Note 6. Derivative Instruments, Hedging Activities and Fair Value Measurements

In the normal course of our business operations, we are exposed to certain risks, including changes in interest rates and commodity prices. In order to manage risks associated with certain anticipated future transactions, we use derivative instruments. Derivatives are financial instruments whose fair values are determined by changes in specified benchmarks such as interest rates or commodity prices. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at a specified measurement date. Derivative instruments typically include futures, forward contracts, swaps, options and other instruments with similar characteristics. Substantially all of our derivatives are used for non-trading activities.

We are required to recognize derivative instruments at fair value as either assets or liabilities on our balance sheet unless such instruments meet certain normal purchase/normal sale criteria. While all derivatives are required to be reported at fair value on the balance sheet, changes in fair value of the derivative instruments are reported in different ways, depending on the nature and effectiveness of the hedging activities to which they relate. After meeting specified conditions, a qualified derivative may be designated as a total or partial hedge of:

§	Changes in the fair value of a recognized asset or liability, or an unrecognized firm commitment – In a fair value hedge, gains and losses for both the derivative instrument and the hedged item are recognized in income during the period of change.

§	Variable cash flows of a forecasted transaction – In a cash flow hedge, the effective portion of the hedge is reported in other comprehensive income (loss) and is reclassified into earnings when the forecasted transaction affects earnings.

An effective hedge relationship is one in which the change in fair value of a derivative instrument can be expected to offset 80% to 125% of the changes in fair value of a hedged item at inception and throughout the life of the hedging relationship. The effective portion of a hedge relationship is the amount by which the derivative instrument exactly offsets the change in fair value of the hedged item during the reporting period. Conversely, ineffectiveness represents the change in the fair value of the derivative instrument that does not exactly offset the change in the fair value of the hedged item. Any ineffectiveness associated with a hedge relationship is recognized in earnings immediately. Ineffectiveness can be caused by, among other things, changes in the timing of forecasted transactions or a mismatch of terms between the derivative instrument and the hedged item.

A contract designated as a cash flow hedge of an anticipated transaction that is probable of not occurring is immediately recognized in earnings.

Certain of our derivative instruments do not qualify for hedge accounting treatment; therefore, they are accounted for using mark-to-market accounting.

Interest Rate Derivative Instruments

We may utilize interest rate swaps, forward starting swaps and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements. This strategy is a component in controlling our overall cost of capital associated with such borrowings. Interest rate swaps exchange the stated interest rate paid on a notional amount of existing debt for the fixed or floating interest rate stipulated in the derivative instrument. Forward starting swaps perform a similar function except that they are associated with interest rates underlying anticipated future issuances of debt.

The following table summarizes our portfolio of interest rate swaps at December 31, 2011:

Hedged Transaction	Number and Type of Derivative(s) Outstanding	Notional Amount	Period of Hedge	Rate Swap	Accounting Treatment
Senior Notes C	1 fixed-to-floating swap	$100.0	1/04 to 2/13	6.4% to 2.3%	Fair value hedge
Senior Notes G	3 fixed-to-floating swaps	$300.0	10/04 to 10/14	5.6% to 1.5%	Fair value hedge
Senior Notes P	7 fixed-to-floating swaps	$400.0	6/09 to 8/12	4.6% to 2.7%	Fair value hedge
Senior Notes AA	10 fixed-to-floating swaps	$750.0	1/11 to 2/16	3.2% to 1.3%	Fair value hedge
Undesignated swaps	6 floating-to-fixed swaps	$600.0	5/10 to 7/14	0.4% to 2.0%	Mark-to-market

Interest expense for the years ended December 31, 2011, 2010 and 2009 reflects a benefit of $19.6 million, and expenses of $16.5 million and $16.2 million, respectively, attributable to interest rate swaps.

In February 2012, we settled 11 fixed-to-floating interest rate swaps having an aggregate notional amount of $800.0 million, resulting in gains totaling $41.7 million. These gains will be amortized to earnings (as a decrease in interest expense) using the effective interest method over the forecasted hedged period.

The following table summarizes our portfolio of forward starting swaps outstanding at December 31, 2011. Forward starting swaps hedge the expected underlying benchmark interest rates related to future issuances of debt.

