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Intangible Assets and Goodwill
 12 Months Ended
Dec. 31, 2023
Intangible Assets and Goodwill [Abstract]  
Intangible Assets and Goodwill
Note 6.  Intangible Assets and Goodwill

Identifiable Intangible Assets

The following table summarizes our intangible assets by business segment at the dates indicated:

 
  
December 31, 2023
    
December 31, 2022
  
 
  
Gross
Value
    
Accumulated
Amortization
    
Carrying
Value
    
Gross
Value
    
Accumulated
Amortization
    
Carrying
Value
  
NGL Pipelines & Services:
                                    
Customer relationship intangibles
  
$
449
    
$
(263
)
  
$
186
    
$
449
    
$
(249
)
  
$
200
  
Contract-based intangibles
    
752
      
(110
)
    
642
      
749
      
(84
)
    
665
  
Segment total
    
1,201
      
(373
)
    
828
      
1,198
      
(333
)
    
865
  
Crude Oil Pipelines & Services:
                                                
Customer relationship intangibles
    
2,195
      
(530
)
    
1,665
      
2,195
      
(431
)
    
1,764
  
Contract-based intangibles
    
283
      
(275
)
    
8
      
283
      
(271
)
    
12
  
Segment total
    
2,478
      
(805
)
    
1,673
      
2,478
      
(702
)
    
1,776
  
Natural Gas Pipelines & Services:
                                                
Customer relationship intangibles
    
1,351
      
(625
)
    
726
      
1,350
      
(588
)
    
762
  
Contract-based intangibles
    
641
      
(209
)
    
432
      
639
      
(195
)
    
444
  
Segment total
    
1,992
      
(834
)
    
1,158
      
1,989
      
(783
)
    
1,206
  
Petrochemical & Refined Products Services:
                                                
Customer relationship intangibles
    
181
      
(86
)
    
95
      
181
      
(80
)
    
101
  
Contract-based intangibles
    
45
      
(29
)
    
16
      
45
      
(28
)
    
17
  
Segment total
    
226
      
(115
)
    
111
      
226
      
(108
)
    
118
  
Total intangible assets
  
$
5,897
    
$
(2,127
)
  
$
3,770
    
$
5,891
    
$
(1,926
)
  
$
3,965
  

The following table presents the amortization expense of our intangible assets by business segment for the years indicated:

 
  
For the Year Ended December 31,
  
 
  
2023
    
2022
    
2021
  
NGL Pipelines & Services
  
$
40
    
$
36
    
$
24
  
Crude Oil Pipelines & Services
    
103
      
84
      
77
  
Natural Gas Pipelines & Services
    
51
      
50
      
42
  
Petrochemical & Refined Products Services
    
7
      
7
      
8
  
Total
  
$
201
    
$
177
    
$
151
  

The following table presents our forecast of amortization expense associated with existing intangible assets for the years indicated:

2024
    
2025
    
2026
    
2027
    
2028
  
$
210
    
$
208
    
$
203
    
$
185
    
$
180
  

Customer relationship intangible assets
Customer relationship intangible assets represent the estimated economic value assigned to commercial relationships acquired in connection with business combinations.  Our customer relationship intangible assets are classified as either (i) basin-specific or (ii) general. Basin-specific customer relationships represent access to customers associated with a defined resource basin (e.g., customers using a natural gas gathering system serving a specific production field) and is analogous to having a franchise in a particular area.  General customer relationships are associated with customers whose hydrocarbon volumes are not attributable to specific resource basins (e.g., customers at a marine terminal that handles volumes originating from multiple sources).

The estimated fair value of each customer relationship intangible asset was determined at the time of acquisition using a discounted cash flow analysis, which incorporates various assumptions regarding the acquired business.  The assumptions may include Level 3 fair value inputs, including long-range cash flow forecasts that extend for the estimated economic life of the hydrocarbon resource base served by the asset network, anticipated service contract renewals, resource base depletion rates and expected customer attrition rates.

The recognition of customer relationships are supported by a variety of factors.  In general, midstream infrastructure requires a significant investment, both in terms of initial construction costs and ongoing maintenance, and is generally supported by long-term contracts that establish a customer base.  The level of expenditures and regulatory requirements involved in constructing new midstream asset networks can create significant economic barriers to entry that may limit potential competition.  Furthermore, efficient, continuous operation of the acquired fixed assets not only supports the commercial relationships existing at the time of the acquisition, but it provides us with opportunities to establish new ones.  These factors support the long-term value attributed to our customer relationship intangible assets.

With respect to amortization periods, the duration of a basin-specific customer relationship is limited to the estimated economic life of the associated resource basin.  The duration of our other customer relationships is typically limited to the term of the underlying service contracts, including assumed renewals.  Amortization expense attributable to customer relationships is recorded in a manner that closely resembles the pattern in which we expect to benefit from such relationships.

