XML 57 R43.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Instruments, Hedging Activities and Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2018
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 commodity derivative instruments outstanding at December 31, 2018 (volume measures as noted):

 
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 (Bcf)
 
4.9
  
n/a
 
Cash flow hedge
Forecasted sales of NGLs (MMBbls)
 
1.0
  
n/a
 
Cash flow hedge
Octane enhancement:
       
Forecasted purchase of NGLs (MMBbls)
 
1.8
  
n/a
 
Cash flow hedge
Forecasted sales of octane enhancement products (MMBbls)
 
3.1
  
0.1
 
Cash flow hedge
Natural gas marketing:
 
 
 
 
 
 
 
Natural gas storage inventory management activities (Bcf)
 
3.3
 
 
n/a
 
Fair value hedge
NGL marketing:
 
 
 
 
 
 
 
Forecasted purchases of NGLs and related hydrocarbon products (MMBbls)
 
33.6
 
 
4.3
 
Cash flow hedge
Forecasted sales of NGLs and related hydrocarbon products (MMBbls)
 
45.0
 
 
1.7
 
Cash flow hedge
NGLs inventory management activities (MMBbls)
 
0.3
  
n/a
 
Fair value hedge
Refined products marketing:
 
 
 
 
 
 
 
Forecasted purchases of refined products (MMBbls)
 
1.0
 
 
n/a
 
Cash flow hedge
Forecasted sales of refined products (MMBbls)
 
2.0
 
 
n/a
 
Cash flow hedge
Refined products inventory management activities (MMBbls)
 
0.5
  
n/a
 
Fair value hedge
Crude oil marketing:
 
 
 
 
 
 
 
Forecasted purchases of crude oil (MMBbls)
 
18.4
 
 
1.9
 
Cash flow hedge
Forecasted sales of crude oil (MMBbls)
 
28.5
 
 
1.9
 
Cash flow hedge
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Natural gas risk management activities (Bcf) (3,4)
 
77.5
 
 
0.9
 
Mark-to-market
NGL risk management activities (MMBbls) (4)
 
3.3
  
n/a
 
Mark-to-market
Refined products risk management activities (MMBbls) (4)
 
2.6
  
n/a
 
Mark-to-market
Crude oil risk management activities (MMBbls) (4)
 
26.3
 
 
3.2
 
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 2020, June 2019 and December 2020, respectively.
(3)      Current volume includes 29.8 Bcf of physical derivative instruments that are predominantly priced at a marked-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
 
  
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
 
  
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
 
Current assets
 
$
--
 
Current assets
 
$
--
 
Current
liabilities
 
$
--
 
Current
liabilities
 
$
1.5
 
Interest rate derivatives
 
Other assets
  
--
 
Other assets
  
0.1
 
Other liabilities
  
--
 
Other liabilities
  
0.2
 
Total interest rate derivatives
 
 
  
--
 
 
  
0.1
 
 
  
--
 
 
  
1.7
 
Commodity derivatives
 
Current assets
  
138.5
 
Current assets
  
109.5
 
Current
liabilities
  
115.0
 
Current
liabilities
  
104.4
 
Commodity derivatives
 
Other assets
  
5.6
 
Other assets
  
6.4
 
Other liabilities
  
11.1
 
Other liabilities
  
6.8
 
Total commodity derivatives
 
 
  
144.1
 
 
  
115.9
 
 
  
126.1
 
 
  
111.2
 
Total derivatives designated as hedging instruments
 
 
 
$
144.1
 
 
 
$
116.0
 
 
 
$
126.1
 
 
 
$
112.9
 
   
 
    
 
    
 
    
 
    
Derivatives not designated as hedging instruments
 
Commodity derivatives
 
Current assets
 
$
15.9
 
Current assets
 
$
43.9
 
Current
liabilities
 
$
33.2
 
Current
liabilities
 
$
62.3
 
Commodity derivatives
 
Other assets
  
1.9
 
Other assets
  
1.9
 
Other liabilities
  
3.1
 
Other liabilities
  
3.4
 
Total commodity derivatives
 
 
  
17.8
 
 
  
45.8
 
 
  
36.3
 
 
  
65.7
 
Total derivatives not designated as hedging instruments
 
 
 
$
17.8
 
 
 
$
45.8
 
 
 
$
36.3
 
 
 
$
65.7
 
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 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
Paid
  
