10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                         

Commission file number: 001-36710

Shell Midstream Partners, L.P.

(Exact name of registrant as specified in its charter)

Delaware	46-5223743
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

150 N. Dairy Ashford, Houston, Texas 77079

(Address of principal executive offices) (Zip Code)

(832) 337-2034

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units, Representing Limited Partner Interests	SHLX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No   ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ý	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ý

The registrant had 233,289,537 common units outstanding as of August 1, 2019.

SHELL MIDSTREAM PARTNERS, L.P.

TABLE OF CONTENTS

	Page
Part I. Financial Information	3
Item 1. Financial Statements (Unaudited)	3
Unaudited Consolidated Balance Sheets	3
Unaudited Consolidated Statements of Income	4
Unaudited Consolidated Statements of Comprehensive Income	5
Unaudited Consolidated Statements of Cash Flows	6
Unaudited Consolidated Statements of Changes in (Deficit) Equity	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3. Quantitative and Qualitative Disclosures About Market Risk	49
Item 4. Controls and Procedures	49
Part II. Other Information	51
Item 1. Legal Proceedings	51
Item 1A. Risk Factors	51
Item 5. Other Information	52
Item 6. Exhibits	53
Signature	54

* SHELL and the SHELL Pecten are registered trademarks of Shell Trademark Management, B.V. used under license.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

SHELL MIDSTREAM PARTNERS, L.P.

UNAUDITED CONSOLIDATED BALANCE SHEETS

	June 30, 2019		December 31, 2018
	(in millions of dollars)
ASSETS
Current assets
Cash and cash equivalents	$	257	$	208
Accounts receivable – third parties, net	12		19
Accounts receivable – related parties	39		29
Allowance oil	13		13
Prepaid expenses	6		15
Total current assets	327		284
Equity method investments	930		823
Property, plant and equipment, net	738		742
Operating lease right-of-use assets	5		—
Other investments	2		62
Other assets – related parties	2		3
Total assets	$	2,004	$	1,914
LIABILITIES
Current liabilities
Accounts payable – third parties	$	5	$	4
Accounts payable – related parties	8		9
Deferred revenue – third parties	—		8
Deferred revenue – related party	—		3
Accrued liabilities – third parties	18		13
Accrued liabilities – related parties	17		16
Total current liabilities	48		53
Noncurrent liabilities
Debt payable – related party	2,691		2,091
Operating lease liabilities	5		—
Finance lease liabilities	25		25
Other unearned income	2		2
Total noncurrent liabilities	2,723		2,118
Total liabilities	2,771		2,171
Commitments and Contingencies (Note 14)
(DEFICIT) EQUITY
Common unitholders – public (123,832,233 units issued and outstanding as of both June 30, 2019 and December 31, 2018)	3,458		3,459
Common unitholder – SPLC (109,457,304 and 99,979,548 units issued and outstanding as of June 30, 2019 and December 31, 2018)	(198)		(198)
General partner – SPLC (4,761,012 and 4,567,588 units issued and outstanding as of June 30, 2019 and December 31, 2018)	(4,046)		(3,543)
Accumulated other comprehensive loss	(6)		—
Total partners’ deficit	(792)		(282)
Noncontrolling interests	25		25
Total deficit	(767)		(257)
Total liabilities and deficit	$	2,004	$	1,914

The accompanying notes are an integral part of the consolidated financial statements.

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SHELL MIDSTREAM PARTNERS, L.P.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(in millions of dollars, except per unit data)
Revenue
Transportation, terminaling and storage services – third parties	$	34	$	57	$	76	$	92
Transportation, terminaling and storage services – related parties	64		55		128		98
Product revenue – third parties	3		1		4		1
Product revenue – related parties	6		2		16		10
Lease revenue – related parties	14		14		28		28
Total revenue	121		129		252		229
Costs and expenses
Operations and maintenance – third parties	16		25		29		68
Operations and maintenance – related parties	16		13		30		26
Cost of product sold – third parties	2		1		3		1
Cost of product sold – related parties	5		1		13		8
Loss from revision of asset retirement obligation	—		—		2		—
General and administrative – third parties	5		2		6		4
General and administrative – related parties	12		14		23		27
Depreciation, amortization and accretion	12		12		24		23
Property and other taxes	5		4		9		10
Total costs and expenses	73		72		139		167
Operating income	48		57		113		62
Income from equity method investments	80		48		150		88
Dividend income from other investments	—		13		14		38
Other income	12		10		20		16
Investment, dividend and other income	92		71		184		142
Interest expense, net	21		13		41		24
Income before income taxes	119		115		256		180
Income tax expense	—		—		—		—
Net income	119		115		256		180
Less: Net income attributable to noncontrolling interests	4		4		9		5
Net income attributable to the Partnership	$	115	$	111	$	247	$	175
General partner's interest in net income attributable to the Partnership	$	30	$	32	$	57	$	59
Limited Partners' interest in net income attributable to the Partnership	$	85	$	79	$	190	$	116
Net income per Limited Partner Unit - Basic and Diluted:
Common	$	0.38	$	0.35	$	0.84	$	0.54
Distributions per Limited Partner Unit	$	0.4300	$	0.3650	$	0.8450	$	0.7130
Weighted average Limited Partner Units outstanding - Basic and Diluted:
Common units – public	123.8		123.8		123.8		118.9
Common units – SPLC	102.6		100.0		101.3		97.8

The accompanying notes are an integral part of the consolidated financial statements.

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SHELL MIDSTREAM PARTNERS, L.P.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(in millions of dollars)
Net income	$	119	$	115	$	256	$	180
Other comprehensive loss, net of tax:
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax	—		—		—		—
Comprehensive income	$	119	$	115	$	256	$	180
Less comprehensive income attributable to:
Noncontrolling interests	4		4		9		5
Comprehensive income attributable to the Partnership	$	115	$	111	$	247	$	175

The accompanying notes are an integral part of the consolidated financial statements.

5

SHELL MIDSTREAM PARTNERS, L.P.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS 

	Six Months Ended June 30,
	2019		2018
	(in millions of dollars)
Cash flows from operating activities
Net income	$	256	$	180
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and accretion	24		23
Loss from revision of asset retirement obligation	2		—
Undistributed equity earnings	(3)		(2)
Changes in operating assets and liabilities
Accounts receivable	(3)		(4)
Allowance oil	—		(6)
Prepaid expenses and other assets	10		6
Accounts payable	1		1
Deferred revenue and other unearned income	(11)		(3)
Accrued liabilities	7		18
Net cash provided by operating activities	283		213
Cash flows from investing activities
Capital expenditures	(24)		(25)
Acquisitions from Parent	(90)		(482)
Contributions to investment	(10)		(14)
Return of investment	47		33
Net cash used in investing activities	(77)		(488)
Cash flows from financing activities
Net proceeds from equity offerings	—		973
Borrowings under credit facilities	600		1,220
Repayments of credit facilities	—		(973)
Contributions from general partner	—		20
Capital distributions to general partner	(510)		(738)
Distributions to noncontrolling interests	(9)		(7)
Distributions to unitholders and general partner	(248)		(189)
Other contributions from Parent	10		6
Net cash (used in) provided by financing activities	(157)		312
Net increase in cash and cash equivalents	49		37
Cash and cash equivalents at beginning of the period	208		138
Cash and cash equivalents at end of the period	$	257	$	175
Supplemental cash flow information
Non-cash investing and financing transactions:
Change in accrued capital expenditures	$	(2)	$	1
Other non-cash contributions from Parent	—		2

The accompanying notes are an integral part of the consolidated financial statements.

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SHELL MIDSTREAM PARTNERS, L.P.

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN (DEFICIT) EQUITY

	Partnership
(in millions of dollars)	Common Unitholders Public		Common Unitholder SPLC		General Partner SPLC		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
Balance as of December 31, 2018	$	3,459	$	(198)	$	(3,543)	$	—	$	25	$	(257)
Impact of change in accounting policy (Note 4)	(4)		(5)		—		—		—		(9)
Net income	58		47		27		—		5		137
Other contributions from Parent	—		—		7		—		—		7
Distributions to unitholders and general partner	(49)		(40)		(40)		—		—		(129)
Distributions to noncontrolling interests	—		—		—		—		(3)		(3)
Balance as of March 31, 2019	$	3,464	$	(196)	$	(3,549)	$	—	$	27	$	(254)
Net income	45		40		30		—		4		119
Other contributions from Parent	—		—		9		(6)		—		3
Distributions to unitholders and general partner	(51)		(42)		(26)		—		—		(119)
Distributions to noncontrolling interests	—		—		—		—		(6)		(6)
June 2019 Acquisition	—		—		(510)		—		—		(510)
Balance as of June 30, 2019	$	3,458	$	(198)	$	(4,046)	$	(6)	$	25	$	(767)

	Partnership
(in millions of dollars)	Common Unitholders Public		Common Unitholder SPLC		General Partner SPLC		Noncontrolling Interests		Total
Balance as of December 31, 2017	$	2,774	$	(507)	$	(2,856)	$	23	$	(566)
Impact of change in accounting policy	(1)		1		(2)		—		(2)
Net income	21		16		27		1		65
Net proceeds from equity offerings	673		300		—		—		973
Contributions from general partner	—		—		20		—		20
Other contributions from Parent	—		—		5		—		5
Distributions to unitholders and general partner	(33)		(30)		(20)		—		(83)
Distributions to noncontrolling interests	—		—		—		(2)		(2)
Balance as of March 31, 2018	$	3,434	$	(220)	$	(2,826)	$	22	$	410
Net income	43		36		32		4		115
Other contributions from Parent	—		—		2		—		2
Distributions to unitholders and general partner	(43)		(35)		(28)		—		(106)
Distributions to noncontrolling interests	—		—		—		(4)		(4)
May 2018 Acquisition	—		—		(738)		—		$	(738)
Balance as of June 30, 2018	$	3,434	$	(219)	$	(3,558)	$	22	$	(321)

The accompanying notes are an integral part of the consolidated financial statements.

7

SHELL MIDSTREAM PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Except as noted within the context of each note disclosure, the dollar amounts presented in the tabular data within these note disclosures are stated in millions of dollars.

1. Description of Business and Basis of Presentation

Shell Midstream Partners, L.P. (“we,” “us,” “our” or “the Partnership”) is a Delaware limited partnership formed by Royal Dutch Shell plc on March 19, 2014 to own and operate pipeline and other midstream assets, including certain assets acquired from Shell Pipeline Company LP (“SPLC”) and its affiliates. We conduct our operations either through our wholly owned subsidiary Shell Midstream Operating LLC (“Operating Company”) or through direct ownership. Our general partner is Shell Midstream Partners GP LLC (“general partner” or “sponsor”). References to “RDS”, “Shell” or “Parent” refer collectively to Royal Dutch Shell plc and its controlled affiliates, other than us, our subsidiaries and our general partner.

Description of Business

We are a growth-oriented master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. As of June 30, 2019, our assets include interests in entities that own crude oil and refined products pipelines and terminals that serve as key infrastructure to (i) transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and (ii) deliver refined products from those markets to major demand centers. Our assets also include interests in entities that own natural gas and refinery gas pipelines that transport offshore natural gas to market hubs and deliver refinery gas from refineries and plants to chemical sites along the Gulf Coast.

We generate revenue from the transportation, terminaling and storage of crude oil and refined products through our pipelines and storage tanks, and generate income from our equity and other investments. Our operations consist of one reportable segment. 

The following table reflects our ownership interests as of June 30, 2019:

	SHLX Ownership
Pecten Midstream LLC (“Pecten”)	100.0	%
Sand Dollar Pipeline LLC (“Sand Dollar”)	100.0	%
Triton West LLC (“Triton”)	100.0	%
Zydeco Pipeline Company LLC (“Zydeco”) (1)	92.5	%
Amberjack Pipeline Company LLC (“Amberjack”) – Series A/Series B	75.0% / 50.0%
Mars Oil Pipeline Company LLC (“Mars”)	71.5	%
Odyssey Pipeline L.L.C. (“Odyssey”)	71.0	%
Bengal Pipeline Company LLC (“Bengal”)	50.0	%
Crestwood Permian Basin LLC (“Permian Basin”)	50.0	%
LOCAP LLC (“LOCAP”)	41.48	%
Explorer Pipeline Company (“Explorer”)	38.59	%
Poseidon Oil Pipeline Company, L.L.C. (“Poseidon”)	36.0	%
Colonial Pipeline Company (“Colonial”)	16.125	%
Proteus Oil Pipeline Company, LLC (“Proteus”)	10.0	%
Endymion Oil Pipeline Company, LLC (“Endymion”)	10.0	%
Cleopatra Gas Gathering Company, LLC (“Cleopatra”)	1.0	%

⁽¹⁾ SPLC owns the remaining 7.5% ownership interest is Zydeco.

Basis of Presentation

Our unaudited consolidated financial statements include all subsidiaries required to be consolidated under generally accepted accounting principles in the United States (“GAAP”). Our reporting currency is U.S. dollars, and all references to dollars are

8

U.S. dollars. The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. The year-end consolidated balance sheet data was derived from audited financial statements. During interim periods, we follow the accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 (our “2018 Annual Report”), filed with the United States Securities and Exchange Commission (“SEC”) unless otherwise described herein. The unaudited consolidated financial statements for the three and six months ended June 30, 2019 and June 30, 2018 include all adjustments we believe are necessary for a fair statement of the results of operations for the interim periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our 2018 Annual Report.

Our consolidated subsidiaries include Pecten, Sand Dollar, Triton, Zydeco, Odyssey and the Operating Company. Asset acquisitions of additional interests in previously consolidated subsidiaries and interests in equity and other investments are included in the financial statements prospectively from the effective date of each acquisition. In cases where these types of acquisitions are considered acquisitions of businesses under common control, the financial statements are retrospectively adjusted.

Summary of Significant Accounting Policies

The accounting policies are set forth in Note 2 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements of our 2018 Annual Report. There have been no significant changes to these policies during the six months ended June 30, 2019, other than those noted below.

Recent Accounting Pronouncements

Standards Adopted as of January 1, 2019

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02 to Topic 842, Leases. As permitted, we adopted the new standard using the modified retrospective approach, effective January 1, 2019, which provides a method for recording existing leases at the beginning of the period of adoption. As such, results and balances prior to January 1, 2019 are not adjusted and continue to be reported in accordance with our historical accounting under previous GAAP.

See Note 8 — Leases for additional information and disclosures required by the new standard.

Standards Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13 to Topic 326, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments, which replaces the current incurred loss impairment method with a method that reflects expected credit losses on financial instruments. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. While we are still evaluating the impact of ASU 2016-13, we do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

2. Acquisitions

June 2019 Acquisition

On June 6, 2019, we acquired SPLC’s remaining 25.97% ownership interest in Explorer and 10.125% ownership interest in Colonial for consideration valued at $800 million (the “June 2019 Acquisition”). The June 2019 Acquisition increased our ownership interest in Explorer to 38.59% and in Colonial to 16.125%. The June 2019 Acquisition closed pursuant to a Contribution Agreement dated May 10, 2019 (the “May 2019 Contribution Agreement”) between us and SPLC, and is accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. As such, we recorded the acquired equity interests at SPLC’s historical carrying value of $90 million, which is included in Equity method investments in our unaudited consolidated balance sheet as of June 30, 2019. In addition, as a transfer between entities under common control, we recorded Accumulated other comprehensive loss of $6 million related to historical remeasurements

9

of pension and other postretirement benefits provided by Explorer and Colonial to their employees. We recognized $510 million of (cash) consideration in excess of the historical carrying value of equity interests acquired as a capital distribution to our general partner in accordance with our policy for common control transactions. We funded the June 2019 Acquisition with $600 million in cash consideration from borrowings under our Ten Year Fixed Facility (as defined in Note 7 — Related Party Debt) with Shell Treasury Center (West) Inc. (“STCW”) and non-cash equity consideration valued at $200 million. Pursuant to the May 2019 Contribution Agreement, the number of common units representing the equity consideration was determined by dividing the contribution amount (25% of total consideration of $800 million) by the price per unit of $20.68, which represents the volume weighted average sales prices of the common units calculated for the five trading day period ended on April 30, 2019, less the general partner units issued to the general partner in order to maintain its 2% general partner interest in us. The equity issued consisted of 9,477,756 common units issued to Shell Midstream LP Holdings LLC, an indirect subsidiary of Shell, and 193,424 general partner units issued to the general partner in order to maintain its 2% general partner interest in us.