At December 31, 2023, the carrying value of our portfolio of customer relationship intangible assets was $2.7 billion, the principal components of which were as follows:

 a
  
Weighted
Average
Remaining
Amortization
Period
  
 
 
December 31, 2023
Gross
Value
  
Accumulated
Amortization
  
Carrying
Value
Basin-specific customer relationships:
                      
   EFS Midstream (acquired 2015)
  
18.4 years
  
$
 1,410
  
$
(339)
  
$
1,071
   State Line and Fairplay (acquired 2010)
  
23.2 years
    
895
    
(302)
    
593
   San Juan Gathering (acquired 2004)
  
15.8 years
    
331
    
(266)
    
65
General customer relationships:
                      
   Oiltanking (acquired 2014)
  
20.0 years
    
1,193
    
(294)
    
899


• The EFS Midstream customer relationships provide us with long-term access to condensate and natural gas producers in the Eagle Ford Shale served by our EFS Midstream System.  The EFS Midstream System provides condensate gathering and processing services along with gathering, treating and compression services for associated natural gas.

•
The State Line and Fairplay customer relationships provide us with long-term access to natural gas producers served by our Haynesville and Fairplay Gathering Systems.  The Haynesville Gathering System gathers and treats natural gas produced from the Haynesville and Bossier Shale supply basins and the Cotton Valley and Taylor Sand formations in Louisiana and East Texas.  The Fairplay Gathering System gathers natural gas produced from the Cotton Valley formation in East Texas.

•
The San Juan Gathering customer relationships provide us with long-term access to natural gas producers in the San Juan Basin served by our San Juan Gathering System.

•
The Oiltanking customer relationships provide us with long-term access to crude oil and refined products storage and terminal customers served at our Houston Ship Channel and Beaumont, Texas terminals.

Contract-based intangible assets
Contract-based intangible assets represent specific commercial rights we acquired in connection with business combinations. These intangible assets are typically valued using an income approach that incorporate the terms of the agreements.  At December 31, 2023, the carrying value of our portfolio of contract-based intangible assets was $1.1 billion, the principal components of which were as follows:

a
  
Weighted
Average
Remaining
Amortization
Period
  
 
 
December 31, 2023
Gross
Value
  
Accumulated
Amortization
  
Carrying
Value
Navitas Midstream customer contracts
  
28.0 years
$
  
989
  
$
(45)
  
$
944
Jonah natural gas gathering agreements
  
18.0 years
    
224
    
(185)
    
39
Delaware Basin natural gas processing contracts
  
3.0 years
    
82
    
(48)
    
34


• The Navitas Midstream customer contracts, which we acquired in connection with our acquisition of Navitas Midstream Partners, LLC (“Navitas Midstream”) in February 2022, represents the estimated value we assigned to the acquired long-term contracts with customers that dedicate future lease production to our system.  The estimated fair value of the acquired contract-based intangible assets was determined using an income approach, specifically a discounted cash flow analysis.  The fair value estimate incorporates Level 3 inputs including: (i) management’s long-term forecast of cash flows generated by the Midland Basin System based on the estimated economic life of the hydrocarbon resource basin served and resource depletion rates; and (ii) a discount rate of 15.5%, which is based on a benchmarking analysis with reference to the implied rate of return on the Navitas Midstream acquisition and a market participant weighted average cost of capital.  The estimated useful life of the acquired contract-based intangible asset is 30 years.  Amortization expense attributable to these contracts is recorded using a units-of-production method based on gathering volumes.

•
The Jonah natural gas gathering agreements represent the estimated value we assigned to natural gas gathering contracts acquired in 2001 associated with the Jonah Gathering System. Amortization expense attributable to these intangible assets is recorded using a units-of-production method based on gathering volumes.

•
The Delaware Basin natural gas processing contracts represent the estimated value we assigned to natural gas processing contracts we acquired in 2018 in connection with our step acquisition of the remaining 50% member interest in Delaware Basin Gas Processing LLC. Amortization expense attributable to these contracts is recorded using a straight-line approach over the terms of the underlying contracts.

Goodwill

Goodwill represents the cost of acquired businesses in excess of the fair value of their net assets at acquisition.  The following table presents changes in the carrying amount of goodwill by business segment during the periods indicated:

 
  
NGL
Pipelines
& Services
    
Crude Oil
Pipelines
& Services
    
Natural Gas
Pipelines
& Services
    
Petrochemical
& Refined
Products
Services
    
Consolidated
Total
  
Balance at December 31, 2021 (1)
  
$
2,652
    
$
1,841
    
$
–
    
$
956
    
$
5,449
  
Goodwill related to acquisition (2)
    
159
      
–
      
–
      
–
      
159
  
Balance at December 31, 2022 (1)
    
2,811
      
1,841
      
–
      
956
      
5,608
  
Balance at December 31, 2023 (1)
  
$
2,811
    
$
1,841
    
$
–
    
$
956
    
$
5,608
  

(1)
Balances are presented net of historical accumulated impairment losses of $296 million for the Natural Gas Pipelines & Service segment and $1 million for the Petrochemical & Refined Products Services segment.  There have been no goodwill impairment charges recognized for the reporting units within the NGL Pipelines & Services and Crude Oil Pipelines & Services segments.
(2)
This amount represents the goodwill recognized in connection with our acquisition of Navitas Midstream in February 2022.  In general, we attribute this goodwill to our ability to leverage the acquired business with our existing NGL asset base to create future business opportunities.