Property, Plant and Equipment

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Note 4.  Property, Plant and Equipment

The historical costs of our property, plant and equipment and related balances were as follows at the dates indicated:

	Estimated Useful Life		December 31,
	in Years		2023		2022
Plants, pipelines and facilities (1)(5)		3-45	$	57,983	$	54,396
Underground and other storage facilities (2)(6)		5-40		4,401		4,329
Transportation equipment (3)		3-10		242		222
Marine vessels (4)		15-30		935		921
Land				411		387
Construction in progress				2,245		2,867
Subtotal				66,217		63,122
Less accumulated depreciation				20,462		18,800
Subtotal property, plant and equipment, net				45,755		44,322
Capitalized major maintenance costs for reaction-based    plants, net of accumulated amortization (7)				49		79
Property, plant and equipment, net			$	45,804	$	44,401

(1)	Plants, pipelines and facilities include distillation-based and reaction-based plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; buildings; office furniture and equipment; laboratory and shop equipment and related assets.
(2)	Underground and other storage facilities include underground product storage caverns; above ground storage tanks; water wells and related assets.
(3)	Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations.
(4)	Marine vessels include tow boats, barges and related equipment used in our marine transportation business.
(5)	In general, the estimated useful lives of major assets within this category are: distillation-based and reaction-based plants, 20-35 years; pipelines and related equipment, 5-45 years; terminal facilities, 10-35 years; buildings, 20-40 years; office furniture and equipment, 3-20 years; and laboratory and shop equipment, 5-35 years.
(6)	In general, the estimated useful lives of assets within this category are: underground storage facilities, 5-35 years; storage tanks, 10-40 years; and water wells, 5-35 years.
(7)	For reaction-based plants, we use the deferral method when accounting for major maintenance activities.  Under the deferral method, major maintenance costs are capitalized and amortized over the period until the next major overhaul project.  On a weighted-average basis, the expected remaining amortization period for these costs is 0.8 years.

The following table summarizes our depreciation expense and capitalized interest amounts for the years indicated:

	For the Year Ended December 31,
	2023		2022		2021
Depreciation expense (1)	$	1,860	$	1,779	$	1,705
Capitalized interest (2)		106		90		80

(1)	Depreciation expense is a component of “Third party and other costs” within “Costs and expenses” as presented on our Statements of Consolidated Operations.
(2)	Capitalized interest is a component of “Interest expense” as presented on our Statements of Consolidated Operations.

Asset Retirement Obligations

We record AROs in connection with legal requirements to perform specified retirement activities under contractual arrangements and/or governmental regulations.  Our contractual AROs primarily result from right-of-way agreements associated with our pipeline operations and property leases associated with our plant sites.  In addition, we record AROs in connection with governmental regulations associated with the abandonment or retirement of above-ground brine storage pits and certain marine vessels.  We also record AROs in connection with regulatory requirements associated with the renovation or demolition of certain assets containing hazardous substances such as asbestos.  We typically fund our AROs using cash flow from operations.

Property, plant and equipment at December 31, 2023 and 2022 includes $109 million and $117 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset.

The following table presents information regarding our AROs for the years indicated:

	For the Year Ended December 31,
	2023			2022			2021
ARO liability beginning balance	$	234		$	176		$	150
Liabilities incurred (1)		5			20			6
Revisions in estimated cash flows (2)		(12	)		30			6
Liabilities settled (3)		(13	)		(10	)		(4	)
Accretion expense (4)		11			18			18
ARO liability ending balance	$	225		$	234		$	176

(1)	Represents the initial recognition of estimated ARO liabilities during period.
(2)	Represents subsequent adjustments to estimated ARO liabilities during period.
(3)	Represents cash payments to settle ARO liabilities during period.
(4)	Represents net change in ARO liability balance attributable to the passage of time and other adjustments, including true-up amounts associated with revised closure estimates.

Of the $225 million total ARO liability recorded at December 31, 2023, $4 million was reflected as a current liability and $221 million as a long-term liability.

The following table presents our forecast of ARO-related accretion expense for the years indicated:

2024		2025		2026		2027		2028
$	13	$	14	$	15	$	16	$	16

Impairments of Property, Plant and Equipment

The following table presents our non-cash asset impairment charges involving property, plant and equipment by business segment for the years indicated:

	For the Year Ended December 31,
	2023		2022		2021
NGL Pipelines & Services	$	12	$	23	$	20
Crude Oil Pipelines & Services		1		3		15
Natural Gas Pipelines & Services (1)		5		6		56
Petrochemical & Refined Products Services (2)		2		9		127
Total impairment charges for property, plant and equipment	$	20	$	41	$	218

(1)	2021 amount includes a $37 million non-cash impairment charge associated with the sale of components of our San Juan Gathering System.
(2)	2021 amount includes a non-cash impairment charge of $113 million associated with our marine transportation business.

The following information summarizes our significant asset impairment charges involving property, plant and equipment that were recognized during the year ended December 31, 2021:

• In December 2021, we evaluated our marine transportation business for impairment due to a further deterioration of demand for such services, which resulted in lower-than-expected term and spot rates.  As a result of our review, we recognized an impairment charge of $114 million.  The impairment charge reduced property, plant and equipment by $113 million and intangible assets by $1 million.  We determined the fair value using an income approach (i.e., a discounted cash flow approach), which incorporates Level 3 inputs including: (i) management’s long-term forecast of cash flows generated by the business; (ii) a discount rate of 8.7%, which is based on an estimated weighted-average cost of capital for market participants engaged in similar business activities; and (iii) a growth rate of 2.2% for terminal year cash flows.

• In March 2021, we entered into agreements to sell a coal bed natural gas gathering system and related Val Verde treating facility, both of which were components of our San Juan Gathering System, to a third party for $39 million in cash.  The transaction closed and was effective on April 1, 2021.  We recognized an impairment charge of $44 million attributable to this transaction, which reflects the write down of $37 million of property, plant and equipment and $7 million of intangible assets to their respective fair values.

The remainder of our impairment charges for the years ended December 31, 2023, 2022 and 2021 are attributable to the complete write-off of assets that are no longer expected to be used or constructed.