Property, Plant, and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment

9. PROPERTY, PLANT, AND EQUIPMENT

A summary of the historical cost of property, plant, and equipment is as follows:

		December 31,
thousands	Estimated Useful Life	2020		2019
Land	N/A	$	9,696	$	9,495
Gathering systems – pipelines	30 years	5,231,212		5,092,004
Gathering systems – compressors	15 years	2,096,905		1,929,377
Processing complexes and treating facilities	25 years	3,424,368		3,237,801
Transportation pipeline and equipment	6 to 45 years	168,205		173,572
Produced-water disposal systems	20 years	831,719		754,774
Assets under construction	N/A	176,834		486,584
Other	3 to 40 years	702,806		672,064
Total property, plant, and equipment		12,641,745		12,355,671
Less accumulated depreciation		3,931,800		3,290,740
Net property, plant, and equipment		$	8,709,945	$	9,064,931

The cost of property classified as “Assets under construction” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet placed into productive service as of the respective balance sheet date.

Long-lived asset and other impairments. During the year ended December 31, 2020, the Partnership recognized impairments of $203.9 million, primarily due to $150.2 million of impairments for assets located in Wyoming and Utah. These assets were impaired to estimated fair values of $105.5 million. The Partnership assesses whether events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The fair value of assets with impairment triggers were measured using the income approach and Level-3 fair value inputs. The income approach was based on the Partnership’s projected future EBITDA and free cash flows, which requires significant assumptions including, among others, future throughput volumes based on current expectations of producer activity and operating costs. These impairments were primarily triggered by reductions in estimated future cash flows resulting from lower forecasted producer throughput and lower commodity prices. Long-lived asset and other impairments on the consolidated statements of operations for the year ended December 31, 2020, also includes a $29.4 million other-than-temporary impairment of the Partnership’s investment in Ranch Westex (see Note 7). The remaining impairments of $24.3 million were primarily at the DJ Basin complex and DBM oil system due to the cancellation of projects and impairments of rights-of-way.

During the year ended December 31, 2019, the Partnership recognized impairments of $6.3 million, primarily at the DJ Basin complex due to impairments of rights-of-way and cancellation of projects.

During the year ended December 31, 2018, the Partnership recognized impairments of $230.6 million, including impairments of $125.9 million at the Third Creek gathering system and $8.1 million at the Kitty Draw gathering system. These assets were impaired to estimated salvage values of $1.8 million and zero, respectively, using the market approach and Level-3 fair value inputs, due to the shutdown of these systems in May 2018. During 2018, the Partnership also recognized impairments of $38.7 million and $34.6 million at the Hilight and MIGC systems, respectively. These assets were impaired to estimated fair values of $4.9 million and $15.2 million, respectively, using the income approach and Level-3 fair value inputs, due to a reduction in estimated future cash flows. The remaining $23.3 million of impairments primarily was related to (i) a $10.9 million impairment at the GNB NGL pipeline, which was impaired to estimated fair value of $10.0 million using the income approach and Level-3 fair value inputs, and (ii) a $5.6 million impairment related to an idle facility at the Chipeta complex, which was impaired to estimated salvage value of $1.5 million using the market approach and Level-3 fair value inputs.

9. PROPERTY, PLANT, AND EQUIPMENT

Potential future long-lived asset impairments. As of December 31, 2020, it is reasonably possible that prolonged low commodity prices, further commodity-price declines, changes to producers’ drilling plans in response to lower prices, and potential producer bankruptcies could result in future long-lived asset impairments. For example, on April 29, 2020, the Partnership received notice that Sanchez is attempting to reject a number of midstream and downstream agreements with commercial counterparties, including Sanchez’s Springfield gathering agreements and agreements obligating Sanchez to deliver the gas volumes gathered by the Springfield system to our Brasada processing plant. If the attempted rejection is successful, the Partnership’s South Texas assets could be impaired.