The transaction includes about $1.8bn in assumed debt at TGP and about $560m of proportional debt at EPNG.

KMP plans to fund 10% of the transaction value, net of debt assumed, with KMP units that will be issued to KMI at closing valued at nearly $387m.

The remaining value is expected to be funded with borrowings under a new $2bn credit facility, and equity and debt issuances.

Kinder Morgan chairman and CEO Richard D Kinder said the drop down of two premier natural gas pipelines will generate substantial, stable cash flow to KMP and its unit holders for many years to come.

"TGP serves the Northeast and has access to the growing Marcellus and Utica shale plays, while EPNG serves much of the West, including southern California, Arizona and northern Mexico," Kinder added.

"A number of expansion projects are already underway on both of these pipeline systems (see July 18, 2012, KMP earnings release) and we are pursuing additional opportunities."

TGP is a 13,900 miles pipeline system with a design capacity of about 7.5 billion cubic feet (bcf) per day while EPNG is a 10,200 miles pipeline system with a design capacity of about 5.6 bcf per day.

EPNG transports natural gas from the San Juan, Permian and Anadarko basins to California, other western states, Texas and northern Mexico while TGP transports natural gas from Louisiana, the Gulf of Mexico and south Texas to the northeastern US and to areas of New York City and Boston.

The transaction, which has been approved by the independent members of the boards of directors of both KMI and Kinder Morgan Management (KMR), is expected to close in August 2012.