As a result of the June 2019 Acquisition, we now have significant influence over both Explorer and Colonial and account for these investments as equity method investments (see Note 4 — Equity Method Investments for further details).

May 2018 Acquisition

On May 11, 2018, we acquired SPLC’s ownership interests in Amberjack, which is comprised of 75% of the issued and outstanding Series A membership interests of Amberjack and 50% of the issued and outstanding Series B membership interests of Amberjack for $1,220 million (the “May 2018 Acquisition”). The May 2018 Acquisition closed pursuant to a Purchase and Sale Agreement dated May 9, 2018 between us and SPLC, and is accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. We acquired historical carrying value of net assets under common control of $482 million, which is included in Equity method investments in our unaudited consolidated balance sheet. We recognized $738 million of consideration in excess of the historical carrying value of net assets acquired as a capital distribution to our general partner in accordance with our policy for common control transactions. We funded the May 2018 Acquisition with $494 million in borrowings under our Five Year Revolver due July 2023 (as defined in Note 7—Related Party Debt) and $726 million in borrowings under our Five Year Revolver due December 2022 (as defined in Note 7—Related Party Debt) with STCW.

3. Related Party Transactions

Related party transactions include transactions with SPLC and Shell, including those entities in which Shell has an ownership interest but does not have control.

Acquisition Agreements

Refer to Note 2—Acquisitions for a description of agreements applicable to the current reporting periods. For a description of all other applicable agreements, see Note 4—Acquisitions and Divestiture in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

2019 Omnibus Agreement

On November 3, 2014, we entered into an Omnibus Agreement with SPLC and our general partner concerning our payment of an annual general and administrative services fee to SPLC as well as our reimbursement of certain costs incurred by SPLC on our behalf. On February 19, 2019, we, our general partner, SPLC, Operating Company and Shell Oil Company terminated the Omnibus Agreement effective as of February 1, 2019, and we, our general partner, SPLC and Operating Company entered into a new Omnibus Agreement effective February 1, 2019 (the “2019 Omnibus Agreement”).

The 2019 Omnibus Agreement addresses, among other things, the following matters:

•our payment of an annual general and administrative fee of approximately $11 million for the provision of certain services by SPLC;

•our obligation to reimburse SPLC for certain direct or allocated costs and expenses incurred by SPLC on our behalf; and

•our obligation to reimburse SPLC for all expenses incurred by SPLC as a result of us becoming and continuing as a publicly traded entity; we will reimburse our general partner for these expenses to the extent the fees relating to such services are not included in the general and administrative fee.

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Under the 2019 Omnibus Agreement, SPLC agreed to indemnify us against tax liabilities relating to our assets acquired at initial public offering (our “initial assets”) that are identified prior to the date that is 60 days after the expiration of the statute of limitations applicable to such liabilities. This obligation has no threshold or cap. We in turn agreed to indemnify SPLC against events and conditions associated with the ownership or operation of our initial assets (other than any liabilities against which SPLC is specifically required to indemnify us as described above).

During the six months ended June 30, 2019, neither we nor SPLC made any claims for indemnification under the 2019 Omnibus Agreement.

Trade Marks License Agreement

We, our general partner and SPLC entered into a Trade Marks License Agreement with Shell Trademark Management Inc. effective as of February 1, 2019. The Trade Marks License Agreement grants us the use of certain Shell trademarks and trade names and expires on January 1, 2024 unless earlier terminated by either party upon 360 days’ notice.

Tax Sharing Agreement

For a discussion of the Tax Sharing Agreement, see Note 3—Related Party Transactions—Tax Sharing Agreement in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Other Agreements

We have entered into several customary agreements with SPLC and Shell. These agreements include pipeline operating agreements, reimbursement agreements and services agreements. See Note 3—Related Party Transactions—Other Agreements in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Partnership Agreement

On December 21, 2018, we executed Amendment No. 2 (the “Second Amendment”) to the Partnership’s First Amended and

Restated Agreement of Limited Partnership dated November 3, 2014. Under the Second Amendment, our sponsor agreed to

waive $50 million of distributions in 2019 by agreeing to reduce distributions to holders of the incentive distribution rights (“IDR’s”) by: (1) $17 million for the three months ended March 31, 2019, (2) $17 million for the three months ended June 30, 2019 and (3) $16 million for the three months ending September 30, 2019.

Noncontrolling Interests

For Zydeco, noncontrolling interest consists of SPLC’s 7.5% retained ownership interest as of both June 30, 2019 and December 31, 2018. For Odyssey, noncontrolling interest consists of GEL Offshore Pipeline LLC’s (“GEL”) 29.0% retained ownership interest as of both June 30, 2019 and December 31, 2018.

Other Related Party Balances

Other related party balances consist of the following:

	June 30, 2019		December 31, 2018
Accounts receivable	$	39	$	29
Prepaid expenses	6		15
Other assets	2		3
Accounts payable (1)	8		9
Deferred revenue	—		3
Accrued liabilities (2)	17		16
Debt payable (3)	2,691		2,091

⁽¹⁾ Accounts payable reflects amounts owed to SPLC for reimbursement of third-party expenses incurred by SPLC for our benefit.

⁽²⁾ As of June 30, 2019, accrued liabilities reflects $16 million accrued interest and $1 million other accrued liabilities. As of December 31, 2018, accrued liabilities reflects $14 million accrued interest and $2 million other accrued liabilities.

⁽³⁾ Debt payable reflects borrowings outstanding after taking into account unamortized debt issuance costs of $3 million as of both June 30, 2019 and December 31, 2018.

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Related Party Credit Facilities

We have entered into five credit facilities with STCW: the Ten Year Fixed Facility, the Seven Year Fixed Facility, the Five Year Revolver due July 2023, the Five Year Revolver due December 2022 and the Five Year Fixed Facility. Zydeco has also entered into the Zydeco Revolver with STCW. For definitions and additional information regarding these credit facilities, see Note 7 – Related Party Debt in this report and Note 9 – Related Party Debt in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Related Party Revenues and Expenses

We provide crude oil transportation, terminaling and storage services to related parties under long-term contracts. We entered into these contracts in the normal course of our business. Our revenue from related parties for the three and six months ended June 30, 2019 and June 30, 2018 are disclosed in Note 11 – Revenue Recognition.

In the three and six months ended June 30, 2019, we converted excess allowance oil to cash through sales to affiliates of Shell of $1 million and $3 million net proceeds, respectively. In the three and six months ended June 30, 2018, we converted excess allowance oil to cash through sales to affiliates of Shell of $1 million and $2 million net proceeds, respectively. We include the revenue in Product revenue – related parties and the cost in Cost of product sold – related parties.

The majority of our insurance coverage is provided by a wholly owned subsidiary of Shell with the remaining coverage provided by third-party insurers. The related party portion of insurance expense, which is included within Operations and maintenance – related parties, was $5 million and $9 million for the three and six months ended June 30, 2019, respectively, and $3 million and $7 million for the three and six months ended June 30, 2018, respectively.

The following table shows related party expenses, including certain personnel costs, incurred by Shell and SPLC on our behalf that are reflected in the accompanying unaudited consolidated statements of income for the indicated periods. Included in these amounts, and disclosed below, is our share of operating and general corporate expenses, as well as the fees paid to SPLC under certain agreements.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Operations and maintenance – related parties	$	16	$	13	$	30	$	26
General and administrative – related parties	12		14		23		27
Allocated operating expenses	$	3	$	3	$	8	$	7
Allocated general corporate expenses	6		8		13		16
Management Agreement fee	2		2		4		4
Omnibus Agreement fee	2		2		5		4

For a discussion of services performed by Shell on our behalf, see Note 1 – Description of Business and Basis of Presentation – Basis of Presentation in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Pension and Retirement Savings Plans

Employees who directly or indirectly support our operations participate in the pension, postretirement health and life insurance, and defined contribution benefit plans sponsored by Shell, which include other Shell subsidiaries. Our share of pension and postretirement health and life insurance costs for the three and six months ended June 30, 2019 were $2 million and $3 million, respectively. Our share of pension and postretirement health and life insurance costs for the three and six months ended June 30, 2018 were $2 million and $3 million, respectively. Our share of defined contribution benefit plan costs for the three months ended June 30, 2019 were less than $1 million and for the six months ended June 30, 2019 was $1 million. Our share of defined contribution benefit plan costs for the three and six months ended June 30, 2018 were $1 million and $2 million, respectively. Pension and defined contribution benefit plan expenses are included in either General and administrative – related parties or Operations and maintenance – related parties, depending on the nature of the employee’s role in our operations.

Share-based Compensation

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Certain SPLC and Shell employees supporting our operations as well as other Shell operations were historically granted awards

under the Performance Share Plan, Shell’s incentive compensation program. Share-based compensation expense is

included in General and administrative – related parties in the accompanying unaudited consolidated statements of income. These costs for both the three and six months ended June 30, 2019 and June 30, 2018 were not material.

Equity and Other Investments

We have equity and other investments in various entities. As of June 30, 2019, SPLC no longer owns an interest in any of these entities. See Note 2 – Acquisitions for additional details. In some cases, we may be required to make capital contributions or other payments to these entities. See Note 4 – Equity Method Investments for additional details.

Reimbursements

The following table reflects reimbursements from our Parent for the three and six months ended June 30, 2019 and June 30, 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cash received (1)	$	3	$	5	$	10	$	6
Changes in receivable from Parent (2)	—		(3)		—		—
Total reimbursements (3)	$	3	$	2	$	10	$	6

⁽¹⁾ These reimbursements are included in Other contributions from Parent in the accompanying unaudited consolidated statements of cash flows.

⁽²⁾ These reimbursements are included in Other non-cash contributions from Parent in the accompanying unaudited consolidated statements of cash flows.

⁽³⁾ These reimbursements are included in Other contributions from Parent in the accompanying unaudited consolidated statements of (deficit) equity and are exclusive of zero and $1 million for the six months ended June 30, 2019 and June 30, 2018, respectively, related to contributions from Parent.

During the three and six months ended June 30, 2019, we filed claims for reimbursement from our Parent of $3 million and $10 million, respectively. During the three and six months ended June 30, 2018, we filed claims for reimbursement from our Parent of $2 million and $6 million, respectively. For each of these periods, this reflects our proportionate share of Zydeco directional drill project costs and expenses.

4. Equity Method Investments

For each of the following investments, we have the ability to exercise significant influence over these investments based on certain governance provisions and our participation in the significant activities and decisions that impact the management and economic performance of the investments.

Equity method investments comprise the following as of the dates indicated:

	June 30, 2019			December 31, 2018
	Ownership	Investment Amount		Ownership	Investment Amount
Amberjack – Series A / Series B	75.0% / 50.0%	$	441	75.0% / 50.0%	$	458
Mars	71.5%	162		71.5%	169
Bengal	50.0%	84		50.0%	82
Permian Basin	50.0%	79		50.0%	72
LOCAP	41.48%	8		41.48%	8
Explorer (1)	38.59%	92		12.62%	—
Poseidon	36.0%	—		36.0%	—
Colonial (1)	16.125%	30		6.0%	—
Proteus	10.0%	16		10.0%	16
Endymion	10.0%	18		10.0%	18
		$	930		$	823

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⁽¹⁾ As part of the June 2019 Acquisition, these interests have been accounted for prospectively. See below for additional information.

We acquired an additional 25.97% interest in Explorer and an additional 10.125% interest in Colonial in the June 2019 Acquisition. As a result, these investments now qualify for equity method accounting as we have the ability to exercise significant influence over these investments as of the acquisition date. Prior to the acquisition date, Explorer and Colonial were accounted for as Other investments without readily determinable fair values and were therefore carried at cost. Upon acquisition, we added our Parent’s historical carrying value of the equity interests transferred as a transaction between entities under common control, totaling $90 million, to the basis of our previously held interests of $60 million as this is the date these investments qualified for equity method accounting. Subsequent to the June 2019 Acquisition date, we received second quarter distributions for Explorer and Colonial in the amounts of $23 million and $16 million, respectively. We recorded these distributions as reductions to the respective equity method investment balances for Explorer and Colonial as these amounts were no longer considered dividend income due to the change in the method of accounting. We recorded equity earnings for both Explorer and Colonial prospectively from the date of acquisition.

Unamortized differences in the basis of the initial investments and our interest in the separate net assets within the financial statements of the investees are amortized into net income over the remaining useful lives of the underlying assets. As of June 30, 2019 and December 31, 2018, the unamortized basis differences included in our equity investments are $97 million and $40 million, respectively. For the three and six months ended June 30, 2019 the net amortization expense was $1 million and $2 million, respectively, and for the three and six months ended June 30, 2018, the net amortization expense was $1 million and $2 million, respectively.

During the first quarter of 2018, the investment amount for Poseidon was reduced to zero due to distributions received that were in excess of our investment balance and we, therefore, suspended the equity method of accounting. Further, we have no commitments to provide further financial support to Poseidon. As such, we have recorded excess distributions in Other income of $9 million and $17 million for the three and six months ended June 30, 2019, respectively, and $9 million and $10 million for the three and six months ended June 30, 2018, respectively. Once our cumulative share of equity earnings becomes greater than the amount of distributions received, we will resume the equity method of accounting as long as the equity method investment balance remains greater than zero.

Earnings from our equity method investments were as follows during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Amberjack (1)	$	31	$	16	$	63	$	16
Mars	29		21		58		46
Bengal	5		6		10		10
Explorer (2)	7		—		7		—
Colonial (2)	4		—		4		—
Poseidon (3)	—		—		—		6
Other (4)	4		5		8		10
	$	80	$	48	$	150	$	88

⁽¹⁾ We acquired an interest in Amberjack in May 2018. The acquisition of this interest has been accounted for prospectively.

⁽²⁾ As stated above, we acquired additional interests in Explorer and Colonial in June 2019. The acquisition of these interests has been accounted for prospectively.

⁽³⁾ As stated above, the equity method of accounting has been suspended for Poseidon and excess distributions are recorded in Other income.

⁽⁴⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

The adoption of the revenue standard for the majority of our equity method investments followed the non-public business entity adoption date of January 1, 2019 for their stand-alone financial statements, with the exception of Mars and Permian Basin which adopted on January 1, 2018. As a result of the adoption of the revenue standard on January 1, 2019, we recognized our proportionate share of Amberjack’s cumulative effect transition adjustments as a decrease to opening equity (deficit) in the amount of $9 million under the modified retrospective transition method. As a result of the adoption of the revenue standard on January 1, 2018, we recognized our proportionate share of Mars’ cumulative effect transition adjustments as a decrease to opening equity (deficit) in the amount of $7 million under the modified retrospective transition method.

Under the new lease standard (as defined in Note 8 - Leases), the adoption date for our equity method investments will follow the non-public business entity adoption date of January 1, 2020 for their stand-alone financial statements.

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Summarized Financial Information

The following tables present aggregated selected unaudited income statement data for our equity method investments on a 100% basis. However, during periods in which an acquisition occurs, the selected unaudited income statement data is pro-rated based on the number of days in which the Partnership owned and accounted for the investment under the equity method of accounting.

	Three Months Ended June 30, 2019
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	74	$	17	$	57	$	58
Mars	67		26		41		42
Bengal	19		9		10		10
Explorer (1)	37		13		24		18
Colonial (2)	88		44		44		27
Poseidon	34		8		26		23
Other (3)	56		37		19		17

⁽¹⁾ Our additional interest in Explorer was acquired on June 6, 2019. Explorer's total revenues, total operating expenses and operating income (on a 100% basis) were $133 million, $48 million and $85 million, respectively.

