What happened

On one hand, last year went exactly as planned for Kinder Morgan, Inc. (KMI -1.56%). The company's underlying business continued generating stable cash flow, on pace to hit its target of $4.46 billion, roughly flat with 2016. Furthermore, the pipeline giant completed its turnaround plan by securing financing for several growth projects, including completing an IPO of Kinder Morgan Canada Limited (KML) to raise the cash needed to fund its massive Trans Mountain Pipeline (TMPL) expansion project. Finally, the company announced plans to start returning more money to investors in 2018, expecting to increase the dividend 60% this year and by 25% in both 2019 and 2020 while also potentially buying back up to $2 billion in stock.

Despite all this progress, the stock slumped by double digits last year. While pipeline stocks in general lost value in 2017, Kinder Morgan's decline was mainly due to increasing worries that it wouldn't be able to build the TMPL expansion project.

Oil Pipeline near snow covered mountain.

Image source: Getty Images.

So what

The concerns flared up in late spring after an election in British Columbia swung the balance of power to those opposed to the project. Opposition grew hotter throughout the summer, resulting in more lawsuits against the project. In addition to those legal battles, Kinder Morgan couldn't get the permits it needed to build the pipeline through state-owned lands, which put it behind schedule. As of last quarter, the company said the project's completion date might get pushed back nine months to September 2020. The company also warned that it could abandon the expansion if it doesn't get a guarantee that it'll be allowed to finish.

The prospect of a delay or cancellation of this project was not what investors wanted to hear, since it's by far the largest in the company's backlog. At $5.7 billion, it represents more than half of the $10.4 billion of fee-based growth projects the company has on the way and a significant slice of the $1.5 billion in annual earnings it expects these investments to generate. That's why investors are worried the company might not be able to send as much cash their way as anticipated in the coming years if it can't complete this project on time.

Now what

While concerns about the future of this project remain, the company did win a crucial court battle toward the end of the year, and that victory should speed up the permitting process and makes moving forward with this vital project more likely. If it does start construction this year, that will lift a weight that has been holding down the stock. In fact, thanks to last year's decline, shares now trade at just 9.3 times cash flow, which is well below the 14.9 average of its peers. Kinder Morgan's stock is one that investors will want to consider buying, since it has so much upside if that discount goes away.