Cash
Collateral
Received
 
Amounts That
Would Have
Been Presented
On Net Basis
 
 
(i)
 
(ii)
 
(iii) = (i) – (ii)
 
(iv)
 
(v) = (iii) + (iv)
 
As of December 31, 2018:
          
Commodity derivatives
 
$
161.9
  
$
--
  
$
161.9
  
$
(158.6
)
 
$
--
  
$
--
  
$
3.3
 
As of December 31, 2017:
                            
Interest rate derivatives
 
$
0.1
  
$
--
  
$
0.1
  
$
(0.1
)
 
$
--
  
$
--
  
$
--
 
Commodity derivatives
  
161.7
   
--
   
161.7
   
(157.8
)
  
--
   
--
   
3.9
 
Offsetting Financial Liabilities

 
Offsetting of Financial Liabilities and Derivative Liabilities
 
 
      
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 December 31, 2018:
            
Commodity derivatives
 
$
162.4
  
$
--
  
$
162.4
  
$
(158.6
)
 
$
(2.3
)
 
$
1.5
 
As of December 31, 2017:
                        
Interest rate derivatives
 
$
1.7
  
$
--
  
$
1.7
  
$
(0.1
)
 
$
--
  
$
1.6
 
Commodity derivatives
  
176.9
   
--
   
176.9
   
(157.8
)
  
(17.3
)
  
1.8
 
Derivative Instruments Effects on Statements of Operations

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

 Derivatives in Fair Value
Hedging Relationships
Location
 
Gain (Loss) Recognized in
Income on Derivative
 
 
  
 
For the Year Ended December 31,
 
 
 
 
2018
  
2017
  
2016
 
Interest rate derivatives
Interest expense
 
$
1.3
  
$
(0.2
)
 
$
0.3
 
Commodity derivatives
Revenue
  
9.9
   
1.1
   
(90.5
)
Total
 
 
$
11.2
  
$
0.9
  
$
(90.2
)

 Derivatives in Fair Value
Hedging Relationships
Location
 
Gain (Loss) Recognized in
Income on Hedged Item
 
 
  
 
For the Year Ended December 31,
 
 
 
 
2018
  
2017
  
2016
 
Interest rate derivatives
Interest expense
 
$
(1.4
)
 
$
0.4
  
$
(0.4
)
Commodity derivatives
Revenue
  
(6.9
)
  
27.4
   
125.0
 
Total
 
 
$
(8.3
)
 
$
27.8
  
$
124.6
 
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 Statements of Consolidated Operations and Statements of Consolidated Comprehensive Income for the years indicated:

Derivatives in Cash Flow
Hedging Relationships
 
Change in Value Recognized in
Other Comprehensive Income (Loss)
On Derivative
 
 
 
For the Year Ended December 31,
 
 
 
2018
  
2017
  
2016
 
Interest rate derivatives
 
$
22.2
  
$
(5.7
)
 
$
42.3
 
Commodity derivatives – Revenue (1)
  
293.0
   
(33.7
)
  
(197.4
)
Commodity derivatives – Operating costs and expenses (1)
  
0.2
   
(4.8
)
  
3.6
 
Total
 
$
315.4
  
$
(44.2
)
 
$
(151.5
)
             
(1)The fair value of these derivative instruments will 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
 
Derivatives in Cash Flow
Hedging Relationships
Location
 
Gain (Loss) Reclassified from
Accumulated Other Comprehensive
Income (Loss) to Income
 
 
  
 
For the Year Ended December 31,
 
 
 
 
2018
  
2017
  
2016
 
Interest rate derivatives
Interest expense
 
$
(38.1
)
 
$
(40.4
)
 
$
(37.4
)
Commodity derivatives
Revenue
  
131.7
   
(111.6
)
  
(53.6
)
Commodity derivatives
Operating costs and expenses
  
(1.3
)
  
(0.6
)
  
0.2
 
Total
 
 
$
92.3
  
$
(152.6
)
 
$
(90.8
)
Gain/(Loss) Recognized in Income on Derivative
The following table presents the effect of our derivative instruments not designated as hedging instruments on our Statements of Consolidated Operations for the years indicated:

Derivatives Not Designated as
Hedging Instruments
Location
 
Gain (Loss) Recognized in
Income on Derivative
 
 
  
 
For the Year Ended December 31,
 
 
 
 
2018
  
2017
  
2016
 
Commodity derivatives
Revenue
 
$
(462.9
)
 