⁽²⁾ Our additional interest in Colonial was acquired on June 6, 2019. Colonial's total revenues, total operating expenses and operating income (on a 100% basis) were $325 million, $164 million and $161 million, respectively.

⁽³⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Six Months Ended June 30, 2019
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	155	$	36	$	119	$	120
Mars	130		48		82		83
Bengal	37		16		21		21
Explorer (1)	37		13		24		18
Colonial (2)	88		44		44		27
Poseidon	65		17		48		43
Other (3)	86		55		31		26

⁽¹⁾ Our additional interest in Explorer was acquired on June 6, 2019. Explorer's total revenues, total operating expenses and operating income (on a 100% basis) were $222 million, $94 million and $128 million, respectively.

⁽²⁾ Our additional interest in Colonial was acquired on June 6, 2019. Colonial's total revenues, total operating expenses and operating income (on a 100% basis) were $696 million, $330 million and $366 million, respectively.

⁽³⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Three Months Ended June 30, 2018
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack (1)	$	40	$	10	$	30	$	30
Mars	52		22		30		30
Bengal	18		7		11		11
Poseidon	27		8		19		17
Other (2)	39		15		24		21

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⁽¹⁾ Our interest in Amberjack was acquired on May 11, 2018. Amberjack’s total revenues, total operating expenses and operating income (on a 100% basis) were $70 million, $17 million and $53 million, respectively.

⁽²⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Six Months Ended June 30, 2018
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack (1)	$	40	$	10	$	30	$	30
Mars	109		43		66		66
Bengal	33		14		19		19
Poseidon	56		17		39		36
Other (2)	75		30		45		40

⁽¹⁾ Our interest in Amberjack was acquired on May 11, 2018. Amberjack’s total revenues, total operating expenses and operating income (on a 100% basis) were $132 million, $36 million and $96 million, respectively.

⁽²⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

Capital Contributions

We make capital contributions for our pro-rata interest in Permian Basin to fund capital and other expenditures. We have made capital contributions of $10 million during the first six months of 2019.

5. Property, Plant and Equipment

Property, plant and equipment consist of the following as of the dates indicated:

	Depreciable Life	June 30, 2019		December 31, 2018
Land	—	$	12	$	11
Building and improvements	10 - 40 years	40		39
Pipeline and equipment (1)	10 - 30 years	1,202		1,162
Other	5 - 25 years	18		18
		1,272		1,230
Accumulated depreciation and amortization (2)		(591)		(567)
		681		663
Construction in progress		57		79
Property, plant and equipment, net		$	738	$	742

⁽¹⁾ As of June 30, 2019 and December 31, 2018, includes cost of $368 million and $366 million, respectively, related to assets under operating lease (as lessor). As of both June 30, 2019 and December 31, 2018, includes cost of $23 million related to right-of-use (“ROU”) assets under finance lease (as lessee).

⁽²⁾ As of June 30, 2019 and December 31, 2018, includes accumulated depreciation of $128 million and $121 million, respectively, related to assets under operating lease (as lessor). As of both June 30, 2019 and December 31, 2018, includes accumulated amortization of $5 million, related to ROU assets under finance lease (as lessee).

Depreciation and amortization expense on property, plant and equipment for the three and six months ended June 30, 2019 was $12 million and $24 million, respectively, and for the three and six months ended June 30, 2018 was $12 million and $23 million, respectively, and is included in costs and expenses in the accompanying unaudited consolidated statements of income. Depreciation and amortization expense on property, plant and equipment includes amounts pertaining to assets under operating (as lessor) and finance leases (as lessee).

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6. Accrued Liabilities – Third Parties

Accrued liabilities – third parties consist of the following as of the dates indicated:

	June 30, 2019		December 31, 2018
Project accruals	$	7	$	7
Property taxes	9		4
Other accrued liabilities	2		2
Accrued liabilities – third parties	$	18	$	13

See Note 3—Related Party Transactions for a discussion of Accrued liabilities – related parties.

7. Related Party Debt

Consolidated related party debt obligations comprise the following as of the dates indicated:

	June 30, 2019						December 31, 2018
	Outstanding Balance		Total Capacity		Available Capacity		Outstanding Balance		Total Capacity		Available Capacity
Ten Year Fixed Facility	$	600	$	600	$	—	$	—	$	—	$	—
Seven Year Fixed Facility	600		600		—		600		600		—
Five Year Revolver due July 2023	494		760		266		494		760		266
Five Year Revolver due December 2022	400		1,000		600		400		1,000		600
Five Year Fixed Facility	600		600		—		600		600		—
Zydeco Revolver	—		30		30		—		30		30
Unamortized debt issuance costs	(3)		n/a		n/a		(3)		n/a		n/a
Debt payable – related party	$	2,691	$	3,590	$	896	$	2,091	$	2,990	$	896

For the three and six months ended June 30, 2019, interest and fee expenses associated with our borrowings were $22 million and $41 million, respectively, of which we paid $20 million and $39 million, respectively. For the three and six months ended June 30, 2018, interest and fee expenses associated with our borrowings were $13 million and $23 million, respectively, of which we paid $8 million and $19 million, respectively.

Borrowings under our revolving credit facilities approximate fair value as the interest rates are variable and reflective of market rates, which results in Level 2 instruments. The fair value of our fixed rate credit facilities is estimated based on the published market prices for issuances of similar risk and tenor and is categorized as Level 2 within the fair value hierarchy. As of June 30, 2019, the carrying amount and estimated fair value of total debt (before amortization of issuance costs) was $2,694 million and $2,808 million, respectively. As of December 31, 2018, the carrying amount and estimated fair value of total debt (before amortization of issuance costs) was $2,094 million and $2,099 million, respectively.

On June 4, 2019, we entered into a ten-year fixed rate credit facility with STCW with a borrowing capacity of $600 million (the “Ten Year Fixed Facility”). The Ten Year Fixed Facility bears an interest rate of 4.18% per annum and matures on June 4, 2029. No issuance fee was incurred in connection with the Ten Year Fixed Facility. The Ten Year Fixed Facility contains customary representations, warranties, covenants and events of default, the occurrence of which would permit the lender to accelerate the maturity date of amounts borrowed under the Ten Year Fixed Facility. The Ten Year Fixed Facility was fully drawn on June 6, 2019 to partially fund the June 2019 Acquisition.

On May 11, 2018, we funded the May 2018 Acquisition with $494 million in borrowings under the Five Year Revolver due July 2023 and $726 million in borrowings under the Five Year Revolver due December 2022.

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On February 6, 2018, we used net proceeds from sales of common units and from our general partner’s proportionate capital contribution to repay $247 million of borrowings outstanding under our Five Year Revolver due July 2023 and $726 million of borrowings outstanding under our Five Year Revolver due December 2022.

For additional information on our credit facilities, refer to Note 9 – Related Party Debt in the Notes to Consolidated Financial Statements in our 2018 Annual Report.

Borrowings and repayments under our credit facilities for the six months ended June 30, 2019 and June 30, 2018 are disclosed in our unaudited consolidated statements of cash flows. See Note 10 – (Deficit) Equity for additional information regarding the source of our repayments.

8. Leases

Adoption of ASC Topic 842 “Leases”

On January 1, 2019, we adopted ASC Topic 842 (“the new lease standard”) by applying the modified retrospective approach to all leases on January 1, 2019. We elected the package of practical expedients upon transition that permits us to not reassess (1) whether any contracts entered into prior to adoption are or contain leases, (2) the lease classification of existing leases and (3) initial direct costs for any leases that existed prior to adoption. We also elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. Generally, we account for term-based land easements where we control the use of the land surface as leases.

Upon adoption on January 1, 2019, we recognized operating lease right-of-use (“ROU”) assets and corresponding lease liabilities of $5 million. As lessor, the accounting for operating leases has not changed and the adoption did not have an impact on our existing transportation and terminaling services agreements that are considered operating leases. As lessee, the accounting for finance leases (capital leases) was substantially unchanged.

Lessee accounting

We determine if an arrangement is or contains a lease at inception. Our assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period and (3) whether we have the right to direct the use of the asset. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease classification affects the expense recognition in the income statement. Operating lease costs are recorded entirely in operating expenses. Finance lease costs are split, where amortization of the ROU asset is recorded in operating expenses and an implied interest component is recorded in interest expense.

Under the new lease standard, operating leases (as lessee) are included in Operating lease right-of-use assets, Accrued liabilities - third parties and Operating lease liabilities in our unaudited consolidated balance sheets. Finance leases (as lessee) are included in Property, plant and equipment, Accrued liabilities – third parties and Finance lease liabilities in our unaudited consolidated balance sheets. ROU assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at transition date in determining the present value of future payments. The ROU asset includes any lease payments made but excludes lease incentives and initial direct costs incurred, if any. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have long-term non-cancelable third-party operating leases for land. Several of the leases provide for renewal terms. We hold cancellable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline systems. Obligations under these easements are not material to the results of our operations.  In addition, Odyssey has a third-party operating lease for use of offshore platform space at Main Pass 289C. This lease will continue to be in effect until the continued operation of the platform is uneconomic.

We are also obligated under two finance leases. We have a terminaling services agreement in which we took possession of certain storage tanks located in Port Neches, Texas and a lease of offshore platform space on the Garden Banks 128 “A” platform.

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Lease extensions. Many of our leases have options to either extend or terminate the lease. In determining the lease term, we considered all available contract extensions which are reasonably certain of occurring. In many cases, the lease term is equal to the economic life of the underlying asset.

Significant assumptions and judgments

Incremental borrowing rate. We are generally not made aware of the interest rate implicit in a lease due to several reasons, including: (1) uncertainty as to the total amount of the costs incurred by the lessor in negotiating the lease or whether certain costs incurred by the lessor would qualify as initial direct costs and (2) uncertainty as to the lessor’s expectation of the residual value of the asset at the end of the lease. Therefore, we use our incremental borrowing rate (“IBR”) at the commencement of the lease and estimate the IBR for each lease agreement taking into consideration lease contract term, collateral and entity credit ratings, and use sensitivity analyses to evaluate the reasonableness of the rates determined.

Lease balances and costs

The following tables summarize our lease costs as of and for the three and six months ended June 30, 2019:

Leases	Classification	June 30, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	5
Finance lease assets	Property, plant and equipment, net (1)	18
Total lease assets		$	23
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1
Noncurrent
Operating	Operating lease liabilities	5
Finance	Finance lease liabilities	25
Total lease liabilities		$	31

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $5 million as of June 30, 2019.

		Three Months Ended		Six Months Ended
Lease cost	Classification	June 30, 2019		June 30, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1
Interest on lease liabilities	Interest expense, net	1		2
Total lease cost		$	2	$	3

⁽¹⁾ Amounts for the three and six months ended June 30, 2019 were less than $1 million.

Other information

19

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—
Operating cash flows from finance leases (1)	—
Financing cash flows from finance leases (1)	—

⁽¹⁾ Amounts for the six months ended June 30, 2019 were less than $1 million.

	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	20
Finance leases	12
Weighted-average discount rate
Operating leases	5.8	%
Finance leases	14.3	%

Annual maturity analysis

The future annual maturity of lease payments as of June 30, 2019 for the above lease obligations was:

Maturity of lease liabilities	Operating leases (1)		Finance leases (2)		Total
Remainder of 2019	$	—	$	2	$	2
2020	—		4		4
2021	1		4		5
2022	—		4		4
2023	1		4		5
Remainder	6		36		42
Total lease payments	8		54		$	62
Less: Interest (3)	(3)		(29)		(32)
Present value of lease liabilities (4)	$	5	$	25	$	30

⁽¹⁾ Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

⁽²⁾ Includes $26 million in principal and excludes $9 million in executory costs.

⁽³⁾ Calculated using the interest rate for each lease.

⁽⁴⁾ Includes the current portion of $1 million for the finance lease.

Lessor accounting

We have certain transportation and terminaling services agreements with related parties entered into prior to the adoption date of January 1, 2019 that are considered operating leases and include both lease and non-lease components. Certain of these agreements were entered into for terms of ten years with the option to extend for two additional five year terms, and we have additional agreements with an initial term of ten years with the option to extend for up to ten additional one year terms. It is reasonably certain that these contracts will be extended. Our transportation, terminaling and storage services revenue and lease revenue from related parties for both the three and six months ended June 30, 2019 and 2018 are disclosed in Note 11 – Revenue Recognition.

Our risk management strategy for the residual assets is mitigated by the long-term nature of the underlying assets and the long-term nature of our lease agreements.

Significant assumptions and judgments

20

Lease and non-lease components. Certain of our revenues are accounted for under Topic 842, Leases, as the underlying contracts convey the right to control the use of the identified asset for a period of time. We allocate the arrangement consideration between the lease components that fall within the scope of ASC Topic 842 and any non-lease service components within the scope of ASC Topic 606 based on the relative stand-alone selling price of each component. See Note 11 ­– Revenue Recognition for additional information regarding the allocation of the consideration in a contract between the lease and non-lease components.

Annual maturity analysis

As of June 30, 2019, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease liabilities	Operating leases (1)
Remainder of 2019	$	28
2020	56
2021	56
2022	56
2023	56
Remainder	750
Total lease payments	$	1,002

⁽¹⁾ Operating lease payments include $556 million related to options to extend lease terms that are reasonably certain of being exercised.

9. Accumulated Other Comprehensive Loss

As a result of the June 2019 Acquisition, we recorded an accumulated other comprehensive loss related to pension and other post-retirement benefits provided by Explorer and Colonial to their employees. We are not a sponsor of these benefits plans. The June 2019 Acquisition is accounted for as a transaction between entities under common control on a prospective basis and we have recorded the acquisition on our unaudited consolidated balance sheet at SPLC's historical basis which included accumulated other comprehensive loss. Our assumption of the accumulated other comprehensive loss balance had no effect on our comprehensive income during the period as the balance was accumulated while under the ownership of SPLC.

10. (Deficit) Equity

Our capital accounts are comprised of 2% general partner interests and 98% limited partner interests. The common units represent limited partner interests in us. The holders of common units, both public and SPLC, are entitled to participate in partnership distributions and have limited rights of ownership as provided for under our partnership agreement. Our general partner participates in our distributions and also currently holds IDR’s that entitle it to receive increasing percentages of the cash we distribute from operating surplus.

Shelf Registrations

We have a universal shelf registration statement on Form S-3 on file with the SEC under which we, as a well-known seasoned issuer, have the ability to issue and sell an indeterminate amount of common units and partnership securities representing limited partner units. We also have on file with the SEC a shelf registration statement on Form S-3 relating to $1,000,000,000 of common units and partnership securities representing limited partner units to be used in connection with the at-the-market equity distribution program, direct sales, or other sales consistent with the plan of distribution set forth in the registration statement.

Public Offering and Private Placement

On February 6, 2018, we completed the sale of 25,000,000 common units in a registered public offering for $673 million net proceeds ($680 million gross proceeds, or $27.20 per common unit, less $6 million of underwriter’s fees and $1 million of transaction fees). In connection with the issuance of common units, we issued 510,204 general partner units to our general partner for $14 million in order to maintain its 2% general partner interest in us. On February 6, 2018, we also completed the sale of 11,029,412 common units in a private placement with Shell Midstream LP Holdings LLC for an aggregate purchase

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price of $300 million, or $27.20 per common unit. In connection with the issuance of the common units, we issued 225,091 general partner units to the general partner for $6 million in order to maintain its 2% general partner interest in us. We used net proceeds from these sales to repay $247 million of borrowings outstanding under the Five Year Revolver due July 2023 and $726 million of borrowings outstanding under the Five Year Revolver due December 2022, as well as for general partnership purposes.

At-the-Market Program

On March 2, 2016, we commenced an “at-the-market” equity distribution program pursuant to which we may issue and sell common units for up to $300 million in gross proceeds.

During the six months ended June 30, 2019 and June 30, 2018, we did not have any sales under this program.

