Fitch Rates Kinder Morgan Energy Partners' Debt 'BBB+'.

NEW YORK -- Fitch Ratings has assigned a 'BBB+' rating to Kinder Morgan Energy Partners, L.P.'s (KMP) new $500 million of 5.125% senior unsecured notes due Nov. 15, 2014. The Rating Outlook is Stable. Note proceeds and net proceeds of nearly $300 million from a recent equity offering will be used to repay short-term debt and fund the upcoming purchase of TransColorado Pipeline from Kinder Morgan, Inc. (KMI). KMP is the nation's largest master limited partnership (MLP). KMI, rated 'BBB', Rating Outlook Positive, owns the general partner of and has a significant limited partnership interest in KMP. For additional information on KMP's rating, see Fitch's credit analysis report dated Nov. 3, 2004, available on the Fitch Ratings web site at 'www.fitchratings.com'.

KMP's business focuses on providing fee-based energy services, generally avoiding or limiting commodity price risk. Primary areas of business include: transporting and storing of refined petroleum products; transporting, storing, and selling of natural gas; producing, transporting, and selling of carbon dioxide (CO2) for use in, and selling crude oil from, enhanced oil recovery operations; and transloading, storing, and delivering a variety of bulk, petroleum, and petrochemical products at terminal facilities in the U.S.

KMP's rating and Stable Outlook reflect the following characteristics: significant scale and scope of operations; geographic and functional diversity of assets; a favorable track record in acquiring, financing, growing, and operating MLP assets; predictable earnings and cash flow generated from pipeline and terminal operations; and, assuming anticipated growth, financial and operating profiles that are expected to remain consistent with the current rating. Also considered in Fitch's rating analysis is KMP's financial exposure to fluctuations to commodity prices and interest rates, the economic impact from potential adverse regulatory rulings on its Pacific products pipelines, and the company's aggressive expansion and acquisition spending strategy.

KMP's quantitative credit measures have generally strengthened over the past few years. For the 12 months ended June 30, 2004, funds from operations interest coverage was approximately 6.5 times (x) and debt to EBITDA was 3.8x, a modest improvement over 2003 ratios. The strengthening in part reflects a current emphasis on expanding CO2 operations, which have generated higher financial returns than pipeline and terminal facilities, albeit with higher associated risk. KMP plans to make significant internal growth expenditures over the next several years, in the neighborhood of $650 million annually, with nearly half of 2004 expenditures targeted for CO2. In addition, acquisition spending, which is highly discretionary, could also be material and significantly influence results. KMP will likely finance its growth with a reasonable balance of debt and equity units. A newly renewed five-year, $1.25 billion bank credit facility provides adequate liquidity, and the amount of scheduled debt maturities over the next five years is relatively small.

Prospectively, Fitch expects KMP to continue to generate credit measures, which will fall in a range consistent with its rating even if faced with less favorable business conditions. To reflect the potential impact of adverse operating conditions on projected results, Fitch performed sensitivity analysis, which considered the occurrence of several negative trends and events. Since approximately one-half of KMP's debt is floating rate, the company has benefited from a low interest rate environment. Fitch considered the impact of higher rates on interest expense. Furthermore, the future financial performance of the CO2 segment will be materially affected by the volumes of oil produced and, to a lesser degree, the price of oil sold. KMP has been aggressive in using financial hedges to limit but not entirely eliminate its commodity price exposure. Fitch considered the effect of weakening operating conditions for the CO2 segment on its distributable cash flow. In addition, KMP has been part of ongoing proceedings relating to rates charged on its FERC-regulated SFPP refined petroleum products pipelines. Based on the most recent nonbinding rulings, the company estimates that the combined annual impact of potential rate reductions and payment of reparations sought by shippers would be approximately $0.15 of distributable cash flow per share. Fitch factored in the effect of the rate reductions in its analysis. Given its scale and diversity of operations, the cumulative effect of the above-referenced negative factors should not materially impair KMP's credit quality.