Derivative Instruments, Hedging Activities and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Instruments, Hedging Activities and Fair Value Measurements [Abstract]

Hedging Instruments Under the FASB's Derivative and Hedging Guidance

The following table summarizes our portfolio of interest rate swaps at March 31, 2013:

Hedged Transaction	Number and Type of Derivatives Outstanding	Notional Amount		Period of Hedge	Rate Swap	Accounting Treatment
Senior Notes AA	10 fixed-to-floating swaps	$	750.0	1/2011 to 2/2016	3.2% to 1.3%	Fair value hedge
Undesignated swaps	6 floating-to-fixed swaps	$	600.0	5/2010 to 7/2014	0.3% to 2.0%	Mark-to-market

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 contracts, futures contracts, fixed-for-float swaps, basis swaps and option contracts. The following table summarizes our portfolio of commodity derivative instruments outstanding at March 31, 2013 (volume measures as noted):

	Volume (1)		Accounting
Derivative Purpose	Current (2)	Long-Term (2)	Treatment
Derivatives designated as hedging instruments:
Octane enhancement:
Forecasted purchases of NGLs (MMBbls)	1.5	n/a	Cash flow hedge
Forecasted sales of octane enhancement products (MMBbls)	3.2	n/a	Cash flow hedge
Natural gas marketing:
Forecasted sales of natural gas (Bcf)	0.1	n/a	Cash flow hedge
Natural gas storage inventory management activities (Bcf)	1.9	n/a	Fair value hedge
NGL marketing:
Forecasted purchases of NGLs and related hydrocarbon products (MMBbls)	3.4	n/a	Cash flow hedge
Forecasted sales of NGLs and related hydrocarbon products (MMBbls)	6.5	n/a	Cash flow hedge
Refined products marketing:
Refined products inventory management activities (MMBbls)	0.1	n/a	Fair value hedge
Crude oil marketing:
Forecasted purchases of crude oil (MMBbls)	3.9	n/a	Cash flow hedge
Forecasted sales of crude oil (MMBbls)	8.8	n/a	Cash flow hedge
Derivatives not designated as hedging instruments:
Natural gas risk management activities (Bcf) (3,4)	162.7	25.9	Mark-to-market
Refined products risk management activities (MMBbls) (4)	0.5	n/a	Mark-to-market
Crude oil risk management activities (MMBbls) (4)	3.7	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 March 2014, March 2014 and October 2015, respectively. (3) Current volumes include 89.5 Bcf of physical derivative instruments that are predominantly priced at a market-based index plus a premium or minus a discount related to location differences. (4) Reflects the use of derivative instruments to manage risks associated with transportation, processing and storage assets.

Derivative Assets and Liabilities Balance Sheet

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

	Asset Derivatives						Liability Derivatives
	March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012
	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	$	16.1	Other current assets	$	19.6	Other current liabilities	$	--	Other current liabilities	$	175.4
Interest rate derivatives	Other assets		22.3	Other assets		25.6	Other liabilities		--	Other liabilities		--
Total interest rate derivatives			38.4			45.2			--			175.4
Commodity derivatives	Other current assets		45.8	Other current assets		45.3	Other current liabilities		78.3	Other current liabilities		35.4
Commodity derivatives	Other assets		--	Other assets		--	Other liabilities		--	Other liabilities		0.5
Total commodity derivatives			45.8			45.3			78.3			35.9
Total derivatives designated as hedging instruments		$	84.2		$	90.5		$	78.3		$	211.3

Derivatives not designated as hedging instruments
Interest rate derivatives	Other current assets	$	--	Other current assets	$	--	Other current liabilities	$	12.1	Other current liabilities	$	12.2
Interest rate derivatives	Other assets		--	Other assets		--	Other liabilities		2.6	Other liabilities		5.0
Total interest rate derivatives			--			--			14.7			17.2
Commodity derivatives	Other current assets		6.0	Other current assets		15.7	Other current liabilities		7.8	Other current liabilities		8.9
Commodity derivatives	Other assets		0.3	Other assets		0.6	Other liabilities		1.0	Other liabilities		0.7
Total commodity derivatives			6.3			16.3			8.8			9.6
Total derivatives not designated as hedging instruments		$	6.3		$	16.3		$	23.5		$	26.8

Offsetting Financial Assets

Certain of our commodity derivative instruments are subject to master netting arrangements or similar agreements. The following tables present our derivative instruments subject to such arrangements at the dates indicated:

	Offsetting of Financial Assets and Derivative Assets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet		Amounts of Assets Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet		Amounts of Assets Presented in the Balance Sheet		Financial Instruments			Cash Collateral Received			Amounts That Would Have Been Presented On Net Basis
	(i)		(ii)		(iii) = (i) – (ii)		(iv)						(v) = (iii) – (iv)
As of March 31, 2013:
Commodity derivatives	$	52.1	$	--	$	52.1	$	(52.0	)	$	--		$	0.1
As of December 31, 2012:
Commodity derivatives	$	61.6	$	--	$	61.6	$	(38.7	)	$	(15.2	)	$	7.7

