Hey, good morning, everybody. My name's J.R. Weston, one of the midstream analysts here at Raymond James. I'm excited to have David Michels from Kinder Morgan here today. Really interesting story. A lot of unique kind of growth opportunities here with the asset base that they have, especially on the natural gas side of things. An interesting cycle here from a natural gas demand perspective with both the U.S. Gulf Coast LNG growth and also a lot of, you know, power opportunities and natural gas demand opportunities out there. Kinder Morgan's very well positioned to take advantage of some of these trends and translate that into nice growth for their business. One of the large cap kinda diversified blue chip names in our midstream space.
Just really happy to have them, here to present with us today. I'll turn it over to David now.
All right. Thank you, and thank you all for participating. gonna start off with a legal disclaimer before we get going. This is our forward-looking statement slide. Review this and our SEC filings for risks that could materially affect our expected results. Additionally, I'll be discussing certain non-GAAP measures during the presentation. For a list of non-GAAP measures and reconciliations, see our investor presentation and our website. Okay. As was just mentioned, Kinder Morgan is a leading energy infrastructure company. We are one of the largest energy infrastructure companies in the world, and we are the largest in the S&P 500. We move about 40% of all of the natural gas molecules that are produced in the U.S. on a daily basis, including the feed gas that gets liquefied and exported globally.
We are focused on US-owned infrastructure, but we're becoming more and more connected with the global markets given our position in supplying feed gas to these liquefied natural gas facilities that then export to the rest of the world. We own close to 80,000 miles of pipeline. Nearly most of that is natural gas. 80,000 miles of pipeline is enough to circle the globe three times, so it's a lot of gas pipeline, a lot of other product pipeline, and it's a big responsibility that we take very seriously. It also gives us a great competitive advantage when going after new projects, and we'll get into that in a minute.
You can see on the left-hand side of the slide here, 67% of our cash flows come from our natural gas transportation and storage business. That's what we're gonna be spending most of the time today talking about, is the natural gas market and some of the really interesting and exciting growth opportunities coming from that market. Our overall strategy as a company hasn't changed much since Bill Morgan and Rich Kinder founded the company 29 years ago. We focus on assets that are key to the portion of the industry that they are located in. We focus on fee-based, stable, cash-flowing assets. Even though we're in the energy industry, we're focused on maintaining low exposure to commodity prices directly. We...
You'll see our cash flows, cash flow mix in a minute, but it's mostly take-or-pay or fee-based. We have a little bit of commodity price exposure. A lot of that we hedge. Very stable fee-based cash flows. We prioritize a strong balance sheet and ample liquidity. We focus on funding our growth capital and our other cash flow needs with organic cash flow generation. We have a bias to returning value to our shareholders, and that's primarily done in the form of a dividend which is well-covered and sustainable. Of course, running our assets in a safe and compliant manner as efficiently as we can is another key part of our overall strategy.
As I mentioned, the cash flow stability and visibility is very high. This is a very high-quality form of cash flow that we generate. 65% are take-or-pay cash flows, which means we get paid for giving shippers the right to use the capacity in our assets. Whether or not they actually use it, we get paid for that subscription to our assets. So it's kinda like rent. It doesn't matter if you actually stay at that house. You pay the rent. We have another 5% that's hedged, so for 2026. This, and that 5% hedged is pretty consistent year in, year out. For any given year, about 70% of our overall cash flows are fixed. Our revenue is known, and it's going to be paid to us.
Very high quality form of cash flow, very stable and visible. Another 26% of our cash flows are from fee-based businesses, this is like a toll road. If a car rolls down the toll road, we get paid a fixed fee. Similarly for us, 26% of our business is fee-based. Highly confident, stable business model. Moving back a little bit and looking at the overall industry and some of the trends that are unfolding, the current global natural gas demand is about 410 Bcf/d as of 2024. This is a Wood, EIA forecast, and this forecast shows it going to 541 Bcf/d by 2050.
To put that in context, the US is the largest producer of natural gas today, and we produce about 115 Bcf/d. Between 2024 and 2050. This growth would imply that we need to replace more than all of the United States' natural gas production in the next couple of decades, which is a massive amount, and I think that speaks to some of the excitement around the opportunity set that we're gonna talk about how this translates into US opportunities. On the global basis, this is a tremendous amount of additional natural gas demand that is forecast to come to the market. How does that translate into the US? This is going back to that liquefied natural gas.
We are the exporter of choice for many countries across the world because many of the countries that are driving that natural gas demand, that we just talked about don't have adequate or natural resources at all to supply their internal demands. They're looking for other countries to supply liquefied natural gas, which is the really the only efficient way to transport natural gas internationally, to liquefy it and then put it on ships and then regas it when it goes to its host country. The U.S. is particularly well-suited because we have a very robust set of infrastructure in pipelines, storage, well-known basins, excellent producers. EOG was just in here earlier. They're one of them. Excellent producers who have been very efficient and capable at unlocking new sources of reservoir, new sources of molecules to produce.