Units Outstanding

As of June 30, 2019, we had 233,289,537 common units outstanding, of which 123,832,233 were publicly owned. SPLC owned 109,457,304 common units, representing an aggregate 46.0% limited partner interest in us, all of the IDR’s, and 4,761,012 general partner units, representing a 2% general partner interest in us.

The changes in the number of units outstanding from December 31, 2018 through June 30, 2019 are as follows:

	Public	SPLC	General
(in units)	Common	Common	Partner	Total
Balance as of December 31, 2018	123,832,233	99,979,548	4,567,588	228,379,369
June 2019 Acquisition(1)	—	9,477,756	193,424	9,671,180
Balance as of June 30, 2019	123,832,233	109,457,304	4,761,012	238,050,549

⁽¹⁾ See Note 2 – Acquisitions in the Notes to the Unaudited Consolidated Financial Statements for additional information.

Distributions to our Unitholders

Our sponsor has elected to waive $50 million of IDR’s in 2019 to be used for future investment by the Partnership. See Note 3 - Related Party Transactions for terms of the Second Amendment.

The following table details the distributions declared and/or paid for the periods presented:

Date Paid or		Public		SPLC		General Partner						Distributions per Limited Partner Unit
to be Paid	Three Months Ended	Common		Common		IDR's		2%		Total
		(in millions, except per unit amounts)
February 14, 2018	December 31, 2017	$	33	$	30	$	18	$	2	$	83	$	0.3330
May 15, 2018	March 31, 2018	43		35		26		2		106		0.3480
August 14, 2018	June 30, 2018	45		36		30		2		113		0.3650
November 14, 2018	September 30, 2018	47		38		33		3		121		0.3820
February 14, 2019	December 31, 2018	49		40		37		3		129		0.4000
May 15, 2019	March 31, 2019 (1)	51		42		23		3		119		0.4150
August 14, 2019	June 30, 2019 (1)(2)	53		47		28		3		131		0.4300

⁽¹⁾ Includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional information.

⁽²⁾ For more information see Note 15— Subsequent Events.

Distributions to Noncontrolling Interests

Distributions to SPLC for its noncontrolling interest in Zydeco for the three and six months ended June 30, 2019 were $2 million and $3 million, respectively, and for both the three and six months ended June 30, 2018 were $3 million. Distributions to GEL for its noncontrolling interest in Odyssey for the three and six months ended June 30, 2019 were $4 million and $6

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million, respectively, and for the three and six months ended June 30, 2018 were $2 million and $4 million, respectively. See Note 3—Related Party Transactions for additional details.

11. Revenue Recognition

The revenue standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The revenue standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract; identification of the performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations; and recognition of revenue as the entity satisfies the performance obligations.

Disaggregation of Revenue

The following table provides information about disaggregated revenue by service type and customer type:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Transportation services revenue – third parties	$	32	$	55	$	72	$	87
Transportation services revenue – related parties (1)	51		42		101		73
Storage services revenue – third parties	2		2		4		5
Storage services revenue – related parties	2		2		4		3
Terminaling services revenue – related parties (2)	11		11		23		22
Product revenue – third parties (3)	3		1		4		1
Product revenue – related parties (3)	6		2		16		10
Total Topic 606 revenue	107		115		224		201
Lease revenue – related parties	14		14		28		28
Total revenue	$	121	$	129	$	252	$	229

⁽¹⁾ Transportation services revenue - related parties includes $1 million and $2 million, respectively, of the non-lease service component in our transportation services contracts for the both three and six months ended June 30, 2019 and 2018.

⁽²⁾ Terminaling services revenue - related parties is entirely comprised of the non-lease service component in our terminaling services contracts.

⁽³⁾ Product revenue is comprised of allowance oil sales.

Lease revenue

Certain of our long-term transportation and terminaling services contracts with related parties are accounted for as operating

leases under Topic 840, Leases, prior to January 1, 2019 and Topic 842, Leases, on or subsequent to January 1, 2019. These agreements have both a lease component and an implied operation and maintenance service component (“non-lease service component”). We allocate the arrangement consideration between the lease components that fall within the scope of Topic 840 or Topic 842 and any non-lease service components within the scope of the revenue standard based on the relative stand-alone selling price of each component. We estimate the stand-alone selling price of the lease and non-lease service components based on an analysis of service-related and lease-related costs for each contract, adjusted for a representative profit margin. The contracts have a minimum fixed monthly payment for both the lease and non-lease service components. We present the non-lease service components under the revenue standard within Transportation, terminaling and storage services – related parties in the unaudited consolidated statements of income.

Revenues from the lease components of these agreements are recorded within Lease revenue – related parties in the

unaudited consolidated statements of income. Certain of these agreements were entered into for terms of ten years, with the option to extend for two additional five year terms, and we have additional agreements with an initial term of ten years with the option to extend for up to ten additional one-year terms. As of June 30, 2019, future minimum payments of both the lease and service components to be received under the initial ten-year contract term of these operating leases were estimated to be:

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	Total		Less than 1 year		Years 2 to 3		Years 4 to 5		More than 5 years
Operating leases	$	882	$	108	$	216	$	217	$	341

Contract Balances

The following table provides information about receivables and contract liabilities from contracts with customers:

	January 1, 2019		June 30, 2019
Receivables from contracts with customers – third parties	$	19	$	12
Receivables from contracts with customers – related parties	21		33
Deferred revenue – third parties (1)	8		—
Deferred revenue – related party (1)	3		—

⁽¹⁾ Amounts as of June 30, 2019 were less than $1 million.

Significant changes in the deferred revenue balances with customers during the period are as follows:

	December 31, 2018		Additions (1)		Reductions (2)		June 30, 2019 (3)
Deferred revenue – third parties	$	8	$	—	$	(8)	$	—
Deferred revenue – related party	3		—		(3)		—

⁽¹⁾ Contract liability additions resulted from deficiency payments from minimum volume commitment contracts.

⁽²⁾ Contract liability reductions resulted from revenue earned through the actual or estimated use and expiration of deficiency credits.

⁽³⁾ Amounts as of June 30, 2019 were less than $1 million.

We currently have no assets recognized from the costs to obtain or fulfill a contract as of both June 30, 2019 and December 31, 2018.

Remaining Performance Obligations

The following table includes revenue expected to be recognized in the future related to performance obligations exceeding one year of their initial terms that are unsatisfied or partially unsatisfied as of June 30, 2019:

	Total		Remainder of 2019		2020		2021		2022		2023 and beyond
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2019 (1)	$	632	$	55	$	106	$	63	$	63	$	345
Revenue expected to be recognized on other multi-year committed shipper transportation contracts in place as of June 30, 2019 (2)	41		3		5		5		5		23
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2019	2		2		—		—		—		—
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2019 (2)	394		23		47		47		47		230
	$	1,069	$	83	$	158	$	115	$	115	$	598

⁽¹⁾ Excludes revenue deferred for deficiency payments of less than $1 million as of June 30, 2019.

⁽²⁾ Relates to the non-lease service components of certain of our long-term transportation and terminaling service contracts which are accounted for as operating leases.

12. Net Income Per Limited Partner Unit

Net income per unit applicable to common limited partner units is computed by dividing the respective limited partners’ interest in net income attributable to the Partnership for the period by the weighted average number of common units outstanding for the period. Because we have more than one class of participating securities, we use the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units, general partner units and IDR’s. Basic and diluted net income per unit are the same because we do not have any potentially dilutive units outstanding for the periods presented.

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Net income earned by the Partnership is allocated between the limited partners and the general partner (including IDR’s) in accordance with our partnership agreement. Earnings are allocated based on actual cash distributions declared to our unitholders, including those attributable to IDR’s. To the extent net income attributable to the Partnership exceeds or is less than cash distributions, this difference is allocated based on the unitholders’ respective ownership percentages.

The following tables show the allocation of net income attributable to the Partnership to arrive at net income per limited partner unit:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Net income	$	119	$	115	$	256	$	180
Less:
Net income attributable to noncontrolling interests	4		4		9		5
Net income attributable to the Partnership	115		111		247		175
Less:
General partner’s distribution declared (1)	31		32		57		60
Limited partners’ distribution declared on common units	100		81		193		159
Distributions in excess of income	$	(16)	$	(2)	$	(3)	$	(44)

⁽¹⁾ For the three and six months ended June 30, 2019, this includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional information.

	Three Months Ended June 30, 2019
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared (1)	$	31	$	100	$	131
Distributions in excess of income	(1)		(15)		(16)
Net income attributable to the Partnership	$	30	$	85	$	115
Weighted average units outstanding:
Basic and diluted			226.4
Net income per limited partner unit:
Basic and diluted			$	0.38

⁽¹⁾ This includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional  information.

	Six Months Ended June 30, 2019
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared (1)	$	57	$	193	$	250
Distributions in excess of income	—		(3)		(3)
Net income attributable to the Partnership	$	57	$	190	$	247
Weighted average units outstanding:
Basic and diluted			225.1
Net income per limited partner unit:
Basic and diluted			$	0.84

⁽¹⁾ This includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional  information.

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	Three Months Ended June 30, 2018
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared	$	32	$	81	$	113
Distributions in excess of income	—		(2)		(2)
Net income attributable to the Partnership	$	32	$	79	$	111
Weighted average units outstanding:
Basic and diluted			223.8
Net income per limited partner unit:
Basic and diluted			$	0.35

	Six Months Ended June 30, 2018
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared	$	60	$	159	$	219
Distributions in excess of income	(1)		(43)		(44)
Net income attributable to the Partnership	$	59	$	116	$	175
Weighted average units outstanding:
Basic and diluted			216.7
Net income per limited partner unit:
Basic and diluted			$	0.54

13. Income Taxes

We are not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax. Taxes on our net income are generally borne by our partners through the allocation of taxable income. Our income tax expense results from partnership activity in the state of Texas, as conducted by Zydeco, Sand Dollar and Triton. Income tax expense for both the three and six months ended June 30, 2019 and June 30, 2018 was not material.

With the exception of the operations of Colonial, Explorer and LOCAP, which are treated as corporations for federal income tax purposes, the operations of the Partnership are not subject to federal income tax.

14. Commitments and Contingencies

Environmental Matters

We are subject to federal, state, and local environmental laws and regulations. We routinely conduct reviews of potential environmental issues and claims that could impact our assets or operations. These reviews assist us in identifying environmental issues and estimating the costs and timing of remediation efforts. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us and potential third-party liability claims. Often, as the remediation evaluation and effort progresses, additional information is obtained, requiring revisions to estimated costs. These revisions are reflected in income in the period in which they are probable and reasonably estimable. As of both June 30, 2019 and December 31, 2018, these costs and any related liabilities are not material.

Legal Proceedings

We are named defendants in lawsuits and governmental proceedings that arise in the ordinary course of business. For each of our outstanding legal matters, we evaluate the merits of the case, our exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. While there are still uncertainties related to the ultimate costs we may

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incur, based upon our evaluation and experience to date, we do not expect that the ultimate resolution of these matters will have a material adverse effect on our financial position, operating results or cash flows.

Indemnification

Under the 2019 Omnibus Agreement, certain tax liabilities are indemnified by SPLC. See Note 3—Related Party Transactions for additional information.

Minimum Throughput

On September 1, 2016, the in-service date of the finance lease for the Port Neches storage tanks, a joint tariff agreement with a third party became effective. The tariff will be reviewed annually and the rate updated based on the Federal Energy Regulatory Commission (“FERC”) indexing adjustment effective July 1 of each year. Effective July 1, 2019, there was an approximately 4.3% increase to this rate based on FERC indexing adjustment. The initial term of the agreement is ten years with automatic one year renewal terms with the option to cancel prior to each renewal period. 

15. Subsequent Events

We have evaluated events that have occurred after June 30, 2019 through the issuance of these unaudited consolidated financial statements. Any material subsequent events that occurred during this time have been properly recognized or disclosed in the unaudited consolidated financial statements and accompanying notes.

Distribution

On July 24, 2019, the Board declared a cash distribution of $0.4300 per limited partner unit for the three months ended June 30, 2019. The distribution will be paid on August 14, 2019 to unitholders of record as of August 5, 2019.

Revolving Loan Facility

On August 1, 2019, Zydeco entered into a senior unsecured revolving loan facility agreement with STCW, effective August 6, 2019 (the “2019 Zydeco Revolver”). The 2019 Zydeco Revolver has a borrowing capacity of $30 million and matures on August 6, 2024. Borrowings under the credit facility bear interest at the three-month LIBOR rate plus a margin.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Shell Midstream Partners, L.P. (“we,” “us,” “our” or “the Partnership”) is a Delaware limited partnership formed by Royal Dutch Shell plc on March 19, 2014 to own and operate pipeline and other midstream assets, including certain assets acquired from Shell Pipeline Company LP (“SPLC”) and its affiliates. We conduct our operations either through our wholly owned subsidiary Shell Midstream Operating LLC (“Operating Company”) or through direct ownership. Our general partner is Shell Midstream Partners GP LLC (“general partner” or “sponsor”). References to “RDS”, “Shell” or “Parent” refer collectively to Royal Dutch Shell plc and its controlled affiliates, other than us, our subsidiaries and our general partner. Our common units trade on the New York Stock Exchange under the symbol “SHLX”.

The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes in this quarterly report and Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018 (our “2018 Annual Report”) and the consolidated financial statements and related notes therein. Our 2018 Annual Report contains a discussion of other matters not included herein, such as disclosures regarding critical accounting policies and estimates and contractual obligations. You should also read the following discussion and analysis together with the risk factors set forth in our 2018 Annual Report and the “Cautionary Statement Regarding Forward-Looking Statements” in this report.

On January 1, 2019, we adopted Topic 842, Leases (“the new lease standard”) by applying the modified retrospective approach. Results for reporting periods beginning after January 1, 2019 and balances at June 30, 2019 are presented in accordance with the new lease standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under previous generally accepted accounting principles in the United States (“GAAP”). See Note 8 – Leases in the Notes to the Unaudited Consolidated Financial Statements for additional information.

Partnership Overview

We are a growth-oriented master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. As of June 30, 2019, our assets include interests in entities that own crude oil and refined products pipelines and terminals that serve as key infrastructure to (i) transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and (ii) deliver refined products from those markets to major demand centers. Our assets also include interests in entities that own natural gas and refinery gas pipelines that transport offshore natural gas to market hubs and deliver refinery gas from refineries and plants to chemical sites along the Gulf Coast.

For a description of our assets, see Part I, Item 1 - Business and Properties in our 2018 Annual Report.

2019 developments include:

•June 2019 Acquisition. In June 2019, we entered into a Contribution Agreement (the “May 2019 Contribution Agreement”) with SPLC to acquire SPLC’s remaining 25.97% ownership interest in Explorer and 10.125% ownership interest in Colonial for consideration valued at $800 million (the “June 2019 Acquisition”). The June 2019 Acquisition increased the Partnership’s ownership interest in Explorer to 38.59% and in Colonial to 16.125%. We funded the June 2019 Acquisition with $600 million in cash consideration from borrowings under our Ten Year Fixed Facility (as defined below) with Shell Treasury Center (West) Inc. (“STCW”) and non-cash equity consideration valued at $200 million from the issuance of 9,477,756 common units to Shell Midstream LP Holdings LLC, an indirect subsidiary of Shell, and 193,424 general partner units to the general partner in order to maintain its 2% general partner interest in us.

•Borrowings. In June 2019, we entered into a ten-year fixed rate credit facility with STCW with a borrowing capacity of $600 million (the “Ten Year Fixed Facility”). The Ten Year Fixed Facility was fully drawn to partially fund the June 2019 Acquisition.

We generate revenue from the transportation, terminaling and storage of crude oil and refined products through our pipelines and storage tanks, and we generate income from our equity and other investments. Our revenue is generated from customers in the same industry, our Parent’s affiliates, integrated oil companies, marketers, and independent exploration, production and refining companies primarily within the Gulf Coast region of the U.S. We generally do not own any of the crude oil, refinery gas or refined petroleum products we handle, nor do we engage in the trading of these commodities. We therefore have limited direct exposure to risks associated with fluctuating commodity prices, although these risks indirectly influence our activities and results of operations over the long-term.

