pretty positive story. You can quibble about how the money gets allocated, but I believe investors should appreciate the overall flexibility that this strong cash flow provides. We will continue to use our cash flow in a disciplined way that most benefits our shareholders.
As we have said so many times, the management and board of KMI are significant shareholders, and our interests are very vested with the rest of the shareholder base. Steve?
Yeah. Thanks, Rich. As usual, we'll be updating you on both KMI and KML. I'm going to start with a high-level overview and then turn over to our President, Kim Dang, to give you an update on our segment performance. David Michels, KMI CFO, will take you through the numbers. Jack Sanders will update you on KML, and we'll take your questions on both companies. The fourth quarter capped a transformative year for KMI as we grew our business, strengthened our balance sheet, increased our dividend, and continued to find attractive new opportunities to expand our network. We experienced outstanding performance in our natural gas segment, our largest segment, where we saw significant year-over-year growth.
We brought expansion projects online and added new project opportunities to the backlog, highlighted by our Permian Highway Pipeline project, which we FID'd earlier in the year, and which brings an additional two Bcf a day from the Permian Basin to our extensive and cost-based pipeline network on the U.S. Gulf Coast. Gas projects like our Gulf Coast Express project are secured by long-term contracts. We experienced a record increase in natural gas supply and demand across the country. 2019 is projected to be another solid year of growth for U.S. natural gas. That growth drives the value of our existing network to create opportunities for us to invest capital and attractive returns to expand that network. Kim will take you through our results. We made tremendous progress during 2018 in strengthening our balance sheet.
We self-funded our expansion capital expenditures as we have since the latter part of 2015. We also sold our Trans Mountain pipeline and the Trans Mountain expansion project for CAD 4.5 billion. That transaction allowed us to return substantial value to our KML and KMI shareholders while enabling the strengthening of our balance sheet and the de-risking of both entities. In large measure, as a result of that transaction, we were able to end the year with our debt-to-EBITDA multiple at 4.5 times, handily beating our goal of 5.1 times, which is what was assumed in the 2018 plan. We had a very good 2018, as we showed in our 2019 guidance release, we're expecting good year-over-year growth in 2019 as well. We will be focused on our 2018 results in today's call.
The timing of this call, as always, comes right before we do our investor day. We'll have that next week, and we'll go into the details on 2019 at that time. With that, I'll turn it over to Kim.
Okay. Thanks, Steve. Well, natural gas had another outstanding quarter. It was up 8%. Market fundamentals there remained very strong. For the full year, natural gas demand increased from approximately 81 Bcf a day to approximately 90 Bcf a day, a 9 Bcf a day or 11% increase. This is driving nice results in our large diameter pipes. For the fourth quarter, transport volumes increased approximately 4.5 Bcf a day on our transmission system, a 15% growth. Deliveries to LNG facilities were over a Bcf in the quarter. That's approximately a 400 million cubic feet a day increase versus the fourth quarter of 2017. Power demand on our system for the quarter was up 390 cubic feet a day, and exports to Mexico and Kinder Morgan pipelines were up a little over 70 million cubic feet per day.
Overall, as Steve said, the higher utilization of our system, a lot of which came without the need to spend capital, resulted in nice bottom-line growth in the quarter and longer term will drive expansion opportunities. On the supply side, we're also seeing nice volume growth. On our gas and crude gathering systems, volumes were up 21% and 13% respectively, driven by higher production in the Haynesville, the Bakken, and the Eagle Ford. In the Haynesville, our volumes more than doubled in the quarter and now are just slightly over a Bcf a day. A few updates on the large projects. On PHP, we have identified an opportunity to increase the capacity by about 100 million cubic feet a day and are currently working to sell that capacity. On GCX, we've secured 100% of the right of way.
Construction is underway, and we remain on target for an October 2019 in-service. On our Elba liquefaction project, we currently anticipate that we will be in service at the end of the first quarter. Force majeure has continued to be of a delay, but fortunately, we do not expect the delay to have a material impact on our costs given the way our construction and commercial contracts are structured. In our product segment, we benefited from increased contributions from Ocean, Utopia, and Double H, offset somewhat by lower contributions from KMPC due to lower contract rates on that front. Refined volumes were up 1%, which is consistent with the EIA. Crude and condensate volumes were up 2%, and that's due to increased volumes on our pipelines in the Eagle Ford.
There in the Eagle Ford, as I said on KMP, the impact of those incremental volumes was more than offset by the lower pricing and higher volumes in the Bakken, where volumes were up 38%. NGL volumes were down 11% due to unattractive product differentials. The lower volumes here have minimal financial impact given the nature of our contracts. Our terminal business was down 5% in the quarter. The primary driver is a lease payment from Edmonton South to Trans Mountain, that prior to the sale of Trans Mountain, was eliminated as an intercompany transaction. Excluding the lease payment, the terminal segment would have been down less than 2%. Our liquid business, which accounts for approximately 80% of the segment, was essentially flat, with expansions in Houston and Alberta offsetting weakness in the Northeast.