Hedged Transaction	Number and Type of Derivative(s) Outstanding	Notional Amount	Expected Termination Date	Average Rate Locked	Accounting Treatment
Future debt offering	10 forward starting swaps (1)	$500.0	2/12	4.5%	Cash flow hedge
Future debt offering	7 forward starting swaps	$350.0	8/12	3.7%	Cash flow hedge
Future debt offering	16 forward starting swaps	$1,000.0	3/13	3.7%	Cash flow hedge
(1) These swaps were settled in February 2012 in connection with the issuance of Senior Notes EE (see below).

In connection with the issuance of Senior Notes during the year ended December 31, 2011 (see Note 12), we settled three forward starting swaps and two treasury locks having an aggregate notional amount of $1.47 billion, resulting in losses totaling $23.2 million. These losses will be amortized to earnings (as an increase in interest expense) using the effective interest method over the forecasted hedge period.

In connection with the issuance of Senior Notes during the year ended December 31, 2010, we settled a forward starting swap having a notional amount of $50.0 million, resulting in a gain of $1.3 million, which will be amortized to earnings (as a decrease in interest expense) using the effective interest method over the forecasted hedge period.

In connection with the issuance of Senior Notes EE in February 2012 (see Note 23), we settled ten forward starting swaps having an aggregate notional value of $500.0 million, resulting in losses totaling $115.3 million. These losses will be reflected in other comprehensive income for the first quarter of 2012 and amortized to earnings (as an increase in interest expense) using the effective interest method over the forecasted hedge period of 10 years.

Commodity Derivative Instruments

The prices of natural gas, NGLs, crude oil, refined products and certain petrochemical products are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control. In order to manage such price risks, we enter into commodity derivative instruments such as physical forward agreements, futures contracts, fixed-for-float swaps, basis swaps and options contracts. The following table summarizes our commodity derivative instruments outstanding at December 31, 2011:

	Volume (1)		Accounting
Derivative Purpose	Current (2)	Long-Term (2)	Treatment
Derivatives designated as hedging instruments:
Natural gas processing:
Forecasted natural gas purchases for plant thermal reduction (“PTR”) (3)	12.6 Bcf	n/a	Cash flow hedge
Forecasted sales of NGLs (4)	2.0 MMBbls	n/a	Cash flow hedge
Octane enhancement:
Forecasted purchases of NGLs	0.3 MMBbls	n/a	Cash flow hedge
Forecasted sales of octane enhancement products	0.9 MMBbls	0.1 MMBbls	Cash flow hedge
Natural gas marketing:
Natural gas storage inventory management activities	9.3 Bcf	n/a	Fair value hedge
NGL marketing:
Forecasted purchases of NGLs and related hydrocarbon products	4.2 MMBbls	n/a	Cash flow hedge
Forecasted sales of NGLs and related hydrocarbon products	3.6 MMBbls	n/a	Cash flow hedge
Refined products marketing:
Forecasted purchases of refined products	0.8 MMBbls	n/a	Cash flow hedge
Forecasted sales of refined products	1.6 MMBbls	n/a	Cash flow hedge
Crude oil marketing:
Forecasted purchases of crude oil	0.4 MMBbls	n/a	Cash flow hedge
Forecasted sales of crude oil	1.0 MMBbls	n/a	Cash flow hedge
Derivatives not designated as hedging instruments:
Natural gas risk management activities (5,6)	354.2 Bcf	58.3 Bcf	Mark-to-market
Refined products risk management activities (6)	0.6 MMBbls	n/a	Mark-to-market
Crude oil risk management activities (6)	5.4 MMBbls	n/a	Mark-to-market
(1) Volume for derivatives designated as hedging instruments reflects the total amount of volumes hedged whereas volume for derivatives not designated as hedging instruments reflects the absolute value of derivative notional volumes. (2) The maximum term for derivatives designated as cash flow hedges, derivatives designated as fair value hedges and derivatives not designated as hedging instruments is December 2013, May 2012 and December 2013, respectively. (3) PTR represents the British thermal unit equivalent of the NGLs extracted from natural gas by a processing plant, and includes the natural gas used as plant fuel to extract those liquids, plant flare and other shortages. (4) Forecasted sales of NGL volumes under natural gas processing exclude 2.2 MMBbls of additional hedges executed under contracts that have been designated as normal sales agreements. (5) Current volumes include approximately 87.8 Bcf of physical derivative instruments that are predominantly priced at an index plus a premium or minus a discount related to location differences. (6) Reflects the use of derivative instruments to manage risks associated with transportation, processing and storage assets.