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As a result of Tropical Storm Barry, we expect to incur an impact of approximately $10 million to net income and cash available for distribution in the third quarter of 2019. Certain producers in the Gulf of Mexico elected to shut-in and evacuate as a safety precaution, while others were forced to shut-in or curtail production due to on-shore closures. There was no material impact to our people, assets or the environment as a result of the storm.

Executive Overview

Net income was $256 million and net income attributable to the Partnership was $247 million during the six months ended June 30, 2019. We generated cash from operations of $283 million. As of June 30, 2019, we had cash and cash equivalents of $257 million, total debt of $2,694 million and unused capacity under our credit facilities of $896 million.

Our 2019 operations and strategic initiatives demonstrate our continuing focus on our business strategies:

•Maintain operational excellence through prioritization of safety, reliability and efficiency;

•Growth through strategic acquisitions in key geographies to achieve integrated value;

•Focus on advantageous commercial agreements with creditworthy counterparties to enhance financial results and deliver reliable distribution growth over the long-term; and

•Optimize existing assets and pursue organic growth opportunities.

How We Evaluate Our Operations

Our management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include: (i) revenue (including pipeline loss allowance (“PLA”) from contracted capacity and throughput; (ii) operations and maintenance expenses (including capital expenses); (iii) Adjusted EBITDA (defined below); and (iv) Cash Available for Distribution.

Contracted Capacity and Throughput

The amount of revenue our assets generate primarily depends on our transportation and storage services agreements with

shippers and the volumes of crude oil, refinery gas and refined products that we handle through our pipelines, terminals and

storage tanks.

The commitments under our transportation, terminaling and storage services agreements with shippers and the volumes which we handle in our pipelines and storage tanks are primarily affected by the supply of, and demand for, crude oil, refinery gas, natural gas and refined products in the markets served directly or indirectly by our assets. This supply and demand is impacted by the market prices for these products in the markets we serve. We utilize the commercial arrangements we believe are the most prudent under the market conditions to deliver on our business strategy. The results of our operations will be impacted by our ability to:

•maintain utilization of and rates charged for our pipelines and storage facilities;

•utilize the remaining uncommitted capacity on, or add additional capacity to, our pipeline systems;

•increase throughput volumes on our pipeline systems by making connections to existing or new third-party pipelines or other facilities, primarily driven by the anticipated supply of, and demand for, crude oil and refined products; and

•identify and execute organic expansion projects.

Operations and Maintenance Expenses

Our management seeks to maximize our profitability by effectively managing operations and maintenance expenses. These

expenses are comprised primarily of labor expenses (including contractor services), insurance costs (including coverage for our consolidated assets and operated joint ventures), utility costs (including electricity and fuel) and repairs and maintenance

expenses. Utility costs fluctuate based on throughput volumes and the grades of crude oil and types of refined products we

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handle. Our property and business interruption coverage is provided by a wholly owned subsidiary of Shell, which results in cost savings and improved coverage. Our other operations and maintenance expenses generally remain stable across broad ranges of throughput and storage volumes, but can fluctuate from period to period depending on the mix of activities, particularly maintenance activities, performed during a period. At times, the fluctuation in operations and maintenance expenses may materially increase due to the performance of planned maintenance, such as turnaround work and asset integrity work, and unplanned maintenance, such as repair of damage caused by a natural disaster.

Adjusted EBITDA and Cash Available for Distribution

Adjusted EBITDA and cash available for distribution have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. You should not consider Adjusted EBITDA or cash available for distribution in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because Adjusted EBITDA and cash available for distribution may be defined differently by other companies in our industry, our definition of Adjusted EBITDA and cash available for distribution may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

The GAAP measures most directly comparable to Adjusted EBITDA and cash available for distribution are net income and net cash provided by operating activities. Adjusted EBITDA and cash available for distribution should not be considered as an alternative to GAAP net income or net cash provided by operating activities. Please refer to “Results of Operations - Reconciliation of Non-GAAP Measures” for the reconciliation of GAAP measures net income and cash provided by operating activities to non-GAAP measures, Adjusted EBITDA and cash available for distribution.

We define Adjusted EBITDA as net income before income taxes, net interest expense, gain or loss from dispositions of fixed assets, allowance oil reduction to net realizable value, loss from revision of asset retirement obligation, and depreciation, amortization and accretion, plus cash distributed to us from equity investments for the applicable period, less equity method distributions included in other income and income from equity investments. We define Adjusted EBITDA attributable to the Partnership as Adjusted EBITDA less Adjusted EBITDA attributable to noncontrolling interests and Adjusted EBITDA attributable to Parent.

We define cash available for distribution as Adjusted EBITDA attributable to the Partnership less maintenance capital expenditures attributable to the Partnership, net interest paid, cash reserves and income taxes paid, plus net adjustments from volume deficiency payments attributable to the Partnership and certain one-time payments received. Cash available for distribution will not reflect changes in working capital balances.

We believe that the presentation of these non-GAAP supplemental financial measures provides useful information to management and investors in assessing our financial condition and results of operations. We present these financial measures because we believe replacing our proportionate share of our equity investments’ net income with the cash received from such equity investments more accurately reflects the cash flow from our business, which is meaningful to our investors.

Adjusted EBITDA and cash available for distribution are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

•our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods;

•the ability of our business to generate sufficient cash to support our decision to make distributions to our unitholders;

•our ability to incur and service debt and fund capital expenditures; and

•the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Factors Affecting Our Business and Outlook

We believe key factors that impact our business are the supply of, and demand for, crude oil, natural gas, refinery gas and refined products in the markets in which our business operates. We also believe that our customers’ requirements, competition and government regulation of crude oil, refined products, natural gas and refinery gas play an important role in how we manage

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our operations and implement our long-term strategies. In addition, acquisition opportunities, whether from Shell or third parties, and financing options, will also impact our business. These factors are discussed in more detail below.

Changes in Crude Oil Sourcing and Refined Product Demand Dynamics

To effectively manage our business, we monitor our market areas for both short-term and long-term shifts in crude oil and

refined products supply and demand. Changes in crude oil supply such as new discoveries of reserves, declining production in older fields, operational impacts at producer fields and the introduction of new sources of crude oil supply, affect the demand for our services from both producers and consumers. One of the strategic advantages of our crude oil pipeline systems is their ability to transport attractively priced crude oil from multiple supply markets to key refining centers along the Gulf Coast. Our crude oil shippers periodically change the relative mix of crude oil grades delivered to the refineries and markets served by our pipelines. They also occasionally choose to store crude longer term when the forward price is higher than the current price (a “contango market”). While these changes in the sourcing patterns of crude oil transported or stored are reflected in changes in the relative volumes of crude oil by type handled by our pipelines, our total crude oil transportation revenue is primarily affected by changes in overall crude oil supply and demand dynamics and U.S. exports.

Similarly, our refined products pipelines have the ability to serve multiple major demand centers. Our refined products shippers periodically change the relative mix of refined products shipped on our refined products pipelines, as well as the destination points, based on changes in pricing and demand dynamics. While these changes in shipping patterns are reflected in relative types of refined products handled by our various pipelines, our total product transportation revenue is primarily affected by changes in overall refined products supply and demand dynamics. Demand can also be greatly affected by refinery performance in the end market, as refined products pipeline demand will increase to fill the supply gap created by refinery issues.

We can also be constrained by asset integrity considerations in the volumes we ship. We may elect to reduce cycling on our

systems to reduce asset integrity risk, which in turn would likely result in lower revenues.

As these supply and demand dynamics shift, we anticipate that we will continue to actively pursue projects that link new

sources of supply to producers and consumers. Similarly, as demand dynamics change, we anticipate that we will create new

services or capacity arrangements that meet customer requirements. We expect to continue extending our corridor pipelines to provide developing growth regions in the Gulf of Mexico with access via our existing corridors to onshore refining centers and market hubs. For example, Appomattox and Buckskin came online during 2019. We believe this strategy will allow our offshore business to grow profitably throughout demand cycles.

Changes in Customer Contracting

We generate a portion of our revenue under long-term transportation service agreements with shippers, including ship-or-pay agreements and life-of-lease transportation agreements, some of which provide a guaranteed return, and storage service

agreements with marketers, pipelines and refiners. Historically, the commercial terms of these long-term transportation and

storage service agreements have substantially mitigated volatility in our financial results by limiting our direct exposure to

reductions in volumes due to supply or demand variability. Our business could be negatively affected if we are unable to renew or replace our contract portfolio on comparable terms, by sustained downturns or sluggishness in commodity prices or the economy in general, and is impacted by shifts in supply and demand dynamics, the mix of services requested by the customers of our pipelines, competition and changes in regulatory requirements affecting our operations. Our business can also be impacted by asset integrity or customer interruptions and natural disasters.

Two of our long-term transportation services agreements on the Zydeco system expired at the end of 2018, and another expired in the second quarter of 2019. These contracts represented approximately 30% of our revenues for the year ended December 31, 2018. Zydeco announced a binding open season on April 15, 2019 which concluded on May 31, 2019. As a result of this open season, Zydeco was able to re-contract the expired volumes. Although we have replaced the volumes from the expired contracts, the rates under the new contracts are lower than those previously contracted, and therefore net income and cash available for distribution will be lower.

The market environment dictated the rates, terms and duration of these agreements. Increases or decreases in available crude supply in the Houston market can affect demand for transportation to other markets, especially the Louisiana refining market. A number of factors can impact this, including increased production in fields with Houston connectivity and increased export capabilities at Texas Gulf Coast ports. Shippers may also choose alternate routes on which to ship. Alternatively, Louisiana refineries’ availability and crude slates, as well as potential crude options at Louisiana Gulf Coast ports, can impact Louisiana demand for crude types available in the Houston market. Additionally, crude prices and basis differentials directly impact the

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price our customers are willing to pay to transport. Despite these challenges, we believe that Zydeco continues to serve an important market and we strive to maximize the long-term value of the system to both shippers and the pipeline.

Revenue we generate from spot shipments typically has a corresponding positive impact on cash available for distribution. However, in the first half of 2019, previously committed shippers whose contracts expired at the end of 2018 have had the ability to ship on credits earned related to under-shipments prior to the expiration of their contracts. As such, revenue is recognized for the usage of those credits, but cash is not received. The majority of these credits were utilized in the first quarter, with the remaining credits used in the second quarter. For the contract that expired during the second quarter of 2019, the shipper will have the ability to use the credits, and if unused, they will expire during the fourth quarter of 2019. These credits are not expected to be material.

The cumulative effect of the foregoing circumstances and challenges on Zydeco has had, and may continue to have, a material impact on our financial results. The impact on both our net income and cash available for distribution in the first six months of 2019 was approximately $55 million.

Changes in Commodity Prices and Customers’ Volumes

Crude oil prices have fluctuated significantly over the past few years, often with drastic moves in relatively short periods of

time. The current global geopolitical and economic uncertainty continues to contribute to volatility in financial and commodity markets. Our direct exposure to commodity price fluctuations is limited to the PLA provisions in our tariffs. We have indirect exposure to commodity price fluctuations to the extent such fluctuations affect the shipping patterns of our customers. Certain of our assets benefit from long-term fee-based arrangements, and are strategically positioned to connect crude oil volumes originating from key onshore and offshore production basins to the Texas and Louisiana refining markets, where demand for throughput has remained strong. Historically, we have not experienced a material decline in throughput volumes on our crude oil pipeline systems as a result of lower crude oil prices. However, if crude oil prices remain at lower levels for a sustained period, we could see a reduction in our transportation volumes if production coming into our systems is deferred and our associated allowance oil sales decrease. Our customers may also experience liquidity and credit problems, which could cause them to defer development or repair projects, avoid our contracts in bankruptcy, or renegotiate our contracts on terms that are less attractive to us or impair their ability to perform under our contracts.

Our throughput volumes on our refined products pipeline systems depend primarily on the volume of refined products produced at connected refineries and the desirability of our end markets. These factors in turn are driven by refining margins, maintenance schedules and market differentials. Refining margins depend on the cost of crude oil or other feedstocks and the price of refined products. These margins are affected by numerous factors beyond our control, including the domestic and global supply of and demand for crude oil and refined products. We are currently experiencing relatively high demand for our pipeline systems that service refineries.

Other Changes in Customers’ Volumes

Total Zydeco volumes were higher in the three months ended June 30, 2019 (“Current Quarter”) versus the three months ended June 30, 2018 (“Comparable Quarter”) primarily resulting from an increase in non-mainline offshore volumes, partially offset by the expiration of two contracts at the end of 2018 and a third that expired in the Current Quarter. Total Zydeco volumes were higher in the six months ended June 30, 2019 (“Current Period”) versus the six months ended June 30, 2018 (“Comparable Period”) primarily due to declaring Force Majeure in the Comparable Period related to the hydro-test of the Zydeco pipeline from Houston, Texas to Houma, Louisiana which resulted in 49 days of downtime. This increase was partially offset by lower volumes in the Current Period due to the expiration of two contracts at the end of 2018 and a third that expired in the Current Period.

Transportation volumes on the Auger pipeline were higher in both the Current Quarter and Current Period versus the Comparable Quarter and Comparable Period primarily due to increased production at the Auger and Enchilada platforms following drilling and workover activity at existing fields, as well as the shut-in of production at certain connected producer facilities in the Comparable Quarter caused by the fire at the Enchilada platform late in 2017. We received $3 million in the second quarter of 2019 related to business interruption recoveries associated with outages in 2018.

Transportation volumes on the Na Kika pipeline were lower in the Current Quarter versus the Comparable Quarter due to a planned turnaround on the producing platform in the Current Quarter, partially offset by new wells that came online during the Comparable Quarter. Volumes in the Current Period versus the Comparable Period were relatively flat. Delta experienced

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higher transportation volumes in the Current Quarter and Current Period versus the Comparable Quarter and Comparable Period due to higher receipts from Odyssey.

Odyssey volumes were higher in the Current Quarter versus the Comparable Quarter primarily driven by increased production at certain platforms in the Current Quarter. Odyssey volumes were higher in the Current Period versus the Comparable Period primarily driven by multiple fields tied back to the Delta House platform being shut-in for unplanned maintenance in the Comparable Period, as well as increased production at certain platforms in the Current Period.

Transportation volumes on Amberjack were higher in both the Current Quarter and Current Period versus the Comparable Quarter and Comparable Period driven by increased production from two large fields in the central Gulf of Mexico.

Transportation volumes on Mars were higher in both the Current Quarter and Current Period versus the Comparable Quarter and Comparable Period driven by increased production from three large fields in the central Gulf of Mexico, as well as from an increase in receipt volume from a connecting pipeline system. The increase in transportation volumes was partially offset by lower storage volumes in the Current Quarter and Current Period versus the Comparable Quarter and Comparable Period.

Major Maintenance Projects

On the Zydeco pipeline system, we are finalizing a directional drill project to address soil erosion over a two-mile section of our 22-inch diameter pipeline under the Atchafalaya River and Bayou Shaffer in Louisiana (the “directional drill project”). Due to allowing for performance of work during optimal weather and water conditions, final construction activities have been delayed and we now expect the project to be completed in the fourth quarter of 2019. Zydeco expects to incur approximately $42 million in maintenance capital expenditures for the total project. Since inception in the latter half of 2017, Zydeco has incurred $41 million, of which $2 million and $10 million were incurred in the Current Quarter and Current Period, respectively. In connection with the acquisitions of additional interests in Zydeco, SPLC agreed to reimburse us against our proportionate share of certain costs and expenses with respect to this project. During the Current Quarter and Current Period, we filed claims for reimbursement from SPLC of $3 million and $10 million, respectively, which were treated as capital contributions from our Parent.

Certain connected producers have turnarounds planned during 2019. The impact to net income and cash available for distribution for the second quarter of 2019 was approximately $5 million, and we expect the impact for the remainder of 2019 to be approximately $5 million.

For expected capital expenditures in 2019, refer to Capital Resources and Liquidity - Capital Expenditures and Investments.