Our bulk business was down due to certain asset divestitures and lower contributions from coal, primarily due to a customer contract expiration, that's despite higher coal volumes. Our bulk tonnage was up 10% in the quarter, with the largest driver being coal volumes. Coal volumes were up almost a million tons. Liquid utilization was essentially flat in the quarter. CO2 segment benefited from higher CO2 prices, but that benefit was offset by lower average crude oil price and lower NGL volumes. Net crude oil production was flat versus the fourth quarter of 2017, with increased volumes at Tacker largely offset by reduced volumes at our smaller fields. Tacker volumes were up 5% versus last year. They were 8% above our plan as we continue to find ways to access the significant remaining oil in place in that field.
Tall Cotton volumes were up 26% versus last year, but below budget, NGL volumes were down 7% in the quarter due to a plant outage, but that has since been remedied. Net realized crude oil price was down 6% in the quarter, that's despite a higher WTI price. The WTI hedges we have in place, as well as the increase in the Midland-Cushing differential, offset the increase in the WTI price. For 2019, as we've told you previously, we've substantially hedged the Midland-Cushing differential. That's the update on the segments, with that, I'll turn it over to David Michael.
Thanks, Kim. Today, we're declaring a dividend of $0.20 per share, which rounds out our $0.80 per share dividend declared for the full year 2018. That's consistent with our 2018 budget and the plan that we announced to shareholders in July 2017. It also represents a 50% increase over the $0.50 per share we declared for 2017. We also generated distributable cash flow of 2.65 times our declared dividend for the year. KMI had a very good quarter to cap off a very strong year. We grew meaningfully from last year's fourth quarter and ended the full year nicely above plan and nicely above 2017.
In addition, as Steve mentioned, we significantly strengthened our balance sheet during the full year, that strengthening helped us result in credit rating updates by both Moody's and S&P to mid-BBB, meeting the risk hedge and credit measures. Our revenues were up $149 million or 4% from the fourth quarter of 2017, operating costs were down $101 million or 18%. There were some certain items both this quarter and in the fourth quarter of 2017 that create a little comparability noise. As a reminder, we define certain items as items that are recorded under GAAP that are non-cash or occur sporadically, and which we believe are not representative of our business's ongoing cash-generating capability. Excluding current items, operating income would be up $35 million or 3% from the fourth quarter of 2017.
Net income available to common stockholders for the quarter was $483 million, or $0.21 per share, which is an increase of $1.528 billion and $0.68 per share versus the fourth quarter of 2017, a 146% increase. This very large change was driven by a reduction in our deferred tax asset taken as a certain item during the fourth quarter of 2017 as a result of the federal tax rate cut. That's a good example of a certain item that can make it difficult to compare our business's operating performance period over period. Looking at earnings adjusted for all certain items, this quarter, we generated $565 million of adjusted earnings versus $469 million in the fourth quarter of last year. That's a $96 million improvement, or a 20% better quarter-over-quarter.
Adjusted earnings per share is $0.25, which is $0.04 or 19% higher than the fourth quarter of 2017. Moving on to distributable cash flow. DCF per share is $0.56 for the quarter, up $0.03 or 6% from the fourth quarter of 2017. The natural gas segment was the largest driver of that growth. The natural gas segment was up $83 million or 80%, and the benefit of a multiple fronts, as Kim mentioned. EPG and NGPL were both up, driven primarily by volume and supply growth. KinderHawk and South Texas assets were up, driven by increased volumes from Haynesville and Bossier. TGP was also up due to growing DJ Basin production. Those are partially offset by lower commodity prices impacting our Hiland assets and lower contribution from GLNG due to an arbitration ruling calling for a contract termination. Product segment was up $3 million.
Terminals were down $15 million, and CO2 was down $12 million. Kim covered the main drivers behind the changes in those segments. FMC was down. Kinder Morgan Canada was down $50 million or 100%. That's due to the Trans Mountain sale, which closed in August. G&A, our general administrative expenses, were lower by $66 million, driven by a greater amount of overhead capitalized due to a greater amount of spending on growth projects, non-recurring expenses we incurred during the fourth quarter of 2017, and lower G&A from the sale of Trans Mountain. Interest expense was $6 million higher, driven by higher short-term interest rates, which more than offset the benefit we received from having a lower debt balance, as well as interest income earned on the Trans Mountain sale proceeds. Preferred stock dividends were down in the quarter due to the conversion of our mandatory convertible securities occurred in October.
