KMP reported third quarter distributable cash flow before certain items of $320million, up 14 percent from $281.9 million for the same period last year. Distributable cash flow per unit before certain items was $1.12 versus $1.09 per unit for the third quarter of 2008. Net income attributable to KMP before certain items was $351.1 million compared to $345million for the same period last year. Including certain items, net income attributable to KMP was $359.5million versus $329.8 million for the third quarter of 2008. Certain items resulted in a net gain of almost $9 million for the quarter, primarily reflecting insurance reimbursements in the company's Terminals business.

For the first nine months of 2009, KMP produced distributable cash flow before certain items of $854.2 million compared to $856 million for the same period last year. Distributable cash flow per unit before certain items for the first nine months was $3.07 versus $3.35 for the comparable period in 2008. Net income attributable to KMP before certain items was $1.0billion compared to $1.1 billion for the same period last year. Including certain items, net income attributable to KMP for the first nine months was $0.9billion compared to $1.0billion for the same period last year.

Chairman and CEO Richard D. Kinder said, "KMP had a very strong third quarter despite the ongoing impact from lingering economic headwinds that we have been experiencing all year. We generated distributable cash flow of $1.12 per unit, substantially higher than our budget for the quarter, which resulted in excess coverage over our quarterly distribution of approximately $19 million. All of our business segments outperformed their 2008 third quarter results with the exception of our CO2 business, which fell about 2 percent short of its third quarter results from last year due to significantly lower crude oil prices. Our stable, cash producing assets, combined with reduced internal costs and lower interest rates, helped offset the economic headwinds which resulted in lower refined products transportation volumes, decreased steel handling at our bulk terminals, lower crude oil prices and a difficult business environment for our Texas Intrastate pipelines. We remain confident that we will achieve our budget of $4.20 per unit in cash distributions for the year, which would represent 4.5 percent growth over the 2008 distribution. We also continue to make good progress in executing our multi-billion dollar capital investment program that will drive future growth at KMP."

Overview of Business Segments

The Products Pipelines business produced third quarter segment earnings before DD&A and certain items of $166.7 million, up 19 percent from $140.6 million for the comparable period in 2008. This segment is on track to meet its published annual budget of 10 percent growth.

"Products Pipelines had an excellent quarter, particularly considering the ongoing soft demand for refined products that continued to suppress transport volumes," Kinder said. "Growth compared to the third quarter last year was driven by higher tariffs on the Pacific system, improved warehousing margins at existing and expanded West Coast terminal facilities, higher ethanol revenues on the Central Florida Pipeline and at our Southeast Terminals, good performance in our Transmix business and higher revenues on Plantation (which was impacted in the third quarter last year by hurricanes)." Reduced fuel and power costs and lower operating expenses also helped overcome the decrease in volumes resulting from ongoing weak economic conditions.

Compared to the third quarter of 2008, total refined products revenues were up 3.7percent and volumes were down 2.7 percent (volumes in third quarter last year were impacted by hurricanes). Excluding Plantation, revenues were up 5.3percent and volumes were down 4.4percent. Including ethanol, gasoline volumes for the segment were up slightly, 0.2percent and 0.6 percent respectively for the quarter and year to date. Diesel volumes were down 10 percent for both the quarter and year to date, and jet fuel volumes were down 2.8percent for the quarter and 6.1 percent year to date. For the year, total refined product revenues are relatively flat and volumes are down 3.2 percent versus last year (down 2.8 percent adjusted for leap year in 2008).

The Natural Gas Pipelines business produced third quarter segment earnings before DD&A and certain items of $194.8million, up 10 percent from $177.2 million for the same period last year. This segment is expected to outperform its 2008 results, but come in below its published annual budget of 11percent growth.

"Growth in this segment's earnings versus the third quarter of 2008 was attributable to contributions from new pipeline projects that were brought online - Rockies Express-East to Lebanon, Ohio, and all of Midcontinent Express and Kinder Morgan Louisiana," Kinder said. Segment transportation volumes increased by 24 percent compared to the third quarter of 2008, reflecting these new pipeline operations and the conversion of some sales business on the Texas intrastate system to transport service. The Texas Intrastates contributed more than 40 percent of the Natural Gas Pipelines' earnings before DD&A, but continued to be impacted by difficult market conditions which resulted in reduced sales margins and lower processing margins.

Kinder noted that the company expanded its natural gas footprint during the quarter by purchasing the natural gas treating business from Crosstex Energy, making KMP the largest provider of contracted gas treating services in the United States (see Other News for more details).

The CO2 business reported third quarter segment earnings before DD&A and certain items of $198.6million, down from $203.3 million for the same period in 2008 when crude oil prices were much higher. The average West Texas Intermediate (WTI) crude oil price in the third quarter of 2008 was $117.98 compared to $68.30 for the third quarter this year. Based on current oil price forecasts, continued higher production and lower operating costs, this segment should come in slightly below its published annual budget of 5 percent growth.

"This segment exceeded its budget in both the second and third quarters, led by strong oil production at the SACROC Unit," Kinder said. "Higher CO2 delivery volumes, improved NGL sales volumes and reduced operating and capital costs in the third quarter also helped offset the lower oil prices that continued to impact unhedged volumes in this segment."