$
(42.7
)
 
$
(38.4
)
Commodity derivatives
Operating costs and expenses
  
8.2
   
0.1
   
(0.4
)
Total
 
 
$
(454.7
)
 
$
(42.6
)
 
$
(38.8
)
Unrealized mark-to-market gains (losses)

Unrealized mark-to-market gains (losses) by segment:
   
NGL Pipelines & Services
 
$
18.0
 
Crude Oil Pipelines & Services
  
(44.1
)
Natural Gas Pipelines & Services
  
5.3
 
Petrochemical & Refined Products Services
  
1.7
 
Total
 
$
(19.1
)
Fair Value Measurements of Financial Assets and Liabilities Measured on a Recurring Basis
 
 
At December 31, 2018
Fair Value Measurements Using
    
 
 
Quoted Prices
in Active
Markets for
Identical Assets
and Liabilities
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
  
Total
 
Financial assets:
            
Commodity derivatives:
            
   Value before application of CME Rule 814
 
$
172.3
  
$
282.4
  
$
2.2
  
$
456.9
 
   Impact of CME Rule 814 change
  
(134.8
)
  
(159.3
)
  
(0.9
)
  
(295.0
)
   Total commodity derivatives
  
37.5
   
123.1
   
1.3
   
161.9
 
Total
 
$
37.5
  
$
123.1
  
$
1.3
  
$
161.9
 
 
                
Financial liabilities:
                
Liquidity Option Agreement (see Note 17)
 
$
--
  
$
--
  
$
390.0
  
$
390.0
 
Commodity derivatives:
                
   Value before application of CME Rule 814
  
85.5
   
291.2
   
21.4
   
398.1
 
   Impact of CME Rule 814 change
  
(48.6
)
  
(172.9
)
  
(14.2
)
  
(235.7
)
   Total commodity derivatives
  
36.9
   
118.3
   
7.2
   
162.4
 
Total
 
$
36.9
  
$
118.3
  
$
397.2
  
$
552.4
 


 
 
At December 31, 2017
Fair Value Measurements Using
    
 
 
Quoted Prices
in Active
Markets for
Identical Assets
and Liabilities
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
  
Total
 
Financial assets:
            
Interest rate derivatives
 
$
--
  
$
0.1
  
$
--
  
$
0.1
 
Commodity derivatives:
                
   Value before application of CME Rule 814
  
47.1
   
184.9
   
2.9
   
234.9
 
   Impact of CME Rule 814 change
  
(47.1
)
  
(26.1
)
  
--
   
(73.2
)
   Total commodity derivatives
  
--
   
158.8
   
2.9
   
161.7
 
Total
 
$
--
  
$
158.9
  
$
2.9
  
$
161.8
 
 
                
Financial liabilities:
                
Liquidity Option Agreement (see Note 17)
 
$
--
  
$
--
  
$
333.9
  
$
333.9
 
Interest rate derivatives
  
--
   
1.7
   
--
   
1.7
 
Commodity derivatives:
                
   Value before application of CME Rule 814
  
118.4
   
270.6
   
1.7
   
390.7
 
   Impact of CME Rule 814 change
  
(118.4
)
  
(95.4
)
  
--
   
(213.8
)
   Total commodity derivatives
  
--
   
175.2
   
1.7
   
176.9
 
Total
 
$
--
  
$
176.9
  
$
335.6
  
$
512.5
 
Fair Value Measurements, Valuation Techniques
The following tables provide quantitative information regarding our recurring Level 3 fair value measurements for commodity derivatives at the dates indicated:

 
 
Fair Value At
December 31, 2018
 
 
 
   
 
 
Financial
Assets
  
Financial
Liabilities
 
Valuation
Techniques
Unobservable Input
Range
Commodity derivatives – Crude oil
 
$
0.9
  
$
0.8
 
Discounted cash flow
Forward commodity prices
$37.59-$51.99/barrel
Commodity derivatives – Ethane
  
0.4
   
0.6
 
Discounted cash flow
Forward commodity prices
$0.28-$0.31/gallon
Commodity derivatives – Propane
  
--
   
1.0
 
Discounted cash flow
Forward commodity prices
$0.61-$0.66/gallon
Commodity derivatives – Normal butane
  
--
   
0.7
 
Discounted cash flow
Forward commodity prices
$0.66-$0.72/gallon
Commodity derivatives – Natural gasoline
  