Cash taxes were lower by $1 million, driven by higher state tax refunds. Maintaining capital was $10 million higher versus 2017 for the natural gas product segment, which is partially offset by lower sustained capital for the sale of Trans Mountain. That was consistent with what we had budgeted. We had budgeted sustaining capital for 2018 to be higher than 2017. Our ending year, relatively close to plan except for the Trans Mountain sale. Total DCF of $1.273 billion is up $83 million or 7%, driven by greater contribution from natural gas, lower G&A expenses, and lower preferred stock dividends, partially offset by the sale of Trans Mountain and higher sustained CapEx. DCF per share is $0.56 per share, up $0.03 or 6%. Same drivers in DCF, but with the partial impact on the incremental shares from the conversion of our preferred stock.
For the full year 2018 versus 2017, DCF was up $248 million or 6%. DCF per share was $2.12 per share or $0.12 and 6% above 2017. Very good full year performance. For the full year relative to budget, DCF of $4.730 billion is up $153 million or 4% on our budget for the year. Our DCF per share of $2.12 is up $0.07 on our budget of $2.05 or 3% higher. Very nice performance for the full year versus plan as well, especially considering the sale of Trans Mountain, and had budgeted Elba liquefaction of 10 shows during 2018. Turning to the balance sheet, just like last quarter, you're going to see two net debt to EBITDA figures. The 4.4 times includes all of the Trans Mountain sale proceeds, as we consolidated all of that cash from KML's balance sheet onto KMI.
Including the cash that was paid to KML public shareholders on January 3rd, which is estimated at the end of the year, $890 million, our adjusted net debt to EBITDA was 4.5 times, which is the second number. That 4.5 is a little bit better than last quarter of 4.6, is much improved from year-end 2017 at 5.1, as well as the 5.1 we budgeted for this year at the beginning. Obviously, Trans Mountain sale was the largest driver of that improvement. Those fees have now been distributed to both KMI and to the public KML holders. We used a portion of our share to pay down a little more than $400 million that we had on our revolver, we used most of the remainder to fund a $1.3 billion bond maturity that's coming up here in February.
Two largest changes on the balance sheet to note here are from year-end, are cash and PP&E, both of those are largely driven by the Trans Mountain sale. Debt ended the quarter at $34.2 billion, which is a decrease of $2.5 billion from year-end an increase of $400 million from last quarter. I'll reconcile those here for you. Quarter change, we had $1.27 billion in DCF. We've got $586 million in gross CapEx and contributions in our joint ventures. Dividends of $455 million. We repurchased $0.3 million of shares, we had a working capital source of $184 million, which is largely driven by tax refunds received. Approximately $400 million in cash from the quarter. For the full year, there's $2.5 billion lower debt driven by $4.7 billion of our DCF. Gross CapEx and JV contributions of $2.57 billion. $1.6 billion in dividends.
$273 million of share repurchases. The asset sale proceeds associated with Trans Mountain, $3.4 billion. Less the KML public shareholders' portion of those proceeds, $819 million. We had a working capital use of $300 million, which was largely driven by our refund payment frame here. That reconciles your $2.5 billion lower debt. With that, I'll turn it back to Steve.
Okay. Now we're going to turn to KML, and Pat Sande will give you the update.
Thanks, Steve. Before I get into the results, I do want to update you on a few general items. First, as the release mentioned, we made the promised return of capital distribution associated with the Trans Mountain sale on January 3rd. More specifically, we distributed almost $1.2 billion to KML's restricted voting shareholders for approximately $11.47 a share. We also completed the 3-for-1 reverse stock split that was approved at the shareholders meeting last November. With respect to the sale of Trans Mountain, you will recall that the agreement calls for a customary final working capital adjustment. We are substantially through that process and have reviewed the calculation with the Government of Canada and believe that the final adjustment will result in us making the final cash payment back to the government of approximately $35 million in the first quarter. As such, we have booked this amount.
This adjustment should not be viewed as a lowering of the purchase price or an otherwise change to the economics of the deal. Rather, it simply reflects that at closing, we delivered less cash to the government than was contemplated. Consequently, as I will walk you through in a minute, this will not have an impact on the previously communicated net cash and net debt position of KML. Moving to the business side, this is the first quarter where Base Line was essentially in service for the entire quarter and it contributed nicely to the quarter's results. As of the end of the year, we had spent approximately $348 million of our share, with just over $8 million remaining of the total project spend for our share of $357 million.
The $357 million compares to the original estimate of $398 million. As I mentioned previously, it is a result of cost savings on the project. Finally, a topic that I know is on everybody's mind is KML's ongoing strategic review. While we don't have anything to announce as the review is ongoing, we are hopeful that we will have the review completed and a direction to announce on the next earnings call. While this review is taking some time, the time we are taking is necessary given the range of options, the cross-border complexity, the fact that a strategic combination or sale of the company are among the options, and the evaluation of those options require third-party price and term discovery, and that process takes time. Now moving towards the results.
