Kinder Morgan, Inc., Houston, announced it has struck a $568 million deal with Philly Tankers LLC for four new 50,000-dwt, Tier 2 tankers to be constructed at the Aker Philadelphia Shipyard in Philadelphia.

Each tanker will have a capacity of 337,000 bbls., and are being built ready for conversion to liquid natural gas for propulsion. The vessels will be delivered to Kinder Morgan between November 2016 and November 2017 for U.S. domestic service. The first two ships scheduled for delivery in late 2016 and early 2017 are already under long-term contract, and Kinder Morgan is negotiating for contracts on the two additional tankers to be complete in late 2017.

These four new vessels will increase Kinder Morgan’s Jones Act tanker fleet to 16 ships by late 2017, of which 14 are under long-term contracts.

The transaction requires approval of shareholders holding 80% of the shares of Philly Tankers AS. Philly Tankers AS is the parent of Philly Tankers LLC. Shareholders accounting for over 85% of Philly Tankers AS’ outstanding shares have already entered into irrevocable voting undertakings approving the transaction. An extraordinary general meeting of the shareholders of Philly Tankers AS will be scheduled in August for formal shareholder approval of the transaction.

“There continues to be strong demand for domestic waterborne transportation to move petroleum products and crude oil, and our fleet of highly efficient tankers will provide stable, fee-based cash flow to KMI shareholders for many years to come through multiyear contracts,” said Kinder Morgan Terminals President John Schlosser. “This latest transaction clearly underscores Kinder Morgan’s commitment to marine transportation of crude oil, condensate and refined products in the U.S. domestic trade.”

“This is just the latest indication that we continue to have good opportunities to deploy capital in our core businesses at attractive returns,” said Steve Kean, president and chief executive officer of Kinder Morgan. Prior to this transaction, the company identified a backlog of projects that had grown to $22 billion. “We are seeing numerous opportunities in our core pipelines and terminals businesses as the demand for midstream transportation and storage services continues to grow,” Kean said.

Kinder Morgan currently has seven product tankers on the water and five tankers that are in various stages of design and construction at the NASSCO shipyard in San Diego, scheduled for delivery between late 2015 and mid-2017.

The new Tier 2 tankers to come out of the Philadelphia yard will deliver cargo flexibility, improved fuel efficiency and incorporate the latest environmental protection features, including a ballast water treatment system.

Kinder Morgan entered the Jones Act product tanker business with an initial purchase of five ships in 2014 via the acquisition of American Petroleum Tankers and State Class Tankers for $960 million in cash.

Kinder Morgan is the largest energy infrastructure company in North America. It owns an interest in or operates 84,000 miles of pipelines and 165 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, carbon dioxide and other products, and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke. Kinder Morgan is the largest midstream and third largest energy company in North America with an enterprise value of approximately $115 billion.