Offsetting Financial Liabilities

	Offsetting of Financial Liabilities and Derivative Liabilities
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet		Amounts of Liabilities Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet		Amounts of Liabilities Presented in the Balance Sheet		Financial Instruments			Cash Collateral Paid			Amounts That Would Have Been Presented On Net Basis
	(i)		(ii)		(iii) = (i) – (ii)		(iv)						(v) = (iii) – (iv)
As of March 31, 2013:
Commodity derivatives	$	87.1	$	--	$	87.1	$	(52.0	)	$	(24.3	)	$	10.8
As of December 31, 2012:
Commodity derivatives	$	45.5	$	--	$	45.5	$	(38.7	)	$	(4.3	)	$	2.5

Derivative Instruments Effects on Statements of Operations

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

Derivatives in Fair Value Hedging Relationships	Location	Gain (Loss) Recognized in Income on Derivative
		For the Three Months Ended March 31,
		2013			2012
Interest rate derivatives	Interest expense	$	(3.5	)	$	(1.5	)
Commodity derivatives	Revenue		(0.7	)		0.7
Total		$	(4.2	)	$	(0.8	)

Derivatives in Fair Value Hedging Relationships	Location	Gain (Loss) Recognized in Income on Hedged Item
		For the Three Months Ended March 31,
		2013			2012
Interest rate derivatives	Interest expense	$	3.4		$	1.1
Commodity derivatives	Revenue		(6.7	)		0.4
Total		$	(3.3	)	$	1.5

Derivative Instruments Effects on Statements of Comprehensive Income

The following tables present the effect of our derivative instruments designated as cash flow hedges on our Unaudited Condensed Statements of Consolidated Operations and Unaudited Condensed 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 the Three Months Ended March 31,
	2013			2012
Interest rate derivatives	$	6.7		$	28.9
Commodity derivatives – Revenue (1)		(47.6	)		(39.6	)
Commodity derivatives – Operating costs and expenses (1)		--			(20.0	)
Total	$	(40.9	)	$	(30.7	)

(1) The fair value of these derivative instruments would be reclassified to their respective locations on the Statement of Consolidated Operations upon settlement of the underlying derivative transactions, as appropriate.

Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income/(Loss) to Income (Effective Portion)

Derivatives in Cash Flow Hedging Relationships	Location	Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) to Income (Effective Portion)
		For the Three Months
		Ended March 31,
		2013			2012
Interest rate derivatives	Interest expense	$	(5.9	)	$	(2.7	)
Commodity derivatives	Revenue		(7.7	)		(10.0	)
Commodity derivatives	Operating costs and expenses		0.4			(12.0	)
Total		$	(13.2	)	$	(24.7	)

Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion)

Derivatives in Cash Flow Hedging Relationships	Location	Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
		For the Three Months
		Ended March 31,
		2013		2012
Commodity derivatives	Operating costs and expenses	$	--	$	0.3
Total		$	--	$	0.3

Gain/(Loss) Recognized in Income on Derivative

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

Derivatives Not Designated as Hedging Instruments	Location	Gain (Loss) Recognized in Income on Derivative
		For the Three Months
		Ended March 31,
		2013			2012
Interest rate derivatives	Interest expense	$	0.1		$	(2.2	)
Commodity derivatives	Revenue		(5.3	)		20.8
Commodity derivatives	Operating costs and expenses		--			(2.8	)
Total		$	(5.2	)	$	15.8

Fair Value Measurements of Financial Assets and Liabilities Measured on a Recurring Basis

The following table sets forth, by level within the fair value hierarchy, the carrying values of our financial assets and liabilities at March 31, 2013. These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of such inputs requires judgment.

	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant		Carrying
	Identical Assets		Observable		Unobservable		Value
	and Liabilities		Inputs		Inputs		at March 31,
	(Level 1)		(Level 2)		(Level 3)		2013
Financial assets:
Interest rate derivatives	$	--	$	38.4	$	--	$	38.4
Commodity derivatives		16.3		35.8		--		52.1
Total	$	16.3	$	74.2	$	--	$	90.5

Financial liabilities:
Interest rate derivatives	$	--	$	14.7	$	--	$	14.7
Commodity derivatives		39.1		47.4		0.6		87.1
Total	$	39.1	$	62.1	$	0.6	$	101.8

Reconciliation of Changes in the Fair Value of Level 3 Financial Assets and Liabilities

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

		For the Three Months
		Ended March 31,
Location		2013			2012
Financial Asset (Liability) Balance, Net, January 1		$	(1.5	)	$	0.4
Total gains (losses) included in:
Net income (1)	Revenue		(0.6	)		0.5
Other comprehensive income (loss)	Commodity derivative instruments – changes in fair value of cash flow hedges		--			0.5
Settlements	Revenue		1.5			(0.5	)
Financial Asset (Liability) Balance, Net, March 31		$	(0.6	)	$	0.9

(1) There were unrealized gains of $0.9 million and $0.1 million included in these amounts for the three months ended March 31, 2013 and 2012, respectively.

Fair Value Measurements, Valuation Techniques

The following table provides quantitative information about our recurring Level 3 fair value measurements at March 31, 2013:

	Fair Value
	Financial Assets		Financial Liabilities		Valuation Techniques	Unobservable Input	Range
Commodity derivatives – Crude oil	$	--	$	0.6	Discounted cash flow	Forward commodity prices	$95.75-$112.88/barrel

Noncash Impairment Charges By Segment

The following table summarizes our non-cash impairment charges by segment during each of the periods presented:

	For the Three Months
	Ended March 31,
	2013		2012
NGL Pipelines & Services	$	1.0	$	5.1
Petrochemical & Refined Products Services		10.0		0.3
Total	$	11.0	$	5.4