Of note, as I talk to the results, I'm generally only going to reference results from continuing operations, as we believe those are much more useful and relevant. Today, the KML board declared a dividend for the fourth quarter of 0.1625 per split-adjusted restricted voting share or $0.65 annualized, which is consistent with previous guidance. Earnings per restricted voting share from continuing operations for the fourth quarter of 2018 are $0.30. That is derived from approximately $40 million of income from continuing operations, which is up approximately $22 million versus the same quarter in 2017. The biggest contributors to the increase were strong revenue associated with the Base Line Tap and Terminal coming online and interest income associated with the proceeds from the Trans Mountain sale. I do want to offer one comment on the almost $28 million loss in discontinued operations.
That is due almost entirely to the $35 million payment on Trans Mountain that I mentioned. Adjusted earnings from continuing operations with current items were approximately $43 million compared to approximately $18 million for the same quarter in 2017. Total DCF from continuing operations for the quarter is $62.9 million, which is up $28.7 million from the comparable period in 2017. That provides coverage of approximately $13 million and reflects a DCF payout ratio of approximately 31%, which is obviously somewhat skewed from the interest income. Looking at the components of the DCF variance, segment EBITDA before certain items was up $10.9 million compared to Q4 2017, with the pipeline segment up approximately $6.1 million and the terminal segment up approximately $3.8 million. The pipeline segment was higher primarily due to the recognition of deficiency revenue on Cochin and the non-recurrence of an in-line inspection done in 2017, Q4 2017.
The terminal segment was higher due primarily to Base Line coming online as the asset was not in service in 2017 and higher contract renewal rates at the North Forty. Partially offset with the expiration of a contract on the Imperial JV and the one-time nature of a capital true-up via the same asset in 2017. G&A is essentially flat. Interest is favorable by approximately $24.7 million due to the interest on the Trans Mountain proceeds and lower interest expense. The cash tax line item was essentially flat. Deferred dividends are up $2.6 million given Q4 2018 had both tranches outstanding for the full quarter as opposed to the prior. Sustaining capital was unfavorable approximately $3.6 million compared to Q4 2017 due to timing on some work on both Ocean and within the terminal center.
Looking forward to 2019, as with last year, I'll walk you through the details of KML's budget at the analyst conference next week. With that, I'll move on to the balance sheet compared year-end 2017 to 12/31/2018, and my comments will focus only on the line items related to the retained assets and not the assets or liabilities on the sale. Cash increased approximately $4.227 billion to $4.338 billion. As I mentioned last quarter, there's a lot of moving pieces in the change associated with Trans Mountain TM and the CapEx center that has the government, the government credit facility, and other purchase price adjustments. I'm not going to take you through all that on this call, but if you want more details, feel free to give us a call.
Generally, the increase is the proceeds received from Trans Mountain, plus DCF generated less sustaining capital, less distributions paid net of the gross, and less the payoff to debt to cash when we received the sale proceeds. More importantly, let me take you through the pro forma reconciliation of what that year-end cash balance looks like, taking into account the immediate uses of Trans Mountain proceeds following year-end. Starting with the $4.338 billion in cash, approximately $3.977 billion was paid out as a special distribution on January 3rd. That's the sum of the $1.195 billion distribution payable to restricted voting shareholders and the $2.782 billion distribution payable to KMI, both shown on the balance sheet. Next, approximately $308 million of cash taxes from the gain on the sale will be paid in Q1. Finally, you deduct a $35 million final tax adjustment for Canada that I mentioned.
Netting all those items leaves you with a net tax position of obviously no net of approximately $18 million. This is consistent with the comments we previously made about KMI having little or no net debt after taking into account all the moving pieces associated with Trans Mountain sale and associated distributions. Other current assets increased approximately $2 million due to an increase in AR associated with Base Line coming online, transition services agreement selling to Trans Mountain, and interest receivable from interest on the Trans Mountain proceeds. Net PP&E decreased by $7 million as a result of depreciation in excess of net assets placed in service. Deferred charges and other assets decreased approximately $63 million as a result of the write-off of the unamortized debt issuance cost associated with the Trans Mountain facility that we canceled. Moving on to the right-hand side of the balance sheet.
As I mentioned, distributions payable and distributions payable to related parties increased from zero to $1.2 billion and $2.8 billion respectively, as we reflected the special distribution. Other current liabilities increased $237 million primarily due to taxes payable in the Trans Mountain sale. Other long-term liabilities decreased by $283 million primarily as a result of the deferred tax liability released as a result of the gain on the Trans Mountain sale. With that, I'll turn it back to Steve.
Okay, thanks, Pat. We want to take a moment to honor our late General Counsel, Kurt Hoffert, who passed away on December 28th while skiing with his family. In addition to being a fine lawyer, Kurt was a fine human being with deep personal connections with the people he worked with. We lost a trusted colleague, but many at Kinder Morgan also lost a friend and a mentor. Kurt loved his work, and his spirit shone through in it. We will miss him. With that, if you will come back on, we will take questions. Like we did last time, as a courtesy to everyone who has questions, we ask that you hold yourself to one question and one follow-up. If you have more questions, we will get to them. You just get back in the queue, and we will take you up in due course. Okay. Thank you.