Major Expansion Projects

In June 2017, Zydeco began construction on a tank expansion project in Houma to address future capacity shortfalls during tank maintenance which will allow us to service additional capacity, as well as allow for existing tanks to come out of service for regularly scheduled inspection and maintenance. The scope included interconnecting piping, dike expansion and associated facility work. The tanks were completed during the first quarter of 2019 and are operational. We built two 250,000 barrel working tanks at the existing Houma facility and have incurred growth capital expenditures of $46 million since inception, of which $3 million and $6 million, respectively, were incurred in the Current Quarter and Current Period. Any remaining costs are not expected to be material.

On Amberjack, we have seen an increase in volume due to multiple production expansion projects, which has resulted in an increase in equity investment income and distributions received from Amberjack. See “Factors Affecting Our Business and Outlook - Changes in Crude Oil Sourcing and Refined Products Demand Dynamics” for additional information.

Customers

We transport and store crude oil, refined products, natural gas, and refinery gas for a broad mix of customers, including producers, refiners, marketers and traders, and are connected to other crude oil and refined products pipelines. In addition to serving directly-connected U.S. Gulf Coast markets, our crude oil and refined products pipelines have access to customers in various regions of the United States through interconnections with other major pipelines. Our customers use our transportation and storage services for a variety of reasons. Refiners typically require a secure and reliable supply of crude oil over a prolonged period of time to meet the needs of their specified refining diet and frequently enter into long-term firm transportation agreements to ensure a ready supply of crude oil, rate surety and sometimes sufficient transportation capacity over the life of the contract. Similarly, chemical sites require a secure and reliable supply of refinery gas to crackers and enter

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into long-term firm transportation agreements to ensure steady supply. Producers of crude oil and natural gas require the ability to deliver their product to market and frequently enter into firm transportation contracts to ensure that they will have sufficient capacity available to deliver their product to delivery points with greater market liquidity. Marketers and traders generate income from buying and selling crude oil and refined products to capitalize on price differentials over time or between markets. Our customer mix can vary over time and largely depends on the crude oil and refined products supply and demand dynamics in our markets.

Competition

Our pipeline systems compete primarily with other interstate and intrastate pipelines and with marine and rail transportation.

Some of our competitors may expand or construct transportation systems that would create additional competition for the

services we provide to our customers. For example, newly constructed transportation systems in the onshore Gulf of Mexico

region may increase competition in the markets where our pipelines operate. In addition, future pipeline transportation capacity could be constructed in excess of actual demand, which could reduce the demand for our services, in the market areas we serve, and could lead to the reduction of the rates that we receive for our services. While we do see some variation from quarter to quarter resulting from changes in our customers’ demand for transportation, this risk has historically been mitigated by the long-term, fixed rate basis upon which we had contracted a substantial portion of our capacity. However, contracts that represented approximately 30% of our revenues for the year ended December 31, 2018 expired in either December 2018 or in the second quarter of 2019. During the open season that concluded on May 31, 2019, the volumes from these expired contracts were replaced with new contracts. See “Changes in Customer Contracting” for additional information.

Our storage terminal competes with surrounding providers of storage tank services. Some of our competitors have expanded terminals and built new pipeline connections, and third parties may construct pipelines that bypass our location. These, or similar events, could have a material adverse impact on our operations.

Our refined products terminals generally compete with other terminals that serve the same markets. These terminals may be owned by major integrated oil and gas companies or by independent terminaling companies. While fees for terminal storage and throughput services are not regulated, they are subject to competition from other terminals serving the same markets. However, our contracts provide for stable, long-term revenue, which is not impacted by market competitive forces.

Regulation

Our assets are subject to regulation by various federal, state and local agencies, For example, our interstate common carrier and intrastate pipeline systems are subject to economic regulation by the Federal Energy Regulatory Commission (“FERC”).

In May 2019, Zydeco, Mars, LOCAP and Colonial filed with FERC to increase rates subject to FERC's indexing adjustment methodology by approximately 4.3% starting on July 1, 2019.

On March 21, 2019, FERC issued a Notice of Inquiry (“NOI”) in Docket No. PL19-4-000 seeking comments on whether it should modify its policies concerning the determination of return on equity (“ROE”) for utilities, and on whether any policy changes concerning utility ROEs should be applied to oil and natural gas pipelines. The NOI includes a discussion on: FERC's use of the discounted cash flow (“DCF”) methodology for utilities and pipelines; other financial models that can be used to determine ROE; and the decisions on use of DCF in the utility sector that led to issuance of the NOI. The NOI seeks comments on eight topics and on several technical sub-issues within each topic, including on whether to apply a single ROE policy across oil pipelines, natural gas pipelines, and utilities. Initial comments were filed on June 26, 2019, and reply comments were filed July 26, 2019. We will continue to monitor developments in this area.

On July 18, 2018, FERC issued Order No. 849, which adopts procedures to address the impact of the Tax Cuts and Jobs Act and its Revised Policy Statement on Treatment of Income Taxes in Docket No. PL17-1-000, issued on March 15, 2018 (the “March 2018 Revised Policy Statement”). FERC contemporaneously issued Order on Rehearing in Docket No. PL17-1-000, which affirms the FERC position in the March 2018 Revised Policy Statement that eliminated the recovery of an income tax allowance by master limited partnership (“MLP”) oil and gas pipelines in cost-of-service-based rates. In Order No. 849, however, FERC has clarified its general disallowance of MLP income tax allowance recovery by providing that an MLP will not be precluded in a future proceeding from making a claim that it is entitled to an income tax allowance. FERC will permit an MLP to demonstrate that its recovery of an income tax allowance does not result in a “double-recovery of investors’ income tax costs.” FERC affirmed Order No. 849 on rehearing on April 18, 2019. Parties also have sought judicial review of the March 2018 Revised Policy Statement, and that challenge is pending in the U.S. Court of Appeals for the D.C. Circuit.

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As was the case with the March 2018 Revised Policy Statement, FERC did not propose any industry-wide action regarding review of rates for crude oil and liquids pipelines in its July 2018 issuances. MLP owned crude oil and liquids pipelines are now required to report Page 700 information in their FERC Form 6 annual reports. FERC intends to address the impact of the elimination of the income tax allowance as part of its five-year review of the oil pipeline rate index level in 2020. FERC will also implement the elimination of the income tax allowance in proceedings involving review of initial cost-of-service rates, rate changes, and rate complaints. For crude oil and liquids pipelines owned by non-MLP partnerships and other pass-through businesses, FERC will address such issues as they arise in subsequent proceedings.

We believe that FERC’s recent decisions, including the March 2018 Revised Policy Statement and issuances in July 2018, will not have a material impact on our operations and financial performance. Since FERC only maintains jurisdiction over interstate crude oil and liquids pipelines, the recent decisions are not expected to have an impact on rates charged through our offshore operations. FERC also does not maintain jurisdiction over certain of the onshore assets in which we have interests. Rates related to these assets should not be impacted by the FERC decision. For our FERC-regulated rates charged through our interstate crude oil and liquids pipelines, the rates are based on either a negotiated or market-based rate, which are below the cost-of-service rates established by FERC. As such, neither our negotiated nor market-based rate revenue for our FERC-regulated assets would be subject to the income tax recovery disallowance. Additionally, we have evaluated the impact of FERC’s recent policy changes on our non-operated joint ventures. Due to the nature of their assets, operations and/or their entity form, we do not believe there will be a material impact to their operations and earnings.

For more information on federal, state and local regulations affecting our business, please read Part I, Items 1 and 2, Business and Properties in our 2018 Annual Report.

Acquisition Opportunities

We plan to continue to pursue acquisitions of complementary assets from SPLC and other affiliates of Shell, as well as from third parties. Since our initial public offering, we have acquired approximately $5,700 million of assets from Shell and its affiliates. We also may pursue acquisitions jointly with SPLC. Given the size and scope of SPLC’s footprint and its significant ownership interest in us, we expect acquisitions from SPLC will be an important growth mechanism for the foreseeable future. Neither SPLC nor any of its affiliates is under any obligation, however, to sell or offer to sell us additional assets or to pursue acquisitions jointly with us, and we are under no obligation to buy any additional assets from them or to pursue any joint acquisitions with them. We will continue to focus our acquisition strategy on transportation and midstream assets. We believe that we will be well positioned to acquire midstream assets from SPLC, other subsidiaries of Shell, and third parties should such opportunities arise. Identifying and executing acquisitions is a key part of our strategy. However, if we do not make acquisitions on economically acceptable terms or if we incur a substantial amount of debt in connection with the acquisitions, our future growth will be limited, and the acquisitions we do make may reduce, rather than increase, our available cash. Our ability to obtain financing or access capital markets may also directly impact our ability to continue to pursue strategic acquisitions. The level of current market demand for equity issued by MLP’s may make it more challenging for us to fund our acquisitions with the issuance of equity in the capital markets. However, we believe our balance sheet offers us flexibility, providing us other financing options such as hybrid securities, purchases of common units by our Sponsor and debt.

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Results of Operations

The following tables and discussion are a summary of our results of operations, including a reconciliation of Adjusted EBITDA and cash available for distribution to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenue	$	121	$	129	$	252	$	229
Costs and expenses
Operations and maintenance	32		38		59		94
Cost of product sold	7		2		16		9
Loss from revision of asset retirement obligation	—		—		2		—
General and administrative	17		16		29		31
Depreciation, amortization and accretion	12		12		24		23
Property and other taxes	5		4		9		10
Total costs and expenses	73		72		139		167
Operating income	48		57		113		62
Income from equity method investments	80		48		150		88
Dividend income from other investments	—		13		14		38
Other income	12		10		20		16
Investment, dividend and other income	92		71		184		142
Interest expense, net	21		13		41		24
Income before income taxes	119		115		256		180
Income tax expense	—		—		—		—
Net income	119		115		256		180
Less: Net income attributable to noncontrolling interests	4		4		9		5
Net income attributable to the Partnership	$	115	$	111	$	247	$	175
General partner’s interest in net income attributable to the Partnership	$	30	$	32	$	57	$	59
Limited Partners’ interest in net income attributable to the Partnership	$	85	$	79	$	190	$	116
Adjusted EBITDA attributable to the Partnership(1)	$	187	$	155	$	357	$	251
Cash available for distribution attributable to the Partnership (1)	$	162	$	137	$	302	$	217

⁽¹⁾ For a reconciliation of Adjusted EBITDA and cash available for distribution attributable to the Partnership to their most comparable GAAP measures, please read “—Reconciliation of Non-GAAP Measures.”

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	Three Months Ended June 30,				Six Months Ended June 30,
Pipeline throughput (thousands of barrels per day) (1)	2019		2018		2019		2018
Zydeco – Mainlines	635		661		631		566
Zydeco – Other segments	271		230		264		243
Zydeco total system	906		891		895		809
Amberjack total system	359		309		361		293
Mars total system	569		451		562		458
Bengal total system	525		567		513		549
Poseidon total system	265		226		259		232
Auger total system	78		48		82		40
Delta total system	251		201		262		208
Na Kika total system	33		41		39		38
Odyssey total system	149		90		151		100
Colonial total system	2,547		2,589		2,601		2,578
Explorer total system	775		638		664		633
LOCAP total system	1,210		1,254		1,213		1,218
Other systems	369		350		281		358
Terminals (2) (3)
Lockport terminaling throughput and storage volumes	221		234		221		240
Revenue per barrel ($ per barrel)
Zydeco total system (4)	$	0.52	$	0.81	$	0.57	$	0.67
Amberjack total system (4)	2.26		2.48		2.39		2.49
Mars total system (4)	1.16		1.15		1.19		1.20
Bengal total system (4)	0.39		0.34		0.39		0.33
Auger total system (4)	1.39		1.30		1.38		1.33
Delta total system (4)	0.58		0.56		0.57		0.56
Na Kika total system (4)	0.75		0.74		0.76		0.73
Odyssey total system (4)	0.91		0.96		0.91		0.90
Lockport total system (5)	0.23		0.20		0.22		0.19

⁽¹⁾ Pipeline throughput is defined as the volume of delivered barrels. For additional information regarding our pipeline and terminal systems, refer to Part I, Item I - Business and Properties - Our Assets and Operations in our 2018 Annual Report.

⁽²⁾ Terminaling throughput is defined as the volume of delivered barrels and storage is defined as the volume of stored barrels.

⁽³⁾ Refinery Gas Pipeline and our refined products terminals are not included above as they generate revenue under transportation and terminaling service agreements, respectively, that provide for guaranteed minimum throughput.

⁽⁴⁾ Based on reported revenues from transportation and allowance oil divided by delivered barrels over the same time period. Actual tariffs charged are based on shipping points along the pipeline system, volume and length of contract.

⁽⁵⁾ Based on reported revenues from transportation and storage divided by delivered and stored barrels over the same time period. Actual rates are based on contract volume and length.

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Reconciliation of Non-GAAP Measures

The following tables present a reconciliation of Adjusted EBITDA and cash available for distribution to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Please read “—Adjusted EBITDA and Cash Available for Distribution” for more information.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Reconciliation of Adjusted EBITDA and Cash Available for Distribution to Net Income
Net income	$	119	$	115	$	256	$	180
Add:
Loss from revision of asset retirement obligation	—		—		2		—
Depreciation, amortization and accretion	12		12		24		23
Interest expense, net	21		13		41		24
Income tax expense	—		—		—		—
Cash distribution received from equity method investments	128		77		211		128
Less:
Equity method distributions included in other income	9		9		17		10
Income from equity method investments	80		48		150		88
Adjusted EBITDA	191		160		367		257
Less:
Adjusted EBITDA attributable to noncontrolling interests	4		5		10		6
Adjusted EBITDA attributable to the Partnership	187		155		357		251
Less:
Net interest paid attributable to the Partnership (1)	21		13		41		24
Income taxes paid attributable to the Partnership	—		—		—		—
Maintenance capex attributable to the Partnership	6		6		14		13
Add:
Net adjustments from volume deficiency payments attributable to the Partnership	(1)		(1)		(10)		(3)
Reimbursements from Parent included in partners’ capital	3		2		10		6
Cash available for distribution attributable to the Partnership	$	162	$	137	$	302	$	217

⁽¹⁾ Amount represents both paid and accrued interest attributable to the period.

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	Six Months Ended June 30,
	2019		2018
Reconciliation of Adjusted EBITDA and Cash Available for Distribution to Net Cash Provided by Operating Activities
Net cash provided by operating activities	$	283	$	213
Add:
Interest expense, net	41		24
Income tax expense	—		—
Return of investment	47		33
Less:
Change in deferred revenue and other unearned income	(11)		(3)
Change in other assets and liabilities	15		16
Adjusted EBITDA	367		257
Less:
Adjusted EBITDA attributable to noncontrolling interests	10		6
Adjusted EBITDA attributable to the Partnership	357		251
Less:
Net interest paid attributable to the Partnership (1)	41		24
Income taxes paid attributable to the Partnership	—		—
Maintenance capex attributable to the Partnership	14		13
Add:
Net adjustments from volume deficiency payments attributable to the Partnership	(10)		(3)
Reimbursements from Parent included in partners’ capital	10		6
Cash available for distribution attributable to the Partnership	$	302	$	217

⁽¹⁾ Amount represents both paid and accrued interest attributable to the period.

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Current Quarter compared to Comparable Quarter

Revenues

Total revenue decreased by $8 million in the Current Quarter as compared to the Comparable Quarter, comprised of $14 million attributable to transportation and terminaling services revenue, partially offset by an increase of $6 million attributable to product revenue.

Transportation services revenue decreased $26 million for Zydeco primarily due to committed contracts that expired either at the end of 2018 or during the Current Quarter, coupled with a larger amount of used and expired credits in the Comparable Quarter. Transportation services revenue increased by $7 million for Pecten primarily due to an increase on Auger due to improved volumes at connected production facilities in the Current Quarter that were negatively impacted in the Comparable Quarter as a result of the fire in November 2017. Further, Delta revenue increased due to higher receipts from Odyssey in the Current Quarter and the impact of operational issues in the Comparable Quarter. There was a decrease in Na Kika revenue due to lower volumes in the Current Quarter resulting from planned turnaround activity, partially offset by new wells coming online. Odyssey revenue increased $5 million primarily due to increased production at certain platforms. Transportation services revenue for Sand Dollar represents the non-lease service component of its transportation services agreements and was relatively flat.