I think in the, the Iran conflict that's happening right now, I think this is, this is underscored we have a relatively low geopolitical risk in America. A great partner for many of these countries who are looking for not just the next five years of supply, but the next 20 or 30 years of supply. Signing up for those types of contracts takes great confidence that you're not going to get interrupted because of geopolitical concerns. That's the international part of our business and how it's growing and why it's growing. Domestically, we're also seeing an increase in natural gas demand. We're not just seeing international natural gas growth driving LNG demand, but we're also seeing domestic demand for natural gas increase.
Industrial businesses, a lot of them can't be electrified, and so natural gas is one of their choice feedstocks to supply the catalyst for high heat content type, industrial processes. We're seeing incremental growth from residential and commercial businesses, but we're really primarily seeing a lot of growth from power generation. This was something that we started seeing unfold over the last three to five years. Population migration, so population moving from parts of the country to other parts of the country, increasing the overall power generation demand for those parts of the country that are attracting new population to them.
Coal-to-gas conversions, we still have a lot of coal power generation out there. That is more slowly today under the current regime, but still transitioning from coal to the other, dispatchable form of electricity production, which is natural gas. You've got three dispatchable forms of electric power generation: nuclear, coal, and natural gas. Nuclear is still a difficult one. Still haven't figured that one out completely. I think the small modular reactors might be something on the horizon, but still many, many years away. Coal, as we talked about, is being environmentally and economically phased out. That leaves us with natural gas. As these coal facilities are switching over and converting, coming to their end of their lives or just being environmentally phased out, they're most often being replaced with natural gas power generation.
Of course, we can't leave this slide without talking a lot about data centers and how much additional power generation is coming from the whole revolution of artificial intelligence and the associated data centers that are required to power them. You know, I think the total amount of additional demand from that category is still to be seen, but it is definitely incremental to what we had been seeing prior to 2024. In 2026, some of the recent estimates, and I'm sure everyone has read something about the scale of this, of this investment and the stimulus that it's providing. In 2026, the five largest hyperscalers are expected to spend over $700 billion in AI investments, which is just incredible.
For us, we're seeing great demand for additional power generation, and a lot of that is directly attributable to the power that is being used to fuel these data centers. We have over 5 Bcf/d of a new hookup requests, which gives you a sense for how much new power gen is being requested. Where is that data center capacity being built? Here's a sense for the announced data center capacity by state. The red bars are the bars where we have significant infrastructure presence. The gray bars are where we don't. In the vast majority of these, about 70% of all of this announced data center capacity are in states where we have significant infrastructure capacity to serve that additional load.
This represents about 210 GW of power demand. If they were all gas, that would be 32 Bcf/d of additional natural gas demanded, and again, about 70% of that is in our backyard. Gives you a sense for the scale and the competitive advantage that our assets have going after some of these data center capacity builds. Speaking of our competitive advantage, this slide shows you on the right-hand side, this is bringing it back together. The left-hand side is total natural gas demand for U.S. supplies. Today, as I said, our market is about 115 Bcf/d. The red line is Kinder Morgan's forecast growing by 26 Bcf/d through 2030.
The darker line is Wood Mackenzie's forecast growing a little bit slower, but still growing quite substantially. Both are 20% or low 20% growth over this timeframe, which is less than five years away now. You can see on the right-hand side, the key factor to any peer in this midstream industry to securing additional infrastructure growth projects is, do you have assets nearby that can integrate with, or that you can expand off of in order to accommodate this additional load growth? The existing miles of pipeline that you have in the ground is very important with regard to securing these additional projects. We can see here we have over 58,000 miles of major interstate pipeline in the U.S.
It's much more than our nearest competitor and more than double all but two of our competitors. We're pretty well positioned to take advantage of this underlying growth trend that we're seeing. Additionally, the existing capacity that we have. That was more focused on growth and securing additional projects to meet that additional growth. The existing capacity that we have is also increasing in value because that capacity is getting full. We'll talk about that in a minute. You're seeing not just incremental natural gas power or natural gas demand across the year, but you're seeing it incrementally getting more peaky. These are two lines.
One is 2015 average daily demand for natural gas in the U.S. The other one is 2025 average daily demand for natural gas in the U.S. You can see down in, you know, the average temperature range of, you know, moderate temperatures, 50 to 70 degrees, the difference between these two bars is, call it 10-15 BCF per day. As you go to the extreme temperature areas, you can see the differences become closer to 40 Bcf/d . It's showing you that in cold temperatures and in warm temperatures, the peakiness of the delivery and the capacity needed is higher than kind of the average incremental load over these two periods of time.