Thank you. At this time, if you would like to ask a question, please press star one. Please record your name when prompted. If you would like to withdraw your question, you may press star two. To ask a question, please press star one. We will limit you to just the first question. Our first question comes from Jeremy Tonet with J.P. Morgan.
Good afternoon.
Good afternoon.
Thanks.
Just want to start off here on the CO2 segment and taking account of some of the volatility we've seen in commodity prices here. I was just wondering how much of the $5.7 billion of capital in the backlog relates to the CO2 segment? Does commodity price environment kind of impact that to pace or how you think about that spend given this volatility?
Yeah. In the CO2 segment, we've got about $1.6 billion of backlog, we'll go through this in more detail in the conference. Yeah, in CO2 and also in our gathering and processing business, we look at CapEx on an ongoing basis. We take into account commodity prices and obviously the breakeven economics with the return for the projects that we look at. We typically will have in some outs in both of those segments. Obviously, if commodity prices are lower, they could be out. The main topic there is Tall Cotton. We will continue to evaluate Tall Cotton and whether we make substantial additional adjustments in there as the year goes on.
That's helpful. Thanks. Just want to touch on SG&A. It's just down 40%, $67 million year-over-year. It seems like a big sit down, that just seems like some of that's related to gross tax capitalization there. I was just wondering if you could provide a little bit more color on that, is this kind of a new run rate or is the run rate ticking lower? Any more color you could provide would be helpful. Thanks.
That's right. A good bit of it does relate to capitalization. Jay, did you want to go through them?
About half of it is capitalization and we had greater capital on top of reasonable capital spend in the year of about $300 million relative to the prior year. You put a reasonable capitalization rate on that, and it gets you around $30 million of greater capitalized G&A costs. A lot of that was driven by GCX, which is a pretty major project, and Elba liquefaction spend. Just a couple of major projects that we were spending on there as well as all of our ongoing projects. A big chunk of that also was one-time G&A costs that we had in 2017, as it was really as a result of an internal policy change, which allowed more paid time off to be carried over to the subsequent year.
Of course, we had lower G&A costs in 2018 as a result of the transition out of there.
1.2 is kind of more of a real run rate G&A going forward, the way to think about it?
Well, depending on the level of capital spend for us to evaluate going forward.
We'll show you our G&A budget for 2019 at the conference next week.
Got you. Just a quick first question, just to confirm you're okay. 1.2 CO2 is over 5.7. That's the right way to think about that for the backlog?
Almost all of the remainder is in natural gas.
That's very helpful. Thank you.
Thank you. Next, we go to Colton Cuddy with Tudor, Pickering, Holt & Co.
Good afternoon.
Afternoon. You mentioned the improved results there on the Permian network. Is that primarily a result of throughput, or are you still seeing some further increases in negotiated rates? I guess just as a follow-on to that, when you bring GCX into service later this year, is there any potential for rate improvement on maybe the TNOP network there in South Texas?
Yeah. I guess, first part of the question, yes, it is improvement and ultimately the rates that come up for renewal. I think, on the second part, just as more gas comes into the data packs of just pushing that across our network both for domestic consumption and export demand. I think there are some opportunities to increase rates on any contracts that are now renewable.
Got it. Just on the proposed joint venture with Enbridge and Oiltanking for the Cochin terminal, any thoughts as to how that project integrates with the existing footprint and whether there might be some ancillary opportunities if you were to reach FID there?
Yeah. Initially, there is not integration at the initial size that we would expect. Again, this is not in our backlog. This is something that we're working on with our partners and we're in development on. Before we would put it in our backlog, we would need to see substantial commitments from shippers. In the early part of the project, the first build, we wouldn't expect to necessarily see it, but we could add connectivity in larger builds from ANTC.
That's helpful. Thank you.
Next is from Jamil Zivani from BMO Capital Markets .
Yeah. Hi. Thanks, and good afternoon. My first question is on PHP. With the little uptick in capacity to 300 million, I was under the impression that you already gapped out in terms of MAOP. What were you able to do to get the incremental 100 million of 2,000? Can you do the same thing with GCX?
Well, when we order decompressions, we upsize the compression order. It was a long lead time item, and we thought there's market for it if we can squeeze some more out, and so we ordered a larger compression equipment, a larger capacity compression equipment. GCX will look for little pockets here and there, but I would say it's kind of largely gapped out there.
Got it. My second question is checking on the pipe project with what's happening with PG&E in California. Ruby has come up with the ship date having a $375 million in contracts. How should we think about that as the potential bankruptcy unfolds there? Are those contracts tied to assets that are based on in-month funding? How are you looking at that contract for Ruby?