Our predominant hedging strategies are: (i) hedging natural gas processing margins; (ii) hedging anticipated future contracted sales of NGLs, refined products and crude oil associated with volumes held in inventory; and (iii) hedging the fair value of natural gas in inventory. The following information summarizes these hedging strategies:

The objective of our natural gas processing strategy is to hedge an amount of gross margin associated with our natural gas processing activities. We achieve this objective by using physical and financial instruments to lock in the purchase prices of natural gas consumed as PTR and the sales prices of the related NGL products. This program consists of (i) the forward sale of a portion of our expected equity NGL production at fixed prices through June 2012, which is achieved through the use of forward physical sales contracts and commodity derivative instruments and (ii) the purchase of commodity derivative instruments having a notional amount based on the volume of natural gas expected to be consumed as PTR in the production of such equity NGL production.

§	The objective of our NGL, refined products and crude oil sales hedging program is to hedge the margins of anticipated future sales of inventory by locking in sales prices through the use of forward physical sales contracts and commodity derivative instruments.

§	The objective of our natural gas inventory hedging program is to hedge the fair value of natural gas currently held in inventory by locking in the sales price of the inventory through the use of commodity derivative instruments.

Certain basis swaps, basis spread options and other derivative instruments not designated as hedging instruments are used to manage market risks associated with anticipated purchases and sales of natural gas necessary to optimize our owned and contractually committed transportation and storage capacity.

There is some uncertainty involved in the timing of these transactions often due to the development of more favorable profit opportunities or when spreads are insufficient to cover variable costs thus reducing the likelihood that the transactions will occur as originally forecasted. As a result of this timing uncertainty, these derivative instruments do not qualify for hedge accounting even though they are effective at managing the risk exposures of these assets.

The earnings volatility caused by fluctuations in non-cash, mark-to-market earnings cannot be predicted and the impact to earnings could be material.

Credit-Risk Related Contingent Features in Derivative Instruments

A limited number of our commodity derivative instruments include provisions related to credit ratings and/or adequate assurance clauses. A credit rating provision provides for a counterparty to demand immediate full or partial payment to cover a net liability position upon the loss of a stipulated credit rating. An adequate assurance clause provides for a counterparty to demand immediate full or partial payment to cover a net liability position should reasonable grounds for insecurity arise with respect to contractual performance by either party. At December 31, 2011, we did not have any over-the-counter derivative instruments with an aggregate fair value in a net liability position. The maximum potential cash payment under the contracts containing a credit rating contingent feature is $1.1 million. The potential for derivatives with contingent features to enter a net liability position may change in the future as commodity positions and prices fluctuate.

Tabular Presentation of Fair Value Amounts, and Gains and Losses on

Derivative Instruments and Related Hedged Items

The following table provides a balance sheet overview of our derivative assets and liabilities at the dates indicated:

	Asset Derivatives						Liability Derivatives
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate derivatives	Other current assets	$	43.7	Other current assets	$	30.3	Other current liabilities	$	163.6	Other current liabilities	$	5.5
Interest rate derivatives	Other assets		44.2	Other assets		77.8	Other liabilities		127.1	Other liabilities		26.2
Total interest rate derivatives			87.9			108.1			290.7			31.7
Commodity derivatives	Other current assets		20.3	Other current assets		46.3	Other current liabilities		30.3	Other current liabilities		93.0
Commodity derivatives	Other assets		--	Other assets		1.0	Other liabilities		0.2	Other liabilities		1.7
Total commodity derivatives (1)			20.3			47.3			30.5			94.7
Total derivatives designated as hedging instruments		$	108.2		$	155.4		$	321.2		$	126.4

Derivatives not designated as hedging instruments
Interest rate derivatives	Other current assets	$	--	Other current assets	$	--	Other current liabilities	$	10.1	Other current liabilities	$	21.0
Interest rate derivatives	Other assets		--	Other assets		--	Other liabilities		10.6	Other liabilities		0.9
Total interest rate derivatives			--			--			20.7			21.9
Commodity derivatives	Other current assets		34.4	Other current assets		38.6	Other current liabilities		32.5	Other current liabilities		41.2
Commodity derivatives	Other assets		12.6	Other assets		4.5	Other liabilities		2.0	Other liabilities		5.4
Total commodity derivatives			47.0			43.1			34.5			46.6
Foreign currency derivatives	Other current assets		--	Other current assets		0.3	Other current liabilities		--	Other current liabilities		0.1
Total derivatives not designated as hedging instruments		$	47.0		$	43.4		$	55.2		$	68.6

(1) Represents commodity derivative instrument transactions that have either not settled or have settled and not been invoiced. Settled and invoiced transactions are reflected in either accounts receivable or accounts payable depending on the outcome of the transaction.