The peak day demand is becoming greater, which means additional storage and pipeline capacity is growing even faster than it would than you would suggest from this page. You know, that 26 BCF a day doesn't speak to how peak day demand is growing even faster. That gives us additional growth opportunities, but it also speaks to the value of the existing assets, and how important they are. Okay, this speaks to, again, kind of, the concept that I talked about earlier, existing capacity becoming more and more valuable. Between 2016 and 2025, the natural gas market in the U.S. grew 44% from 79 BCF a day to 115 BCF a day. A lot of that growth was accommodated through existing pipes that had spare capacity on them.
You didn't see as many growth projects being built as you do in today's market, because back then we had a little bit of spare capacity, and today it's more or less gone on all of the major facilities. In the top right part of the page, you can see our 2016 five-pipe average. Our five largest pipelines that stretch across America, we had a utilization of about 74%. In 2025, that utilization grew to 90%. That's pretty much full because in the summer and the winter are when we have peak demand, and in the shoulder months is when we have a little bit less demand. 90% is basically full. You don't really have any spare capacity. That's playing out.
We're seeing it in the values that we're getting for our service, but we're also seeing it in the tenor that our counterparties are willing to sign up for. You can see in 2016, on those three pipelines that we have listed here, the average length of contract was 5-6 years. In 2025, that grew to 7-8 years in terms. People are recognizing the value of that capacity and are signing up for longer terms at higher rates, which is all good for infrastructure operators like us. Okay, where are we? That's the backdrop in the industry and where does that leave us today? That leaves us with a very nice, robust project backlog. This is our five-year committed project backlog, $10 billion in total projects.
These are projects that have been sanctioned, approved by our board. Many of them are under construction, so high degree of confidence that we are gonna be building these, and we'll be putting those into service. Mostly focused in our natural gas area, not a surprise. Strong build multiple here, 5.6x CapEx to EBITDA. Very good returns. Again, these are projects, and we'll talk about where some of these are built, but a lot of these are built right in areas that we're very familiar with, so we have a high degree of confidence that we'll be able to construct as well, which is important.
This slide speaks to the projects, the experience that we have in building large natural gas projects in the U.S. and how successful we've been able to build those and bring them into service. We spent $5.4 billion on projects from 2021 through 2025, 273 individual projects, and we put them into service pretty much right online with our expectations. A little bit of variance on both cost and schedule, but well within a reasonable band of tolerance. We know how to build these projects. We have a great track record in putting them into service recently.
So we're not expanding our business by, you know, entering a new business line or extending ourselves outside of our core competency. We are doing what we do best, which is build natural gas pipelines in the United States. Here's a list of some of the largest projects that we have signed up right now in that $10 billion of project backlog spend. I'll just touch on the top three. South System Expansion 4, number one, and number three, Mississippi Crossing. You can see on the right-hand side of the page there, they're both taking gas kind of out of the T corridor there just to the east of Texas over into the southeast states.
That's been a part of the country that's been short on natural gas supply for many years now. We've gotten to the point now where they've reached critical mass where they needed some real significant incremental capacity to those markets. We're building those two pipelines, which Mississippi Crossing provides liquidity to the South System 4 expansion to get it all the way over into the Carolina markets, bringing 1.3 Bcf/d of capacity into those markets. Our customers are excited about that. They recognize the need for it, and we're actually even starting to talk to them about the next expansion. Great area to construct pipeline, excellent committed commercial contracts, with customers that we know very well.
They're utility customers, Southern, Dominion, Duke, Oglethorpe, so very high creditworthy counterparties as well. The other one is number two, which is it's a smaller pipeline, but it's a, it's a substantial build. It's moving from the Katy Hub to which is west of Houston over into the Port Arthur market, which is where a lot of the LNG demand is. Katy is where some of the pipelines from the Permian are being delivered into, so that we needed to de-bottleneck that area between Katy, go up and around over Houston, down into the Port Arthur market in order to get that liquid molecule over into where the end market really begins. Exciting build. We're already under construction on that one.
Great counterparty contracts, very good return, 2 Bcf/d of capacity, everything is on track with all three of those major projects. What's next? Beyond that $10 billion of projects that we've already sanctioned, we're working on the next. Our business development teams aren't working on those anymore. Now they're focused on the next set of projects to backfill those and then to potentially grow even more beyond those. We have over $10 billion worth of identified specific projects that our business development teams are working on right now, incremental to the ones that we just listed. The growth drivers behind those incremental new greater than $10 billion of opportunities are similar to the ones we just talked about.
I said we're already working on potentially adding additional supply projects to the southeast markets. We're working on de-bottlenecking within the Texas and Louisiana markets, which is becoming increasingly more important as these LNG facilities continue to come online. You saw how large that LNG market was growing. It's almost doubling between 2024 and 2030. We're gonna see additional de-bottlenecking efforts required to accommodate that flow. Throughout the country, we've got the power generation demand, industrial growth. We've talked about coal conversion. All very, very exciting things. Exports to Mexico is another one. Mexico's production is declining, delivering additional gas down to Mexico is also another factor of growth that we're focused on.