Look, I think there's some It's always uncertainty in a bankruptcy procedure, but I think there's some cause for optimism. Let me first, around the Ruby contract in particular, let me first start out by pointing out that it is Ruby specifically and exclusively that would be impacted by the potential of PG&E bankruptcy. Those two contracts. One of those contracts serves the electric generators that PG&E uses to obviously generate power and service load. The other provides service to PG&E's gas distribution business. We view both of those as contracts that are core to PG&E's business. Those two contracts together represent about $93 million a year of demand revenue. It is a material matter to our interest in Ruby. Again, while the bankruptcy process is uncertain, there's important facts areas like that, but they serve PG&E's core business.
These contracts are used by PG&E, and we've been told to expect continued utilization of those contracts. These contracts help PG&E in meeting its service obligations to core customers. The contracts were approved by the CPUC when they were entered into. The CPUC does require PG&E to maintain upstream firm transport capacity. Those reliability aspects, we think help improve the chances of affirmation. Again, this is uncertain. I'd also say those reliability aspects were confirmed recently with the GTN outage, and diminished capacity there, which drove an increase in takes on the Ruby contract. Generally, current basis is lower and below the long-term contract rates. There are reliability benefits to be considered. Finally, it's our understanding at least, that in PG&E's prior bankruptcy proceeding, they did not reject firm transport contracts.
That's not proof of what they'll do this time, we think there are reasons for optimism on these contracts.
Thanks for the clarification. Thank you. Thank you. The next question comes from Shneur Gershuni with UBS .
Hey, good afternoon, everyone. I just want to start off with 2019 GP big guidance. It looks like cash flow is one of the majority of debt and dividend. It looks like if you back into the numbers, about a $400 million hole they have to make up somewhere else. Is the remaining gap actually something due to basically fund a dividend payout or could we see some more asset sales here?
Yeah, those are not really linked. We would look at those individually, but they're good to get. These numbers would be an expectation of some small debt financing, so we would be financing more than all of the equity requirement and a substantial portion of the debt requirement for those capital investments. We'll take you through that in next week's conference.
There's plenty of availability on the revolver.
Got it. Okay. Then just wanted to touch base again on the Bakken, maybe related thoughts around expanding Double H. Now that some new projects have been announced, I think there's 300,000 barrel a day open season on Push to Spread, Liberty Pipeline, announced a 350,000 barrel open season, too. Call it 650,000 each, if guarantees come out and both of these goes through. Just curious what that means for Double H here.
Yeah. That's something that we're actively looking at as volumes continue to grow. We continue to work on solutions for our customers to get them through to Cushing. There is some expansion capability on Double H.
Okay. Appreciate it, guys. Thank you.
Okay, our next question comes from Harry Mateer with Jefferies.
Good afternoon, Harry.
Hi, good afternoon. First, just a follow-up on Ruby. How should we think about the indemnification agreement that's in place from KMI on 6% of Ruby's debt? Just to clarify, Steve, have you been told since the recent bankruptcy headlines that you should continue to expect utilization of those cash flow contracts?
First, the indemnification no longer exists. Second, we're in pretty continuous conversations with our customers.
Okay, thanks for that. David, you mentioned that KMI plans to pay down the February maturities. I know the analyst is next week, but can you just give us a sense for how you plan to manage the timing and/or magnitude of debt issuance for the balance of the year? Should we just assume late in 2019, given the $100 million maturity that's due in December?
We'll provide more information on that during the Analyst Day, don't fear term peak because of the cash that we have on hand.
Got it. Thank you.
Okay, next question from Tristan Richardson with Evercore.
Hey, good afternoon, guys. Just curious on the projects added to the natural gas backlog in 2014. Could you give us some highlights there of where that is, either geographically or around the stream, whether it be midstream or transmission, and general reasons?
Yeah. It's probably half in stream, which part of that is on our existing asset base system, other in the LNG side. The other half, I would say is supporting LNG projects yet to come.
Great. Thank you. Just a quick follow-up. You talked about following up on a previous question on the Bakken and the volume growth you saw there, and just trying to get utilization today and whether or not there's further headroom for growth on the existing asset base or the potential for expansion would require capital.
Yeah. We are investing in our gathering assets in the Bakken to deal with our constraints. We have investments to expand our takeaway capability there, gas and crude. To get more out of Double H, we would have to expand, and it would have to touch capital.
Understood. Thanks. Thanks very much.
Okay, next question comes from Dennis Cole with Bank of America Merrill Lynch.
Yeah. Hi, good evening, everyone.
Two questions. One, if I could go back first to the KML strategic review. Maybe this is reading a little bit too much into what I'm hearing, Jack, it seemed like you emphasized that the options you listed were just among the options that are available, and I wonder if you might talk about what you mean by that or what other options we should be thinking about.
Yeah, thanks, Dennis. I think the options that are on the table are all the ones that we've articulated before. KML has a good set of assets that could continue as a going concern. It could be one of the strategic transactions that I talked about. It could just go back to KMI. I think in all of the options, there's not anything new that we haven't previously spoken about, and I think we're going to be very thorough in thinking about every single one of those and which one makes the most sense.