Product revenue increased by $6 million. Product revenue results from allowance oil sales for Zydeco and Pecten.

Storage revenue, terminaling services revenue and lease revenue were consistent in the Current Quarter and Comparable Quarter.

Costs and Expenses

Total costs and expenses increased $1 million in the Current Quarter due to $5 million of higher cost of product sold related to the cost of sales of allowance oil, $1 million in higher general and administrative expenses and $1 million in higher property taxes due to changes in property tax appraisal estimates. These increases were partially offset by $6 million in lower operations and maintenance expenses.

General and administrative expense increased primarily due to an increase in the fee under the 2019 Omnibus Agreement, partially offset by the allocation of severance expense in the Comparable Quarter.

Operations and maintenance expenses decreased primarily due to lower project spend in the Current Quarter, partially offset by an increase in insurance expense.

Investment, Dividend and Other Income

Investment, dividend and other income increased $21 million in the Current Quarter as compared to the Comparable Quarter. Income from equity method investments increased by $32 million, primarily as a result of the equity earnings associated with the acquisition of Amberjack in May 2018 and the acquisition of additional interests in Explorer and Colonial in June 2019. Other income increased by $2 million and is primarily related to business continuity insurance proceeds received in connection with the fire at the Enchilada platform impacting Auger, as well as distributions from Poseidon. These increases were partially offset by a decrease in dividend income from other investments of $13 million due to the change in accounting for Explorer and Colonial as equity method investments in the Current Quarter rather than Other investments in the Comparable Quarter following the acquisition of additional interests in June 2019. We were entitled to distributions from Explorer and Colonial with respect to the period beginning April 1, 2019 as these were paid after the acquisition date and were no longer considered dividend income.

Interest Expense

Interest expense increased by $8 million due to additional borrowings outstanding under our credit facilities during the Current Quarter versus the Comparable Quarter.

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Current Period compared to Comparable Period

Revenues

Total revenue increased by $23 million in the Current Period as compared to the Comparable Period, comprised of $14 million attributable to transportation and terminaling services revenue and $9 million attributable to product revenue.

Transportation services revenue increased by $19 million for Pecten primarily due to an increase on Auger due to improved volumes at connected production facilities in the Current Period that were negatively impacted in the Comparable Period as a result of the fire in November 2017. Additionally, Na Kika revenue increased slightly due to an increase in volumes in the Current Period due to new wells coming online in the second quarter of 2018, partially offset by the impact of planned turnaround activity in the Current Period. Further, Delta revenue increased due to higher receipts from Na Kika and Odyssey in the Current Period and the impact of operational issues in the Comparable Period. Odyssey revenue increased primarily due to connecting fields being shut-in for unplanned maintenance in the Comparable Period. Transportation services revenue decreased $14 million for Zydeco primarily due to lower revenue due to committed contracts that expired either at the end of 2018 or during the Current Period. This decrease was partially offset by the impact of being out of service for 49 days as a result of the hydro-test in the Comparable Period and the usage of credits on our committed transportation agreements in the Current Period. Transportation services revenue for Sand Dollar represents the non-lease service component of its transportation services agreements and was relatively flat.

Product revenue increased by $9 million. Product revenue results from allowance oil sales for Zydeco and Pecten.

Storage revenue, terminaling services revenue and lease revenue were relatively consistent in the Current Period and Comparable Period.

Costs and Expenses

Total costs and expenses decreased $28 million in the Current Period due to $35 million in lower operations and maintenance expenses, $2 million in lower general and administrative expenses and $1 million in lower property taxes due to changes in property tax appraisal estimates. These decreases were partially offset by $7 million of higher cost of product sold related to the cost of sales of allowance oil, a $2 million loss on revision of asset retirement obligation and $1 million of additional depreciation expense.

Operations and maintenance expenses decreased primarily due to the impact in the Comparable Period of being out of service for 49 days as a result of the hydro-test and a larger gain on pipeline operations in the Current Period. This decrease was partially offset by an increase in insurance expense.

General and administrative expense decreased primarily due to lower project related expenses and head office allocations. This increase was partially offset by the increase in the fee under the 2019 Omnibus Agreement.

Investment, Dividend and Other Income

Investment, dividend and other income increased $42 million in the Current Period as compared to the Comparable Period. Income from equity method investments increased by $62 million, primarily as a result of the equity earnings associated with the acquisition of Amberjack in May 2018 and the acquisition of additional interests in Explorer and Colonial in June 2019. Other income increased by $4 million and is primarily related to business continuity insurance proceeds received in connection with the fire at the Enchilada platform impacting Auger, as well as distributions from Poseidon. These increases were partially offset by a decrease in dividend income from Other investments of $24 million due to the change in accounting for Explorer and Colonial as equity method investments in the Current Quarter rather than Other investments in the Comparable Quarter following the acquisition of additional interests in June 2019. We were entitled to distributions from Explorer and Colonial with respect to the period beginning April 1, 2019 as these were paid after the acquisition date and were no longer considered dividend income.

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Interest Expense

Interest expense increased by $17 million due to additional borrowings outstanding under our credit facilities during the Current Period versus the Comparable Period.

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Capital Resources and Liquidity

We expect our ongoing sources of liquidity to include cash generated from operations, borrowings under our credit facilities and our ability to access the capital markets. We believe this access to credit along with cash generated from operations will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements, and to make quarterly cash distributions. Our liquidity as of June 30, 2019 was $1,153 million, consisting of $257 million cash and cash equivalents and $896 million of available capacity under our credit facilities.

On December 21, 2018, we and our general partner executed Amendment No. 2 (the “Second Amendment”) to the Partnership’s First Amended and Restated Agreement of Limited Partnership dated November 3, 2014. Under the Second Amendment, our sponsor agreed to waive $50 million of distributions in 2019 by agreeing to reduce distributions to holders of the incentive distribution rights by: (1) $17 million for the quarter ended March 31, 2019, (2) $17 million for the quarter ended June 30, 2019 and (3) $16 million for the quarter ending September 30, 2019.

Credit Facility Agreements

As of June 30, 2019, we have entered into the following credit facilities:

	Total Capacity		Current Interest Rate		Maturity Date
Ten Year Fixed Facility	$	600	4.18	%	June 4, 2029
Seven Year Fixed Facility	600		4.06	%	July 31, 2025
Five Year Revolver due July 2023	760		3.6	%	July 31, 2023
Five Year Revolver due December 2022	1,000		3.6	%	December 1, 2022
Five Year Fixed Facility	600		3.23	%	March 1, 2022
Zydeco Revolver (1)	30		4.0	%	August 6, 2019

⁽¹⁾ As stated below, the Zydeco Revolver will be replaced with the 2019 Zydeco Revolver.

Borrowings under the Five Year Revolver due July 2023, the Five Year Revolver due December 2022 and the Zydeco Revolver bear interest at the three-month LIBOR rate plus a margin. Our weighted average interest rate for the six months ended June 30, 2019 and June 30, 2018 was 3.8% and 3.2%, respectively. The weighted average interest rate includes drawn and undrawn interest fees, but does not consider the amortization of debt issuance costs or capitalized interest. A 1/8 percentage point (12.5 basis points) increase in the interest rate on the total variable rate debt of $894 million as of June 30, 2019 would increase our consolidated annual interest expense by approximately $1 million.

We will need to rely on the willingness and ability of our related party lender to secure additional debt, our ability to use cash

from operations and/or obtain new debt from other sources to repay/refinance such loans when they come due and/or to secure

additional debt as needed.

As of June 30, 2019, we were in compliance with the covenants contained in our credit facilities, and Zydeco was in compliance with the covenants contained in the Zydeco Revolver.

On August 1, 2019, Zydeco entered into a senior unsecured revolving loan facility agreement with STCW, effective August 6, 2019 (the “2019 Zydeco Revolver”). The 2019 Zydeco Revolver has a borrowing capacity of $30 million and matures on August 6, 2024. Borrowings under the credit facility bear interest at the three-month LIBOR rate plus a margin.

For definitions and additional information on our credit facilities, refer to Note 7 – Related Party Debt in the Notes to the Unaudited Consolidated Financial Statements and Note 9 – Related Party Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8 in our 2018 Annual Report.

Equity Issuances

On June 6, 2019, in connection with the June 2019 Acquisition, we issued 9,477,756 common units to Shell Midstream LP Holdings LLC, an indirect subsidiary of Shell. In connection with the issuance of the common units, we issued 193,424 general partner units to the general partner in order to maintain its 2% general partner interest in us. The non-cash equity consideration

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from this issuance was valued at $200 million pursuant to the May 2019 Contribution Agreement and was used to partially fund the June 2019 Acquisition.

On February 6, 2018, we completed the sale of 25,000,000 common units in a registered public offering for approximately $673 million net proceeds. Additionally, we completed the sale of 11,029,412 common units in a private placement with Shell Midstream LP Holdings LLC for an aggregate purchase price of $300 million.

For additional information, see Note 10 – (Deficit) Equity in the Notes to the Unaudited Consolidated Financial Statements.

Cash Flows from Our Operations

Operating Activities. We generated $283 million in cash flow from operating activities in the Current Period compared to $213 million in the Comparable Period. The increase was primarily driven by an increase in operating income due to the adverse impact of the hydro-test in the Comparable Period, as well as an increase in equity investment income related to the acquisition of Amberjack in May 2018 and the acquisition of additional interests in Explorer and Colonial in June 2019. These increases were partially offset by a decrease related to the timing of receipt of receivables and payment of accruals in the Current Period.

Investing Activities. Our cash flow used in investing activities was $77 million in the Current Period compared to $488 million in the Comparable Period. The decrease in cash flow used in investing activities was primarily due to a smaller acquisition from Parent in the Current Period versus the Comparable Period, as well as lower contributions to Permian Basin and a higher return of investment in the Current Period.

Financing Activities. Our cash flow used in financing activities was $157 million in the Current Period compared to cash flow provided by financing activities of $312 million in the Comparable Period. The decrease in cash flow provided by financing activities was primarily due to lower borrowings under credit facilities, increased distributions paid to the unitholders and our general partner and lower contributions from general partner in the Current Period. The decrease in cash flow provided by financing activities was partially offset by lower capital distributions to Parent in the Current Period.

Capital Expenditures and Investments

Our operations can be capital intensive, requiring investments to maintain, expand, upgrade or enhance existing operations and to meet environmental and operational regulations. Our capital requirements consist of maintenance capital expenditures and expansion capital expenditures. Examples of maintenance capital expenditures are those made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives, or other capital expenditures that are incurred in maintaining existing system volumes and related cash flows. In contrast, expansion capital expenditures are those made to acquire additional assets to grow our business, to expand and upgrade our systems and facilities and to construct or acquire new systems or facilities. We regularly explore opportunities to improve service to our customers and maintain or increase our assets’ capacity and revenue. We may incur substantial amounts of capital expenditures in certain periods in connection with large maintenance projects that are intended to only maintain our assets’ capacity or revenue.

We incurred capital expenditures of $21 million and $26 million for the Current Period and the Comparable Period, respectively. The decrease in capital expenditures is primarily due to lower spend on the directional drill and Houma tank expansion projects for Zydeco, coupled with lower capital contributions to Permian Basin in the Current Period.

A summary of our capital expenditures and investments is shown in the table below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Expansion capital expenditures	$	2	$	6	$	7	$	10
Maintenance capital expenditures	11		10		16		15
Total capital expenditures paid	13		16		23		25
(Decrease) Increase in accrued capital expenditures	(5)		(4)		(2)		1
Total capital expenditures incurred	$	8	$	12	$	21	$	26
Contributions to investment	$	5	$	14	$	10	$	14

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We expect total capital expenditures and investments to be approximately $56 million for 2019, a summary of which is shown in the table below:

	Actual		Expected
	Six Months Ended June 30, 2019		Six Months Ending December 31, 2019		Total Expected 2019 Capital Expenditures
Expansion capital expenditures
Zydeco	$	6	$	2	$	8
Total expansion capital expenditures	6		2		8
Maintenance capital expenditures
Zydeco	11		11		22
Pecten	2		3		5
Triton	1		5		6
Total maintenance capital expenditures	14		19		33
Contributions to investment	10		5		15
Total capital expenditures and investments	$	30	$	26	$	56

Total expected expansion capital expenditures for 2019 are primarily related to the Houma tank expansion project, and expected capital contributions to Permian Basin to fund expansion capital and other expenditures.

Zydeco’s maintenance capital expenditures for the three and six months ended June 30, 2019 were $3 million and $11 million, respectively, primarily for the directional drill project. In connection with the acquisition of additional interests in Zydeco, SPLC agreed to reimburse us for our proportionate share of certain costs and expenses incurred by Zydeco with respect to the directional drill project. During the three and six months ended June 30, 2019, we filed claims for reimbursement from SPLC of $3 million and $10 million, respectively. We expect Zydeco’s maintenance capital expenditures to be $11 million for the remainder of 2019, of which approximately $2 million is for the directional drill project and $5 million is related to a pipeline exposure requiring replacement. The majority of the remaining spend is related an upgrade of the motor control center at Houma, pressure cycling mitigation and other routine maintenance.

Pecten’s maintenance capital expenditures for the three and six months ended June 30, 2019 were $1 million and $2 million, respectively. We expect Pecten’s maintenance capital expenditures to be approximately $3 million for the remainder of 2019 for electrical improvements at the Lockport terminal and various improvements on Delta.

We expect Triton's maintenance capital expenditures to be approximately $5 million for the remainder of 2019 related to vapor recovery improvements at the Des Plaines terminal, and tank and facility work at the Colex and Des Plaines terminals.

With the exception of the Zydeco directional drill project for which we are indemnified for our proportionate share, we anticipate that both maintenance and expansion capital expenditures for the remainder of the year will be funded primarily with cash from operations.

Contractual Obligations

A summary of our contractual obligations as of June 30, 2019 is shown in the table below:

	Total		Less than 1 year		Years 2 to 3		Years 4 to 5		More than 5 years
Operating leases for land and platform space	$	8	$	—	$	1	$	1	$	6
Finance leases (1)	64		5		10		10		39
Other agreements (2)	46		6		12		12		16
Debt obligation (3)	2,694		—		600		894		1,200
Total	$	2,812	$	11	$	623	$	917	$	1,261

⁽¹⁾ Finance leases include Port Neches storage tanks and Garden Banks 128 “A” platform. Finance leases include $29 million in interest, $26 million in principal and $9 million in executory costs.

⁽²⁾ Includes a joint tariff agreement and tie-in agreement.

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⁽³⁾ See Note 7 – Related Party Debt in the Notes to the Unaudited Consolidated Financial Statements for additional information.

As of June 30, 2019, our contractual obligations included long-term debt, finance lease obligations, operating lease obligations and other contractual obligations. Other than entering into the Ten Year Fixed Facility, there were no material changes to these obligations outside the ordinary course of business since December 31, 2018.

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Off-Balance Sheet Arrangements

We have not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities.