Average oil production at SACROC was 29.6 thousand barrels per day (MBbl/d), up 6percent from 27.9 MBbl/d for the third quarter of 2008 and above plan. Average oil production at the Yates Field was 26.4MBbl/d, down from 27.1 MBbl/d for the same period last year, but slightly above plan for the quarter. CO2 delivery volumes increased by 4 percent compared to the same period last year due to expansion projects in southwest Colorado that increased CO2 production. NGL sales volumes rebounded nicely from the third quarter of 2008 when they were impacted by Hurricane Ike.

The CO2 segment is an area where KMP is exposed to commodity price risk, but that risk is partially mitigated by a long-term hedging strategy intended to generate more stable realized prices. The realized weighted average oil price per barrel, with all hedges allocated to oil, was $51.42 for the quarter. The realized weighted average NGL price per barrel, allocating none of the hedges to NGLs, was $40.28.

The Terminals business produced third quarter segment earnings before DD&A and certain items of $144million, up 9 percent from $132.4 million for the comparable period in 2008. This segment is expected to outperform its 2008 financial results, but come in below its published annual budget of 14 percent growth.

"Growth in this segment compared to the third quarter last year was driven by increased liquids capacity at our Houston Ship Channel operations, contributions from our Geismar, La., drumming facility which came online in the first quarter of this year, a new petcoke contract that significantly boosted volumes at our Port of Houston bulk facility and the acquisition of Megafleet in April," Kinder explained.

Liquid throughput increased by 14 percent over the third quarter of 2008, reflecting new tanks brought online and the absence of hurricane impacts this year. Weak economic conditions continued to affect the bulk side of the business, however, with throughput down by 6.4 million tons compared to the same period last year. Most of this decrease pertained to steel handling, although that business did show signs of improvement compared to the second quarter of this year.

Kinder Morgan Canada produced third quarter segment earnings before DD&A and certain items of $47.7 million, up 20 percent from $39.6million for the same period in 2008. Excluding a non-cash accounting change related to book tax accruals and foreign exchange fluctuations, this segment is on track to meet or exceed its published annual budget of 9 percent growth.

The growth in Kinder Morgan Canada's third quarter results reflect higher throughput on the Trans Mountain pipeline system which was driven by a significant increase in ship traffic at the Port of Metro Vancouver, the completion of the Anchor Loop expansion of the Trans Mountain Pipeline in the fourth quarter of 2008, and the acquisition of the Express-Platte pipeline system and a jet fuel pipeline from Kinder Morgan, Inc. (KMI) in August of last year. Throughput volumes on Trans Mountain were up 24 percent versus the third quarter of 2008.

Outlook

As previously announced, KMP expects to declare cash distributions of $4.20 per unit for 2009, which would represent a 4.5 percent increase over 2008. "While ongoing economic factors continue to impact our financial results, our nearly 8,000 employees have done yeoman's work to help offset potential shortfalls," Kinder said. "We expect to generate or be very close to generating sufficient distributable cash flow to cover our published annual distribution target." Most of the $2.1 billion in distributable cash that was forecast in KMP's 2009 budget is secure and not subject to volatile market conditions.

KMP's 2009 budget, which was initially announced in November 2008, assumes an average WTI crude oil price of $68 per barrel for the year. The majority of cash generated by KMP is fee based and is not sensitive to commodity prices. In its CO2 segment, the company hedges the majority of its oil production, but does have exposure to unhedged volumes, most of which are natural gas liquids. For full year 2009, every $1 change in the average WTI crude oil price per barrel is expected to impact the CO2 segment by approximately $6 million (or about 0.2percent of our combined business segments' anticipated distributable cash flow).

Kinder Morgan Management, LLC (NYSE: KMR) also expects to declare distributions of $4.20 per share for 2009.

Other News

Products Pipelines

KMP acquired the jet fuel pipeline serving the Portland International Airport in Oregon from Chevron on July 31. The pipeline transports commercial jet fuel from Kinder Morgan's Willbridge Terminal in Portland to the airport.

KMP began commercial transportation in September of blended 2 percent biodiesel (B2) through its 115-mile Oregon Pipeline that runs from Portland to Eugene. The new biodiesel shipment capability will help diesel fuel suppliers throughout Oregon meet a state biodiesel mandate that went into effect on Oct. 1. The Oregon Pipeline is one of only a few pipelines in the United States able to regularly transport blended biodiesel, as the pipeline does not transport jet fuel, thereby eliminating the potential for "trailback" of product into subsequent jet fuel batches.

KMP will make modifications by year end to its Central Florida Pipeline assets that will enable gasoline and diesel to be transferred between the Kinder Morgan and BP Tampa terminals. The project is being supported by a five-year throughput contract with BP.

Natural Gas Pipelines

KMP received authorization from the Pipeline and Hazardous Materials Safety Administration (PHMSA) to increase the maximum allowable operating pressure (MAOP) on specific requested segments of three major natural gas pipelines that it operates from .72 to .8 design. This authorization will enable the Kinder Morgan Louisiana, Midcontinent Express and Rockies Express pipelines to serve their full current contracted capacity levels.

