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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2011

Property, Plant and Equipment [Abstract]

Note 9. Property, Plant, and Equipment

		Estimated	Depreciation
		Useful Life (a)	Rates (a)		December 31,
		(Years)	(%)		2011	2010

					(Millions)

Nonregulated:
	Natural gas gathering and processing facilities	5 - 40		$	6,435	$	6,134
	Construction in progress	(b)			648		223
	Other	3 - 45			816		773
Regulated:
	Natural gas transmission facilities		.01 - 6.67		9,593		9,066
	Construction in progress		(b)		199		240
	Other		.01 - 33.33		1,391		1,359
Total property, plant, and equipment, at cost					19,082		17,795
Accumulated depreciation and amortization					(6,502)		(6,041)
Property, plant, and equipment - net				$	12,580	$	11,754

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(a) Estimated useful life and depreciation rates are presented as of December 31, 2011. Depreciation rates for regulated assets are prescribed by the FERC.

(b) Construction in progress balances not yet subject to depreciation.

Depreciation and amortization expense for property, plant, and equipment – net was $658 million in 2011, $611 million in 2010, and $576 million in 2009.

Regulated property, plant, and equipment – net includes $865 million and $906 million at December 31, 2011 and 2010, respectively, related to amounts in excess of the original cost of the regulated facilities within our gas pipeline businesses as a result of our prior acquisitions. This amount is being amortized over 40 years using the straight-line amortization method. Current FERC policy does not permit recovery through rates for amounts in excess of original cost of construction.

Asset Retirement Obligations

Our accrued obligations relate to underground storage caverns, offshore platforms, fractionation and compression facilities, gas gathering well connections and pipelines, and gas transmission facilities. At the end of the useful life of each respective asset, we are legally obligated to plug storage caverns and remove any related surface equipment, to restore land and remove surface equipment at gas processing, fractionation and compression facilities, to dismantle offshore platforms, to cap certain gathering pipelines at the wellhead connection and remove any related surface equipment, and to remove certain components of gas transmission facilities from the ground.

The following table presents the significant changes to our asset retirement obligations, of which $507 million and $464 million are included in regulatory liabilities, deferred income, and other, with the remaining current portion in accrued liabilities at December 31, 2011 and 2010, respectively.

		December 31,
		2011		2010

		(Millions)
Beginning balance	$	499	$	499
Liabilities settled		(46)		(16)
Additions		4		2
Accretion expense		39		36
Revisions(1)		77		(22)
Ending balance	$	573	$	499

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The revision in 2011 is primarily due to increases in the inflation rate and estimated removal costs, which are among several factors considered for revision in the annual review process. The revision in 2010 is primarily due to a decrease in the inflation rate. The 2011 and 2010 revisions also include increases of $39 million and $31 million, respectively, related to changes in the timing and method of abandonment on certain of Transco's natural gas storage caverns that were associated with a leak in 2010.

Pursuant to its 2008 rate case settlement, Transco deposits a portion of its collected rates into an external trust (ARO Trust) that is specifically designated to fund future AROs. Transco is also required to make annual deposits into the trust through 2012. (See Note 15.).

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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