Meanwhile, our financial profile has improved nicely, so we're meeting this time when we have this very robust opportunity set with a balance sheet that's in really good shape. We've been generating some good growth as it is. We've had a cadence on our dividend that's allowed us to have a dividend that is well-covered and sustainable. Over the past decade, we've been growing our EPS by about 8% annually while decreasing our leverage by 26% over that same time. Our leverage target range is between 3.5 and 4.5 x. We're at 3.8 right now, so we're a little bit on the low end of that.
We're below the midpoint of our leverage target range, so we have a little bit of balance sheet capacity. We're generating cash flow from operations of $6 billion, which means we have about $3 billion annually to spend on these growth investments. We have a great amount of cash flow internally to support these investments that we're making. We don't have to rely on the external capital markets to any large degree. Our dividends, you can see here we've got this good cadence here where we've been growing at a little bit of a slower pace relative to our cash flow growth, and that's added to the sustainability of that dividend over this time. You can see we've taken advantage of some of our lower stock prices. Those light gray bars are share repurchases. All right.
Yeah, that kind of brings us to the end. Just to kind of wrap up here, we're very excited about the growth projects that we have. We're very pleased with our recent performance. We're very pleased with the fact that we've got our financial profile in the shape that it's in in order to meet this current opportunity set, driven by the opportunities and driven by the dynamics that we've talked about through this presentation. We're very optimistic about our future. That's, that's it. I think we have a couple of minutes left for questions.
Sure. Appreciate that, David. Thank you. Any questions here from the audience? Maybe one from me here, David. Just, you had there on the slide about the $10 billion of kind of additional growth projects out there. Can you just maybe speak to, you know, some investors probably understand some of the, kind of the secular growth themes that are out there, but just translating that to growth opportunities for the company, how much easier or harder is it getting to kind of convert those project opportunities into, to real projects that move into your backlog?
Well, they're always hard, otherwise everybody would be doing it. But in some degree, there's greater recognition that existing capacity is full. We talked a little bit about that. There's a little bit more urgency to get some of these projects built because they recognize. I think our customers recognize how long it takes to build these things. There's just a standard amount of time to permit and build and get these things constructed. It's not like a digital transformation. There's a lot of physical work that has to be done you cannot bypass. I would say in some regard, it's gotten a little bit more efficient to sign up commercial contracts in the current environment relative to where we were five years ago, but it's still really tough.
I would say, you know, the other thing that I think I've failed to say before is, you know, with the $10 billion of committed project backlogs that we have today, plus all the projects we're planning to sanction in order to backfill those, you know, if you convert that at the EBITDA multiple that we talked about earlier, it's, you know, $500+ million a year of additional EBITDA. Good single-digit growth on our EBITDA basis, which translates into a high single-digit EPS or low double-digit EPS growth rate, combined with the dividend yield, gets you to a total stock return that's pretty compelling.
I want to move here.
Yeah.
How does that material labor cost deliverability project?
Yeah, that's a great question. That's a really great question. We're focused. That's one of the biggest risks, I would say, to the overall story here, because the projects are there. Will the equipment and the labor be available for us and for others to build? Especially with the backdrop of all these data centers that are being developed, there are some components of labor that are gonna be competing for those same projects. Over the past year, we've bid out three of our major projects, and we've talked to our qualified contractors and what kind of capacity they have in the next two to three years when we'll be building these. So far, there is adequate capacity from major qualified labor contractors. The equipment's getting a little bit longer lead time.
Compressor units are 2-3 years backlog. We're working on some alternatives for us to look at there. I think that just puts more pressure on us to make sure that our scheduling is appropriate. We're signing up and we're getting committed contracts with our labor contractors, and we're signing up for all the long lead time materials well in advance of when we need to put them into service. So far, that's working pretty well, but it is something that we're watching really closely.
Just real quick, David, are you able to, in some of these situations where you have some cost inflation still pass through some of that and kind of protect that build multiple?
That's a great point. What we try to do is we try to anticipate the cost escalations associated with the tightness in the market and pass those along in the form of the rate that we're willing to sign up for with our customers. In most cases, we're able to do that pretty well. In a handful of cases, we're actually able to put into the contractual arrangement with our shippers cost escalations unforeseen at the time that we sign up the contract with them, to sanction the project. Again, I think that is something that's pretty rare. In the past, we didn't see that as something that the shippers are willing to sign up for.
Today, I think because of the fact that capacity is tight and the urgency to get this supply to market is so great, we are seeing a more willingness to share in cost overruns.
That's perfect. We're out of time here, but