--
   
4.1
 
Discounted cash flow
Forward commodity prices
$0.99-$1.01/gallon
Total
 
$
1.3
  
$
7.2
 
 
 
   


 
 
Fair Value At
December 31, 2017
 
 
 
   
 
 
Financial
Assets
  
Financial
Liabilities
 
Valuation
Techniques
Unobservable Input
Range
Commodity derivatives – Crude oil
 
$
2.9
  
$
1.7
 
Discounted cash flow
Forward commodity prices
$60.21-$66.05/barrel
Total
 
$
2.9
  
$
1.7
      
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 years indicated:

 
  
 
For the Year Ended December 31,
 

Location
 
2018
  
2017
 
Financial asset (liability) balance, net, January 1
 
 
$
(332.7
)
 
$
(268.2
)
Total gains (losses) included in:
 
        
Net income (1)
Revenue
  
0.7
   
2.3
 
Net income
Other expense, net – Liquidity Option Agreement
  
(56.1
)
  
(64.3
)
Other comprehensive income (loss)
Commodity derivative instruments – changes in fair value of cash flow hedges
  
(3.2
)
  
0.1
 
Settlements (1)
Revenue
  
(1.9
)
  
(2.4
)
Transfers out of Level 3 (2)
 
  
(2.7
)
  
(0.2
)
Financial liability balance, net, December 31 (2)
 
 
$
(395.9
)
 
$
(332.7
)
  
(1)There were $1.2 million and $0.1 million of unrealized losses included in these amounts for the years ended December 31, 2018 and 2017, respectively.
(2)Transfers out of Level 3 into Level 2 were due to shorter remaining transaction maturities falling inside of the Level 2 range at December 31, 2018 and 2017.
 
Asset Impairment Charges by Segment
The following table summarizes our non-cash asset impairment charges by segment during the years indicated:

 
 
For the Year Ended December 31,
 
 
 
2018
  
2017
  
2016
 
NGL Pipelines & Services
 
$
18.6
  
$
11.5
  
$
21.0
 
Crude Oil Pipelines & Services
  
11.2
   
10.2
   
2.3
 
Natural Gas Pipelines & Services
  
13.9
   
14.3
   
12.3
 
Petrochemical & Refined Products Services
  
3.1
   
1.8
   
9.6
 
Total
 
$
46.8
  
$
37.8
  
$
45.2
 
Nonrecurring Fair Value Measurements

The following table presents categories of long-lived assets, primarily property, plant and equipment, that were subject to non-recurring fair value measurements during the year ended December 31, 2018:

 
  
Fair Value Measurements
at the End of the Reporting Period Using
   
 
Carrying
Value at
December 31,
2018
 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Non-Cash
Impairment
Loss
 
Long-lived assets disposed of other than by sale
 
$
--
  
$
--
  
$
--
  
$
--
  
$
43.7
 
Long-lived assets held and used
  
--
   
--
   
--
   
--
   
3.1
 
Total
                 
$
46.8
 

The following table presents categories of long-lived assets, primarily property, plant and equipment, that were subject to non-recurring fair value measurements during the year ended December 31, 2017:

 
    
Fair Value Measurements
at the End of the Reporting Period Using
    
 
 
Carrying
Value at
December 31,
2017
  
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
  
Total
Non-Cash
Impairment
Loss
 
Long-lived assets disposed of other than by sale
 
$
--
  
$
--
  
$
--
  
$
--
  
$
16.7
 
Long-lived assets held and used
  
1.5
   
--
   
--
   
1.5
   
15.4
 
Long-lived assets held for sale
  
2.5
   
--
   
--
   
2.5
   
2.5
 
Long-lived assets disposed of by sale
  
--
   
--
   
--
   
--
   
3.2
 
Total
                 
$
37.8
 

The following table presents categories of long-lived assets that were subject to non-recurring fair value measurements during the year ended December 31, 2016:

 
    
Fair Value Measurements
at the End of the Reporting Period Using
    
 
 
Carrying
Value at
December 31,
2016
  
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
  
Total
Non-Cash
Impairment
Loss
 
Long-lived assets disposed of other than by sale
 
$
--
  
$
--
  
$
--
  
$
--
  
$
29.9
 
Long-lived assets held  and used
  
8.0
   
8.0
   
--
   
--
   
2.2
 
Long-lived assets disposed of by sale
  
--
   
--
   
--
   
--
   
13.1
 
Total
                 
$
45.2