The following tables present the effect of our derivative instruments designated as fair value hedges on our Statements of Consolidated Operations for the periods presented:

Derivatives in Fair Value Hedging Relationships	Location	Gain/(Loss) Recognized in Income on Derivative
		For Year Ended December 31,
		2011		2010		2009
Interest rate derivatives	Interest expense	$	24.7	$	16.3	$	(8.8	)
Commodity derivatives	Revenue		17.1		3.3		1.8
Total		$	41.8	$	19.6	$	(7.0	)

Derivatives in Fair Value Hedging Relationships	Location	Gain/(Loss) Recognized in Income on Hedged Item
		For Year Ended December 31,
		2011			2010			2009
Interest rate derivatives	Interest expense	$	(24.5	)	$	(16.2	)	$	3.2
Commodity derivatives	Revenue		(14.9	)		(2.6	)		(1.3	)
Total		$	(39.4	)	$	(18.8	)	$	1.9

The following tables present the effect of our derivative instruments designated as cash flow hedges on our Statements of Consolidated Operations and Statements of Consolidated Comprehensive Income for the periods presented:

Derivatives in Cash Flow Hedging Relationships	Change in Value Recognized in Other Comprehensive Income/(Loss) on Derivative (Effective Portion)
	For Year Ended December 31,
	2011			2010			2009
Interest rate derivatives (1)	$	(333.2	)	$	(0.1	)	$	12.5
Commodity derivatives – Revenue (2)		(192.3	)		(7.7	)		(34.8	)
Commodity derivatives – Operating costs and expenses		(29.6	)		(68.6	)		(144.8	)
Foreign currency derivatives		--			(0.1	)		(10.2	)
Total	$	(555.1	)	$	(76.5	)	$	(177.3	)

(1) The other comprehensive loss recognized for interest rate derivatives during 2011 is primarily due to the impact of decreases in forward London Interbank Offered Rates (“LIBOR”) on our forward starting interest rate swap portfolio. The change in fair value of this portfolio during 2011 accounted for $315.5 million of the other comprehensive loss. Any gain or loss ultimately recognized upon settlement of these cash flow hedges would be amortized into earnings as a reduction or increase, respectively, in interest expense over the forecasted hedge period. In February 2012, we settled ten of these forward starting swaps having an aggregate notional amount of $500.0 million, resulting in losses totaling $115.3 million. (2) The increase in other comprehensive loss during 2011 is primarily due to the impact of rising prices on our crude oil, refined products and NGL derivative instruments designated as cash flow hedges of future physical sales transactions.

Derivatives in Cash Flow Hedging Relationships	Location	Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income/(Loss) to Income (Effective Portion)
		For Year Ended December 31,
		2011			2010			2009
Interest rate derivatives	Interest expense	$	(6.3	)	$	(25.6	)	$	(26.4	)
Commodity derivatives	Revenue		(218.4	)		2.1			(61.0	)
Commodity derivatives	Operating costs and expenses		(13.9	)		(46.1	)		(233.2	)
Foreign currency derivatives	Other expense		--			0.3			--
Total		$	(238.6	)	$	(69.3	)	$	(320.6	)

Derivatives in Cash Flow Hedging Relationships	Location	Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion)
		For Year Ended December 31,
		2011			2010			2009
Interest rate derivatives	Interest expense	$	--		$	(0.1	)	$	1.4
Commodity derivatives	Revenue		0.2			--			0.2
Commodity derivatives	Operating costs and expenses		(0.3	)		(0.8	)		(0.1	)
Total		$	(0.1	)	$	(0.9	)	$	1.5

Over the next twelve months, we expect to reclassify $18.9 million of losses attributable to interest rate derivative instruments from accumulated other comprehensive loss to earnings as an increase in interest expense. Likewise, we expect to reclassify $21.2 million of losses attributable to commodity derivative instruments from accumulated other comprehensive loss to earnings, $10.3 million as an increase in operating costs and expenses and $10.9 million as a decrease in revenue.

