Leases

12 Months Ended

Dec. 31, 2020

Lessee

We lease a wide variety of facilities and equipment including land and building space, office and field equipment, storage facilities and transportation equipment. Our remaining lease terms range from less than one year to 58 years. Most long-term leases include renewal options ranging from less than one year to 49 years and, in certain leases, also include purchase options. The lease term included in the measurement of right of use assets and lease liabilities includes options to extend or terminate our leases that we are reasonably certain to exercise.

Under ASC 842, the components of lease cost are shown below. Lease costs for operating leases are recognized on a straight line basis and are reflected in the income statement based on the leased asset’s use. Lease costs for finance leases are reflected in depreciation and amortization and in net interest and other financial costs.


(In millions)	2020		2019
Finance lease cost:
Amortization of right of use assets	$	72	$	59
Interest on lease liabilities	35		37
Operating lease cost	658		660
Variable lease cost	60		68
Short-term lease cost	631		735
Total lease cost	$	1,456	$	1,559

Supplemental balance sheet data related to leases were as follows:


	December 31,
(In millions)	2020			2019
Operating leases
Assets
Right of use assets	$	1,521		$	1,806
Liabilities
Operating lease liabilities	$	497		$	514
Long-term operating lease liabilities	1,014			1,300
Total operating lease liabilities	$	1,511		$	1,814

Weighted average remaining lease term (in years)	4.8			5.1
Weighted average discount rate	3.68		%	3.91		%

Finance leases
Assets
Property, plant and equipment, gross	$	819		$	740
Less accumulated depreciation	272			215
Property, plant and equipment, net	$	547		$	525
Liabilities
Debt due within one year	$	69		$	56
Long-term debt	576			537
Total finance lease liabilities	$	645		$	593

Weighted average remaining lease term (in years)	10.7			11.6
Weighted average discount rate	5.33		%	6.63		%

As of December 31, 2020, maturities of lease liabilities for operating lease obligations and finance lease obligations having initial or remaining non-cancellable lease terms in excess of one year are as follows:


(In millions)	Operating		Finance
2021	$	544	$	91
2022	373		99
2023	243		101
2024	170		84
2025	111		76
2026 and thereafter	224		402
Gross lease payments	1,665		853
Less: imputed interest	154		208
Total lease liabilities	$	1,511	$	645

Leases of Lessor Disclosure

Lessor

MPLX has certain natural gas gathering, transportation and processing agreements in which it is considered to be the lessor under several operating lease arrangements in accordance with GAAP. MPLX’s primary natural gas lease operations relate to a natural gas gathering agreement in the Marcellus Shale for which it earns a fixed-fee for providing gathering services to a single producer using a dedicated gathering system. As the gathering system is expanded, the fixed-fee charged to the producer is adjusted to include the additional gathering assets in the lease. The primary term of the natural gas gathering arrangement expires in 2038 and will continue thereafter on a year-to-year basis until terminated by either party. Other significant natural gas implicit leases relate to a natural gas processing agreement in the Marcellus Shale and a natural gas processing agreement in the Southern Appalachia region for which MPLX earns minimum monthly fees for providing processing services to a single producer using a dedicated processing plant. The primary term of these natural gas processing agreements expires during 2027 and 2023, respectively, and will continue thereafter on a year-to-year basis until terminated by either party.

MPLX did not elect to use the practical expedient to combine lease and non-lease components for lessor arrangements. The tables below represent the portion of the contract allocated to the lease component based on relative standalone selling price. Lessor agreements are currently deemed operating, as MPLX elected the practical expedient to carry forward historical classification conclusions. If and when a modification of an existing agreement occurs and the agreement is required to assessed under ASC 842, MPLX assesses the amended agreement and makes a determination as to whether a reclassification of the lease is required.

Our revenue from implicit lease arrangements, excluding executory costs, totaled approximately $273 million and $254 million in 2020 and 2019, respectively. Under ASC 840, our revenue from implicit lease arrangements, excluding executory costs, totaled approximately $221 million in 2018. The following is a schedule of minimum future rentals on the non‑cancellable operating leases as of December 31, 2020:


(In millions)
2021	$	186
2022	181
2023	178
2024	174
2025	142
2026 and thereafter	999
Total minimum future rentals	$	1,860

The following schedule summarizes our investment in assets held for operating lease by major classes as of December 31, 2020 and 2019:


	December 31,
(In millions)	2020		2019
Gathering and transportation	$	990	$	980
Processing and fractionation	867		855
Terminals	128		83
Land, building and other	15		17
Property, plant and equipment	2,000		1,935
Less accumulated depreciation	430		327
Total property, plant and equipment, net	$	1,570	$	1,608