The remaining 195 miles of the REX Pipeline to Clarington, Ohio, is expected to be in service in November of this year upon completion of one remaining horizontal directional drill and subsequent testing of the pipeline. REX-East began service June 29 from Audrain County, Mo., to the Lebanon Hub in Warren County, Ohio, with capacity of 1.6 billion cubic feet (Bcf) per day. When completed, the 1,679-mile REX Pipeline will have a capacity of 1.8Bcf per day. Binding firm commitments from creditworthy shippers have been secured for nearly all of the capacity on the pipeline, including a compression expansion on the Entrega portion of REX that is expected to be completed in the first quarter of 2010. Including expansions, the current estimate of total construction costs on the entire REX project is between $6.7 billion and $6.8 billion. REX is one of the largest natural gas pipelines ever constructed in North America and is a joint venture of KMP, Sempra Pipelines and Storage and ConocoPhillips.

The approximately 500-mile Midcontinent Express Pipeline (MEP), which extends from southeast Oklahoma, across northeast Texas, northern Louisiana and central Mississippi to an interconnection with the Transco Pipeline near Butler, Ala., is fully operational. Natural gas transportation service commenced Aug. 1 on the second leg of the pipeline from Delhi, La., to Butler. Two compression expansions of the pipeline, which have already been approved by the Federal Energy Regulatory Commission (FERC), are expected to be completed in 2010 and combined will increase pipeline capacity to 1.8 Bcf per day in Zone 1 and 1.2 Bcf per day in Zone 2. MEP's capacity, including the expansion, is fully subscribed with long-term binding commitments from creditworthy shippers. The total cost estimate for the project, including the expansion, remains at approximately $2.3 billion. MEP is a joint venture of KMP and Energy Transfer Partners.

Development of the new Fayetteville Express Pipeline (FEP) continues, and the project has received its environmental assessment from the FERC. A joint venture with Energy Transfer Partners, FEP is a 42-inch, 187-mile pipeline that will begin in Conway County, Ark., and end in Panola County, Miss. FEP has secured 10-year binding commitments totaling 1.85Bcf per day of capacity. The pipeline will have an initial capacity of 2 Bcf per day. Pending regulatory approvals, it is expected to be in service by late 2010 or early 2011. KMP's cost estimate for this project remains at $1.2billion.

KMP purchased the natural gas treating business from Crosstex Energy on Oct. 1 for approximately $266 million. KMP purchased approximately 290 amine-treating and dew-point control plants predominantly located in Texas and Louisiana, with additional facilities in Mississippi, Oklahoma, Arkansas and Kansas. The company will offer these natural gas treating services to its Texas Intrastate customers and to other producers in various supply basins, including the rapidly developing shale plays.

KMP entered into a definitive agreement with GMXR to purchase a 40 percent interest in the GMXR midstream natural gas gathering and compression business for approximately $36million. These assets provide gathering services to GMXR in its Cotton Valley Sands and Haynesville/Bossier Shale horizontal developments in East Texas. The transaction is expected to close in the fourth quarter.

Terminals

Approximately 750,000 barrels of new liquids tankage capacity came online at the Pasadena and Galena Park terminals on the Houston Ship Channel during the third quarter.

KMP renewed customer contracts at its New York Harbor terminals of more than 5 million barrels, representing 33 percent of the capacity at those facilities. The average term of the contracts is nearly seven years.

Debt and Equity Issuance

KMP issued $1 billion in senior notes in September. On the equity side, KMP has sold approximately $858 million of equity year to date versus its full-year budget of $1billion.

Kinder Morgan Management, LLC

Shareholders of Kinder Morgan Management, LLC will also receive a $1.05 distribution ($4.20 annualized) payable on Nov. 13, 2009, to shareholders of record as of Oct. 30, 2009. The distribution to KMR shareholders will be paid in the form of additional KMR shares. The distribution is calculated by dividing the cash distribution to KMP unitholders by KMR's average closing price for the 10 trading days prior to KMR's ex-dividend date.

Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates more than 28,000miles of pipelines and 170terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle bulk materials like coal and petroleum coke. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America. One of the largest publicly traded pipeline limited partnerships in America, KMP has an enterprise value of approximately $25 billion. The general partner of KMP is owned by Kinder Morgan, Inc., a private company. For more information please visit www.kindermorgan.com.

Please join KMP at 4:30 p.m. Eastern Time on Wednesday, Oct. 21, at www.kindermorgan.com for a LIVE webcast conference call on the company's third quarter earnings.

The non-generally accepted accounting principles, or non-GAAP, financial measures of distributable cash flow before certain items, both in the aggregate and per unit, and segment earnings before depreciation, depletion, amortization and amortization of excess cost of equity investments, or DD&A, and certain items, are presented in this news release. Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income or any other GAAP measure of liquidity or financial performance.

Distributable cash flow before certain items is a significant metric used by us and by external users of our financial statements, such as investors, research analysts, commercial banks and others, to compare basic cash flows generated by us to the cash distributions we expect to pay our unitholders on an ongoing basis. Management uses this metric to evaluate our overall performance.