The following table presents the effect of our derivative instruments not designated as hedging instruments on our Statements of Consolidated Operations for the periods presented:

Derivatives Not Designated as Hedging Instruments	Location	Gain/(Loss) Recognized in Income on Derivative
		For Year Ended December 31,
		2011			2010			2009
Interest rate derivatives	Interest expense	$	(18.5	)	$	(20.1	)	$	--
Commodity derivatives	Revenue		39.9			24.4			40.7
Commodity derivatives	Operating costs and expense		(3.7	)		--			--
Foreign currency derivatives	Other expense		(0.5	)		0.3			(0.1	)
Total		$	17.2		$	4.6		$	40.6

Fair Value Measurements

Our fair value estimates are based on either (i) actual market data or (ii) assumptions that other market participants would use in pricing an asset or liability, including estimates of risk. Recognized valuation techniques employ inputs such as product prices, operating costs, discount factors and business growth rates. These inputs may be either readily observable, corroborated by market data or generally unobservable. In developing our estimates of fair value, we endeavor to utilize the best information available and apply market-based data to the extent possible. Accordingly, we utilize valuation techniques (such as the market approach) that maximize the use of observable inputs and minimize the use of unobservable inputs.

A three-tier hierarchy has been established that classifies fair value amounts recognized or disclosed in the financial statements based on the observability of inputs used to estimate such fair values. The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3). At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

The following tables set forth, by level within the fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated. These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input that is significant to their respective fair value. Our assessment of the relative significance of such inputs requires judgment.

	At December 31, 2011
	Quoted Prices
	in Active
	Markets for		Significant		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial assets:
Interest rate derivatives	$	--	$	87.9	$	--	$	87.9
Commodity derivatives		28.4		38.1		0.8		67.3
Total	$	28.4	$	126.0	$	0.8	$	155.2

Financial liabilities:
Interest rate derivatives	$	--	$	311.4	$	--	$	311.4
Commodity derivatives		29.9		34.7		0.4		65.0
Total	$	29.9	$	346.1	$	0.4	$	376.4

	At December 31, 2010
	Quoted Prices
	in Active
	Markets for		Significant		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial assets:
Interest rate derivatives	$	--	$	108.1	$	--	$	108.1
Commodity derivatives		15.7		49.6		25.1		90.4
Foreign currency derivatives		--		0.3		--		0.3
Total	$	15.7	$	158.0	$	25.1	$	198.8

Financial liabilities:
Interest rate derivatives	$	--	$	53.6	$	--	$	53.6
Commodity derivatives		28.4		61.9		51.0		141.3
Foreign currency derivatives		--		0.1		--		0.1
Total	$	28.4	$	115.6	$	51.0	$	195.0

The characteristics of fair value amounts classified within each level of the hierarchy are described as follows:

Level 1 fair values are based on quoted prices, which are available in active markets for identical assets or liabilities as of the measurement date. Active markets are defined as those in which transactions for identical assets or liabilities occur with sufficient frequency so as to provide pricing information on an ongoing basis (e.g., the New York Mercantile Exchange). Our Level 1 fair values consist of financial assets and liabilities such as exchange-traded commodity derivative instruments.

Level 2 fair values are based on pricing inputs other than quoted prices in active markets (as reflected in Level 1 fair values) and are either directly or indirectly observable as of the measurement date. Level 2 fair values include instruments that are valued using financial models or other appropriate valuation methodologies. Such financial models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, the time value of money, volatility factors, current market and contractual prices for the underlying instruments and other relevant economic measures. Substantially all of these assumptions (i) are observable in the marketplace throughout the full term of the instrument; (ii) can be derived from observable data; or (iii) are validated by inputs other than quoted prices (e.g., interest rate and yield curves at commonly quoted intervals). Our Level 2 fair values primarily consist of commodity derivative instruments such as forwards, swaps and other instruments transacted on an exchange or over-the-counter and interest rate derivative instruments. The fair values of these derivative instruments are based on observable price quotes for similar products and locations. The fair value of our interest rate derivatives are determined using financial models that incorporate the implied forward LIBOR yield curve for the same period as the future interest rate swap settlements.

Level 3 fair values are based on unobservable inputs. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. Unobservable inputs reflect management's ideas about the assumptions that market participants would use in pricing an asset or liability (including assumptions about risk). Unobservable inputs are based on the best information available to us in the circumstances, which might include our internally developed data. Level 3 inputs are typically used in connection with internally developed valuation methodologies where we make our best estimate of an instrument's fair value. Our Level 3 fair values primarily consist of ethane, normal butane and natural gasoline-based contracts with terms greater than one year and certain options used to hedge natural gas storage inventory and transportation capacities. In addition, we often rely on price quotes from reputable brokers who publish price quotes on certain products and compare these prices to other reputable brokers for the same products in the same markets whenever possible. These prices, when combined with data from our commodity derivative instruments, are used in our models to determine the fair value of such instruments.