Okay. There's nothing new there that hasn't been vetted out.
That's right.
Perfect. Then, I guess, if we could dig a little bit deeper on the terminals decline. I understand the Edmonton terminal, but the other thing that you talked about in the release is the New York Harbor issues. I wonder if you might just expand upon that a little bit, and is it a one-time thing? Is it seasonal, or is there some impact from a different thing that is more permanent?
It's the same issue that we brought up last time. It's Staten Island. We're roughly 60% utilized there. We've done a great job over the last two quarters of getting our head back above water, but we're looking at strategic alternatives for the site at this point. We are hopeful that we'll have clarity on that in Q2. We'll be able to indicate it on the next earnings call.
The reason that Staten Island is uniquely impacted is because there was a pullback in access.
$0.1375 on every barrel that goes through there, which makes it relatively uncompetitive with New Jersey terminals, our only two of them.
Got it. Okay. Thanks for that.
Welcome.
Sure thing.
Okay, the next question comes from Jean Ann Salisbury with Bernstein.
Hi. Is the government shutdown having any impact on your interactions with FERC on Sugar Bush or indeed the process around the pipeline permitting and approval process?
No. FERC is funded. The answer there is no. I think there's a separate question about how a deadlocked commission will operate on certain things. The answer is no. More broadly, to the extent the government shutdown is not having really much of any impact on us right now. In time, with the U.S. Fish and Wildlife not funded, it could have some impact on permitting, but nothing that's constraining a critical path, nothing that's on a critical path currently. It's not having much of an impact on us at this point.
Okay. That's helpful. As a separate question, it seems like there's some debate about whether Permian gas pipelines have good returns. You have a slide in your appendix at the last Investor Day, which shows a multiple in line with or even better than your average. I think some others have suggested projects with similar mix of returns and duration didn't meet your bar. Can you clarify that the Permian gas pipe projects that you're working on are in line with your backlog average and that you're comfortable with the duration of the projects just as any other projects?
Yeah, no, we're getting these projects with good contracts and attractive returns with long-term contracts. They're mid-double-digit unlevered after-tax returns, it's not a 15% unlevered after-tax return, they're good, solid returns. I agree with the observation just generally. We've looked at other opportunities out of the Permian crude and otherwise, we haven't been able to find the return levels that we would require to participate in that. We're satisfied with the returns, that they're in line returns on our gas transportation expansion projects out of the Permian.
This just dovetails with what we said at the beginning of the call, which is we are using a disciplined approach as to how we allocate our capital. We're not chasing deals that don't make bottom-line sense for Kinder Morgan.
Okay. Thank you.
I think our next question comes from Robert Catellier with CIBC Capital Markets.
Thank you. I just wanted to ask, what is the impact on operations from the shutdown of Trans Mountain in Alberta?
The contracts that we have are take-or-pay. They're MWD-based monthly warehousing charge, so we have not seen an impact.
I understand that take-or-pay wouldn't see an impact there, operationally, are you seeing anything different?
Actually, at our Alberta Hub terminal, we had record volumes in the fourth quarter. We had been averaging 77,000 a day. We hit 146 in the fourth quarter, in December we were up to 168 and hit an all-time one-day high of 265. Volumes have been very strong. We have seen them fall off a little bit in January, as you would have expected, but it has had no impact on the bottom line.
Okay. If I could get the net interest impact on the Trans Mountain sales proceeds that impact on the DCF for KML? What I'm trying to extract is the interest income specifically related to the proceeds versus other interest exposure you might have.
Yeah, I think you can assume we had Well, we paid back for the quarter. We didn't have any debt drawn during the quarter from the KML.
Yeah, how much interest income on just the DCF?
Yeah. I think it's the $24.7. It's the full amount there. I'm saying that full amount, we didn't have any amount borrowed during that peak. The full amount is the interest from.
That's pre-tax or post-tax on the $24.7?
That's the post-tax amount.
Okay. Thanks, Ruben.
Okay, great. Next, we'll take a question from Michael Lapides from Goldman Sachs.
Hey, guys. Easy question for you. Can you quantify what the impact on volumes being moved towards Mexico was to keep your system either for the quarter or for the full year?
Types online moved to Mexico?
Yeah, volumes direct to Mexico through your system. I'm just trying to get a gauge of whether your system is seeing a material benefit yet, and if not now, when?
Okay. We moved 73 million cubic feet a day incremental to Mexico on our system during the fourth quarter versus the fourth quarter of 2017.
Got it. Okay. Still relatively small relative to the grand scheme of things.
That's incremental.
That's incremental. We were in excess of 3 billion cubic feet a day on average.
Right.
Right. Thanks, guys, much appreciated.
Okay, next we'll take a question from Christopher D. Mills from Jefferies.
Hey, Chris.
