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Inventory, Linefill and Base Gas and Long-term Inventory
9 Months Ended
Sep. 30, 2014
Inventory, Linefill and Base Gas and Long-term Inventory  
Inventory, Linefill and Base Gas and Long-term Inventory

Note 4—Inventory, Linefill and Base Gas and Long-term Inventory

 

Inventory, linefill and base gas and long-term inventory consisted of the following as of the dates indicated (barrels and natural gas volumes in thousands and carrying value in millions):

 

 

 

September 30, 2014

 

 

December 31, 2013

 

 

 

 

 

Unit of

 

Carrying

 

Price/

 

 

 

 

Unit of

 

Carrying

 

Price/

 

 

 

Volumes

 

Measure

 

Value

 

Unit (1)

 

 

Volumes

 

Measure

 

Value

 

Unit (1)

 

Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

5,665

 

barrels

 

$

476

 

$

84.02

 

 

6,951

 

barrels

 

$

540

 

$

77.69

 

NGL

 

17,392

 

barrels

 

699

 

$

40.19

 

 

8,061

 

barrels

 

352

 

$

43.67

 

Natural gas

 

29,245

 

Mcf

 

119

 

$

4.07

 

 

40,505

 

Mcf

 

150

 

$

3.70

 

Other

 

N/A

 

 

 

20

 

N/A

 

 

N/A

 

 

 

23

 

N/A

 

Inventory subtotal

 

 

 

 

 

1,314

 

 

 

 

 

 

 

 

1,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Linefill and base gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

11,390

 

barrels

 

715

 

$

62.77

 

 

10,966

 

barrels

 

679

 

$

61.92

 

NGL

 

1,214

 

barrels

 

54

 

$

44.48

 

 

1,341

 

barrels

 

62

 

$

46.23

 

Natural gas

 

28,612

 

Mcf

 

134

 

$

4.68

 

 

16,615

 

Mcf

 

57

 

$

3.43

 

Linefill and base gas subtotal

 

 

 

 

 

903

 

 

 

 

 

 

 

 

798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

2,557

 

barrels

 

207

 

$

80.95

 

 

2,498

 

barrels

 

202

 

$

80.86

 

NGL

 

1,681

 

barrels

 

63

 

$

37.48

 

 

1,161

 

barrels

 

49

 

$

42.20

 

Long-term inventory subtotal

 

 

 

 

 

270

 

 

 

 

 

 

 

 

251

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

$

2,487

 

 

 

 

 

 

 

 

$

2,114

 

 

 

 

(1)                   Price per unit of measure is comprised of a weighted average associated with various grades, qualities and locations.  Accordingly, these prices may not coincide with any published benchmarks for such products.

 

At the end of each reporting period, we assess the carrying value of our inventory and make any adjustments necessary to reduce the carrying value to the applicable net realizable value. We did not record any such charges during the three months ended September 30, 2014. We recorded a charge of $37 million during the nine months ended September 30, 2014 related to the writedown of our natural gas inventory that was purchased in conjunction with managing natural gas storage deliverability requirements during the extended period of severe cold weather in the first quarter of 2014. During the three and nine months ended September 30, 2013, we recorded a charge of $7 million, primarily related to the writedown of our crude oil inventory due to declines in prices during the period. These adjustments are a component of “Purchases and related costs” on our accompanying condensed consolidated statements of operations. The recognition of the adjustment in 2013 was substantially offset by the recognition of gains on derivative instruments being utilized to hedge the future sales of our crude oil inventory.  Substantially all of such gains were recorded to “Supply and Logistics segment revenues” on our accompanying condensed consolidated statements of operations.  See Note 10 for discussion of our derivatives and risk management activities.