Transfers within the fair value hierarchy routinely occur for certain term contracts as prices and other inputs used for the valuation of future delivery periods become more observable with the passage of time. Other transfers are made periodically in response to changing market conditions that affect liquidity, price observability and other inputs used in determining valuations. Based on an assessment completed during the first quarter of 2011, we transferred ethane, normal butane and natural gasoline-based contracts with terms ranging from two months to one year from Level 3 to Level 2. These transfers were made after a sustained increase in the observability of forward prices for these energy commodity products relative to the date range stated above as demonstrated by narrowing bid/offer spreads, higher transaction volumes and more activity and liquidity for these types of contracts. With the exception of the transfers noted above, no other significant transfers were made between fair value levels during the periods presented.

The following table sets forth a reconciliation of changes in the overall fair values of our Level 3 financial assets and liabilities for the periods presented:

	For Year Ended December 31,
	2011			2010
Balance, January 1	$	(25.9	)	$	5.7
Total gains (losses) included in:
Net income (1)		2.3			25.3
Other comprehensive income (loss)		16.2			(34.8	)
Settlements		(2.0	)		(22.6	)
Transfers out of Level 3 (2)		9.8			0.5
Balance, December 31	$	0.4		$	(25.9	)

(1) There were unrealized gains of $2.6 million and $10.3 million included in these amounts for the years ended December 31, 2011 and 2010, respectively. (2) Transfers out of Level 3 into Level 2 during 2011 were primarily due to the change in observability of forward NGL prices as described above.

Nonfinancial Assets and Liabilities

Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis (e.g., property, plant and equipment) and are subject to fair value adjustments under certain circumstances.

Using appropriate valuation techniques, we reduced the carrying value of certain assets recorded as property, plant and equipment to an estimated fair value of $0.4 million based on the present value of expected future cash flows (Level 3), resulting in nonrecurring fair value adjustments (i.e., non-cash asset impairment charges) totaling $16.7 million during the year ended December 31, 2011. These impairment charges recorded during 2011 resulted from the abandonment of certain pipeline laterals on our TPC Offshore gathering system and certain storage caverns. Also during 2011, we reduced the carrying value of certain spare parts inventories to their estimated fair value of $2.7 million using fair market value (Level 2), resulting in nonrecurring fair value adjustments of $11.1 million. These non-cash impairment charges were recorded to reflect obsolescence or the value of what we can expect to receive from anticipated sales.

During the year ended December 31, 2010, we reduced the carrying value of certain assets recorded as property, plant and equipment and other current assets to an estimated fair value of $0.7 million during the year ended December 31, 2010. This resulted in non-cash asset impairment charges of $8.4 million. These impairment charges resulted primarily from the anticipated abandonment of certain pipeline laterals on our TPC Offshore gathering system, the cancellation of a compressor station project on our Texas Intrastate System and the determination that three of our underground NGL storage caverns would not be returned to service due to integrity concerns. Our fair value estimates were based primarily on an evaluation of the future cash flows associated with each asset (Level 3).

During the year ended December 31, 2009, we reduced the carrying value of certain assets recorded as property, plant and equipment, intangible assets and other current assets to an estimated fair value of $31.4 million based on an evaluation of future cash flows (Level 3). These adjustments resulted in non-cash asset impairment charges totaling $32.2 million. In addition, we recorded a goodwill impairment charge of $1.3 million during 2009. Impairment charges recorded during 2009 resulted from reduced levels of throughput at certain river terminals, the indefinite suspension of certain river terminal expansion projects, and the determination that an underground natural gas storage cavern and certain marine transportation assets were obsolete. The affected river terminals were also subject to a throughput contract with a third party, which resulted in a $28.7 million charge recorded in 2009 for deficiency fees.

The non-cash impairment charges we recorded during the years ended December 31, 2011, 2010 and 2009 are a component of operating costs and expenses. The following table summarizes our non-cash impairment charges by segment during each of the last three years:

	For Year Ended December 31,
	2011		2010		2009
NGL Pipelines & Services	$	11.3	$	2.8	$	4.1
Onshore Natural Gas Pipelines & Services		10.4		5.2		4.3
Offshore Pipelines & Services		5.5		--		--
Petrochemical & Refined Products Services		0.6		0.4		25.1
Total non-cash impairment charges	$	27.8	$	8.4	$	33.5