Hey, good afternoon. It's Nick. Not to be out of order. Just following on the question from the last question. I just wanted to ask about export trends you're seeing on the gasoline product side. There's been a rash of articles recently about growing gasoline prices in Mexico with efforts by the government to crack down on pipeline stuff. Curious if at all how that's impacting you and how that's changed kind of Q4.
Yeah. We continue to get record volumes on the Houston ship channel from an export standpoint. We were up almost 8.5% from a volume exit standpoint over our ship docks and 10.1% on total volume. Very strong movements on the gasoline and diesel over our docks. In Houston alone, gasoline was up 8% and distillates were up 6%.
Those figures, are those 14 numbers you're putting for fiscal year?
Full year numbers.
Okay. Has that changed at all? I guess we're very early in the year, but it seems like a lot of this has escalated once the calendar turned. Just curious if the positions there have altered in any way.
No, the only thing we've seen a little more of is we're seeing more volume move via rail out of our former sea by rail facility, which has now been repurposed to handle gasoline and distillates, and that's starting to ramp up. Destination Mexico.
Okay. Perfect. Thanks a lot, guys. Appreciate it.
Okay, next we'll take a call from Merrick Mack with KeyBanc.
Good evening, everyone. Hi. Just a quick one from me. In the CO2 segment, the Mid-Cush differential that you have additional Q for 2019. Are those levels fairly similar to kind of what we saw in fourth quarter?
Yeah, it's roughly $8 a barrel.
Just one quick follow-up. Given that the section of the Renix field, are you looking to potentially do additional acquisitions of this type going forward, or might that depend on sort of how you see Tall Cotton develop over time?
Yeah, that was very unique given its relationship to our SACROC field and our power ability to use that field for multiple purposes. Being it produces oil and NGL, but also the CO2 that it uses could be perhaps better used elsewhere in our portfolio and perhaps offsetting capital investments that we're going to make in order to expand CO2 production. I would call it somewhat unique, but it's an example of the kind of things that we look out for, things that fit, and that integrate well with our existing operations.
Okay, great. Thanks very much.
Okay, next we'll take a call from Becca Caldwell with U.S. Capital Advisors.
Becca.
Good afternoon. Hey, two questions. One, given that you're in settlement discussions on TGP and pre-settlement collection of fees, in exchange, is guidance you give given for roughly $100 million impact over time and no impact in 2018, no impact in 2019?
No change as yet. We're early in those discussions. We're encouraged to be engaged on those two systems, we don't have any update in our guidance or outlook there. I'd say the $100 million is still good from our perspective. It reflects the tax-only component of that, we'll just have to see where the discussions come out. We prefer this environment. We've traditionally been able to work things out with our customers, we would rather be doing it here than sending it to court process. We're happy to be engaged on both of those systems.
Understand. Thank you. Then back to Ruby. Can you remind us of the structure there? I think some of it has preferred, that carves off a big chunk of the EBITDA. If TGP were to congregate or to recut that contract, would that disproportionately hit KMI?
It would disproportionately impact. You're correct. Pembina's interest is a preferred, that's why, as I said, it is a material matter to our interest in Ruby. As I also said, we think that there's reason to be optimistic about the contract.
Great. Thank you.
Next up is the phone, Danilo Juvane with GMP Capital Markets.
Thank you. Couple of quick follow-up questions for me. Firstly, on KML, are there any major touch points to make on a potential pivot beyond the next earnings call?
There's always a potential for that, but I think we feel like we'll be able to give you an update at the next earnings call. Yeah. I think that's right. That's our estimated time that it takes on, and we feel like we'll have an answer by then.
Okay. A follow-up to Juned's question on the Pembina pipeline return. The two times multiple that you outlined before, that's over the course of the 10-year contract duration?
Yeah. What that is showing, I think we've stated the same way on all of these rates, we expect to hear an EBITDA multiple. The contracts, the underlying contracts, are for 10 years. When we make the decision on the project investment, we're careful to look at a variety of terminal value assumptions to make sure that we're satisfied with the returns that we're making on our capital in a variety of scenarios.
That's it from me. Thank you.
Next up we have Jeremy Tonet with JPMorgan.
Hello again. Just a quick little follow-up. I wanted to touch on KML real quick here. I was wondering if you could expand a little bit more on the drivers to the delay in going. I think it was like during first quarter, you said before, now end of first quarter. Are you guys still comfortable with the timeline, or what's happened there exactly?
Yeah. The delay continues to be associated with contractor productivity. We're obviously getting into the final phase here, and we have people on the ground watching the progress that we're making. We're in commissioning activities simultaneous with the completion of the project. We think end of Q1 is a good and reasonable estimate for when we'll be completed. Obviously, it may have an uncertainty around that date. We think we're closing in on it here.
Okay. Well, that's great. Thanks.
At this time, I show no further questions.
Okay. Well, thank you all very much for spending time with us, and we will see most of you next week at the Investor Day. Thank you.