Environmental Matters and Compliance Costs

Our operations are subject to extensive and frequently changing federal, state and local laws, regulations and ordinances relating to the protection of the environment. Among other things, these laws and regulations govern the emission or discharge of pollutants into or onto the land, air and water, the handling and disposal of solid and hazardous wastes and the remediation of contamination. As with the industry in general, compliance with existing and anticipated environmental laws and regulations increases our overall cost of business, including our capital costs to construct, maintain, operate and upgrade equipment and facilities. While these laws and regulations affect our maintenance capital expenditures and net income, we believe they do not affect our competitive position, as the operations of our competitors are similarly affected. We believe our facilities are in substantial compliance with applicable environmental laws and regulations. However, these laws and regulations are subject to changes, or to changes in the interpretation of such laws and regulations, by regulatory authorities, and continued and future compliance with such laws and regulations may require us to incur significant expenditures. Additionally, violation of environmental laws, regulations, and permits can result in the imposition of significant administrative, civil and criminal penalties, injunctions limiting our operations, investigatory or remedial liabilities or construction bans or delays in the construction of additional facilities or equipment. Additionally, a release of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, subject us to substantial expenses, including costs to comply with applicable laws and regulations and to resolve claims by third parties for personal injury or property damage, or by the U.S. federal government or state governments for natural resources damages. These impacts could directly and indirectly affect our business and have an adverse impact on our financial position, results of operations and liquidity if we do not recover these expenditures through the rates and fees we receive for our services. We believe our competitors must comply with similar environmental laws and regulations. However, the specific impact on each competitor may vary depending on a number of factors, including, but not limited to, the type of competitor and location of its operating facilities. For additional information, refer to Environmental Matters, Items 1 and 2. Business and Properties in our 2018 Annual Report.

We accrue for environmental remediation activities when the responsibility to remediate is probable and the amount of associated costs can be reasonably estimated. As environmental remediation matters proceed toward ultimate resolution or as additional remediation obligations arise, charges in excess of those previously accrued may be required. New or expanded environmental requirements, which could increase our environmental costs, may arise in the future. We believe we comply with all legal requirements regarding the environment, but since not all of them are fixed or presently determinable (even under existing legislation) and may be affected by future legislation or regulations, it is not possible to predict all of the ultimate costs of compliance, including remediation costs that may be incurred and penalties that may be imposed.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are set forth in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation — Critical Accounting Policies and Estimates in our 2018 Annual Report. As of June 30, 2019, there have been no significant changes to our critical accounting policies and estimates since our 2018 Annual Report was filed other than those noted below.

Leases

We adopted the new lease standard on January 1, 2019. See Note 8 – Leases in the Notes to the Unaudited Consolidated Financial Statements for additional information.

Recent Accounting Pronouncements

Please refer to Note 1– Description of Business and Basis of Presentation in the Notes to the Unaudited Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and new accounting pronouncements.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements. You can identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions.

We based the forward-looking statements on our current expectations, estimates and projections about us and the industries in which we operate in general. We caution you these statements are not guarantees of future performance as they involve assumptions that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. In addition, we based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual outcomes and results may differ materially from what we have expressed in the forward-looking statements. Any differences could result from a variety of factors, including the following:

•The continued ability of Royal Dutch Shell plc and our non-affiliate customers to satisfy their obligations under our commercial and other agreements and the impact of lower market prices for crude oil, refined petroleum products and refinery gas.

•The volume of crude oil, refined petroleum products and refinery gas we transport or store and the prices that we can charge our customers.

•The tariff rates with respect to volumes that we transport through our regulated assets, which rates are subject to review and possible adjustment imposed by federal and state regulators.

•Changes in revenue we realize under the loss allowance provisions of our fees and tariffs resulting from changes in underlying commodity prices.

•Our ability to renew or replace our third-party contract portfolio on comparable terms.

•Fluctuations in the prices for crude oil, refined petroleum products and refinery gas.

•The level of production of refinery gas by refineries and demand by chemical sites.

•The level of onshore and offshore (including deepwater) production and demand for crude oil by U.S. refiners.

•Changes in global economic conditions and the effects of a global economic downturn on the business of Shell and the business of its suppliers, customers, business partners and credit lenders.

•Availability of acquisitions and financing for acquisitions on our expected timing and acceptable terms.

•Changes in, and availability to us, of the equity and debt capital markets.

•Liabilities associated with the risks and operational hazards inherent in transporting and/or storing crude oil, refined petroleum products and refinery gas.

•Curtailment of operations or expansion projects due to unexpected leaks, spills, or severe weather disruption; riots, strikes, lockouts or other industrial disturbances; or failure of information technology systems due to various causes, including unauthorized access or attack.

•Costs or liabilities associated with federal, state and local laws and regulations relating to environmental protection and safety, including spills, releases and pipeline integrity.

•Costs associated with compliance with evolving environmental laws and regulations on climate change.

•Costs associated with compliance with safety regulations and system maintenance programs, including pipeline integrity management program testing and related repairs.

•Changes in tax status or applicable tax laws.

•Changes in the cost or availability of third-party vessels, pipelines, rail cars and other means of delivering and transporting crude oil, refined petroleum products and refinery gas.

•Direct or indirect effects on our business resulting from actual or threatened terrorist incidents or acts of war.

•The factors generally described in Part I, Item 1A. Risk Factors in our 2018 Annual Report.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information about market risks for the six months ended June 30, 2019 does not differ materially from that disclosed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk” in our 2018 Annual Report, except as noted below.

Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. With the exception of buy/sell arrangements on some of our offshore pipelines and our allowance oil retained, we do not take ownership of the crude oil or refined products that we transport and store for our customers, and we do not engage in the trading of any commodities. We therefore have limited direct exposure to risks associated with fluctuating commodity prices.

Our long-term transportation agreements and tariffs for crude oil shipments include PLA. The PLA provides additional revenue for us at a stated factor per barrel. If product losses on our pipelines are within the allowed levels, we retain the benefit; otherwise, we are required to compensate our customers for any product losses that exceed the allowed levels. We take title to any excess product that we transport when product losses are within the allowed level, and we sell that product several times per year at prevailing market prices. This allowance oil revenue, which accounted for approximately 5% of our total revenue for the six months ended June 30, 2019, is subject to more volatility than transportation revenue, as it is directly dependent on our measurement capability and commodity prices. As a result, the income we realize under our loss allowance provisions will increase or decrease as a result of changes in the mix of product transported, measurement accuracy and underlying commodity prices. We do not intend to enter into any hedging agreements to mitigate our exposure to decreases in commodity prices through our loss allowances.

We may also have risk associated with changes in policy or other actions taken by FERC. Please see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Our Business and Outlook - Regulation” for additional information.

Interest Rate Risk

We are exposed to the risk of changes in interest rates, primarily as a result of variable rate borrowings under our revolving credit facilities. To the extent that interest rates increase, interest expense for these revolving credit facilities will also increase. As of June 30, 2019, the Partnership had $894 million in outstanding variable rate borrowings under these revolving credit facilities. A hypothetical change of 12.5 basis points in the interest rate of our revolving credit facilities would impact the Partnership’s annual interest expense by approximately $1 million. We do not currently intend to enter into any interest rate hedging agreements, but will continue to monitor interest rate exposure.

Our fixed rate debt does not expose us to fluctuations in our results of operations or liquidity from changes in market interest rates. Changes in interest rates do affect the fair value of our fixed rate debt. See Note 7 – Related Party Debt in the Notes to the Unaudited Consolidated Financial Statements for further discussion of our borrowings and fair value measurements. 

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Our disclosure controls and procedures have been designed to provide reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), were effective at the reasonable assurance level as of June 30, 2019.

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Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Although we may, from time to time, be involved in litigation and claims arising out of our operations in the ordinary course of business, we are not a party to any litigation or governmental or other proceeding that we believe will have a material adverse impact on our financial position, results of operations, or cash flows.

Information regarding legal proceedings is set forth in Note 14—Commitments and Contingencies in the Notes to the Unaudited Consolidated Financial Statements and is incorporated herein by reference.

Item 1A. Risk Factors

Risk factors relating to us are discussed in Part I, Item 1A. Risk Factors in our 2018 Annual Report. There have been no material changes from the risk factors previously disclosed in our 2018 Annual Report.

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Item 5. Other Information

Disclosures Required Pursuant to Section 13(r) of the Securities Exchange Act of 1934

In accordance with our General Business Principles and Code of Conduct, Shell Midstream Partners seeks to comply with all applicable international trade laws including applicable sanctions and embargoes.

Under the Iran Threat Reduction and Syria Human Rights Act of 2012, and Section 13(r) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are required to include certain disclosures in our periodic reports if we or any of our “affiliates” (as defined in Rule 12b-2 under the Exchange Act) knowingly engaged in certain specified activities during the period covered by the report. Because the Securities and Exchange Commission (the “SEC”) defines the term “affiliate” broadly, it includes any entity controlled by us as well as any person or entity that controls us or is under common control with us.

The activities listed below have been conducted outside the U.S. by non-U.S. affiliates of Royal Dutch Shell plc that may be deemed to be under common control with us. The disclosure does not relate to any activities conducted directly by us, our subsidiaries or our general partner, Shell Midstream Partners GP LLC (the “General Partner”) and does not involve our or the General Partner’s management.

For purposes of this disclosure, we refer to Royal Dutch Shell plc and its subsidiaries other than us, our subsidiaries, the General Partner and Shell Midstream LP Holdings LLC as the “RDS Group”. When not specifically identified, references to actions taken by the RDS Group mean actions taken by the applicable RDS Group company. None of the payments disclosed below was made in U.S. dollars, nor are any of the balances disclosed below held in U.S. dollars; however, for disclosure purposes, all have been converted into U.S. dollars at the appropriate exchange rate. We do not believe that any of the transactions or activities listed below violated U.S. sanctions.

During the second quarter of 2019, the RDS Group paid $6,238 for the clearance of overflight permits for RDS Group aircraft over Iranian airspace. There was no gross revenue or net profit associated with these transactions. On occasion, RDS Group aircraft may be routed over Iran and therefore these payments may continue in the future.

The RDS Group maintains accounts with Karafarin Bank where its cash deposits (balance of $5,061,098 at June 30, 2019) generated non-taxable interest income of $108,460 in the first six months of 2019, and the RDS Group paid $1 in bank charges in the second quarter of 2019.

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Item 6. Exhibits

The following documents are included as exhibits to this Quarterly Report on Form 10-Q. Those exhibits incorporated by reference are so indicated by the information supplied with respect thereto. Those exhibits which are not incorporated by reference are attached hereto.

Exhibit Number	Exhibit Description	Incorporated by Reference				Filed Herewith	Furnished Herewith
		Form	Exhibit	Filing Date	SEC File No.
10.1	Contribution Agreement, dated as of May 10, 2019 by and among Shell Pipeline Company LP, Shell Midstream Partners, L.P. and Shell Midstream Operating LLC	8-K	10.1	05/13/2019	001-36710
10.2	Shell Midstream Partners, L.P. Fixed Credit Facility, dated as of June 4, 2019, between Shell Midstream Partners, L.P., as the Borrower, and Shell Treasury Center (West) Inc., as the Lender	8-K	10.1	06/06/2019	001-36710
10.3	Revolving Loan Facility Agreement, dated as of August 6, 2019, between Zydeco Pipeline Company LLC, as the Borrower, and Shell Treasury Center (West) Inc., as the Lender					X
31.1	Certification of Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934					X
31.2	Certification of Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934					X
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350						X
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350						X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.					X
101.SCH	XBRL Taxonomy Extension Schema					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase					X
101.LAB	XBRL Taxonomy Extension Label Linkbase					X
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.					X

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 1, 2019	SHELL MIDSTREAM PARTNERS, L.P.
	By:	SHELL MIDSTREAM PARTNERS GP LLC
	By:	/s/ Shawn J. Carsten
		Shawn J. Carsten
		Vice President and Chief Financial Officer
		(principal financial officer and principal accounting officer)

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EX-10

Exhibit 10.3

REVOLVING LOAN FACILITY AGREEMENT

This revolving loan facility agreement is dated 6th August 2019

BETWEEN

(1) ZYDECO PIPELINE COMPANY LLC, a limited liability company incorporated in the United States of America, with its registered office at The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801, USA (the "Borrower"); and

(2) SHELL TREASURY CENTER (WEST) INC., a company incorporated in the United States of America, with its registered office at The Corporation Trust Company, 1209 Orange Street, Wilmington, DE 19801, USA (the "Lender").

It is agreed as follows:

1.DEFINITIONS

In this revolving loan facility agreement:

"Advance" means a loan in US Dollars made or to be made under this Agreement or the principal amount in US Dollars outstanding for the time being of that loan.

"Agreement" means this revolving loan facility agreement between the Lender and the Borrower, as amended, novated, supplemented, extended or restated from time to time.

"Alternative Interest Rate" has the meaning given to that term in Clause 6.3(b).

"Available Commitment" means the Commitment minus the amount of any outstanding Advances.

"Business Day" means a day on which banks in New York are open for the transaction of the business contemplated by this Agreement.

"Commitment" means thirty million US Dollars (USD 30,000,000), to the extent not cancelled or reduced by the Lender under this Agreement.

"Commitment Period" means the period from the Effective Date up to and including the date which is one (1) Business Day before the Final Repayment Date.

"Disbursement Date" means the day on which an Advance is made or to be made under this Agreement.

"Effective Date" means the date of this Agreement as above.

"Event of Default" means any event or circumstance specified as such in Clause 9.

"Final Repayment Date" means 6^th August 2024, or if that is not a Business Day, the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

Page 1 of 9

"Group Company" means and includes Royal Dutch Shell plc and any entity (other than the Lender) which Royal Dutch Shell plc from time to time directly or indirectly controls. For this purpose:

(a) control means the power, direct or indirect, to direct or cause the direction of the management and policies of such person, whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise; and

(b) an entity indirectly controls another entity if a series of entities can be specified, beginning with the first entity and ending with the other entity, so related that each entity of the series (except the ultimate controlling entity) is directly controlled by one or more of the entities earlier in the series.

"Increased Cost" means:

(a) an additional or increased cost;

(b) a reduction in the rate of return under this Agreement or on the Lender’s overall capital; or

(c) a reduction of an amount due and payable under this Agreement,

which is incurred by the Lender but only to the extent attributable to the Lender having entered into this Agreement or funding or performing its obligations under this Agreement.

"Interest Payment Date" means, in relation to each Advance twenty-fifth (25th) day of January, April, July and October in each year or, if that is not a Business Day, the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not) and the relevant Repayment Date.

"Interest Period"means each period by reference to which interest is calculated and payable in respect of an Advance, as determined in accordance with Clause 3.3

"LIBOR" means, in relation to any Interest Period, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on the appropriate page of Reuters at 11.00 am London time on the date two (2) London Banking Days prior to the first day of the Interest Period. If the agreed page is replaced or service ceases to be available, the Lender may specify a reasonable alternative page or service displaying the appropriate rate. If any such rate is below zero, LIBOR will be deemed to be zero.

"Margin" means 65 basis points (0.65%).

"Repayment Date" means, in relation to an Advance, the repayment date for that Advance,

(a) specified by the Borrower in the notice referred to under Clause 2.1 or if that is not a Business Day, the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not), and which shall be a date on or before the Final Repayment Date; or

(b) if not specified by the Borrower in the notice referred to under Clause 2.1, the Final Repayment Date.

"Tax Payment" has the meaning given to that term in Clause 7.4.

Page 2 of 9

"Virtual Treasurer Loan Advisor" means the secure electronic information storage and communications system used by the Lender and the Borrower through which requests for Advances may be made.

"Wholly Owned Shell Company" means any entity, all the shares or ownership securities of which are owned, directly or indirectly, by Royal Dutch Shell plc (the "parent company"). For this purpose, shares or ownership securities in an entity are indirectly owned by the parent company if a series of companies can be specified, beginning with the parent company and ending with the particular entity, so related that all the shares or ownership securities of each entity of the series (except the parent company) are directly owned by one or more of the entities earlier in the series.

2. DRAWDOWN

2.1 Subject to the terms of this Agreement, the Borrower shall be entitled during the Commitment Period to borrow Advances up to an aggregate amount not exceeding the Commitment provided that the Borrower has requested the relevant Advance by not less than five (5) Business Days' written notice to the Lender, such notice specifying the proposed Disbursement Date which shall be a Business Day, the amount of the Advance and the Repayment Date, and provided further that at the time of drawdown, no Event of Default has occurred or is, in the reasonable opinion of the Lender, expected to occur.

2.2 Subject to the terms of this Agreement, the Lender shall make available to the Borrower each Advance referred to in Clause 2.1, before the close of business on the requested Disbursement Date by transferring such Advance to the bank account as shall be designated by the Borrower.

3. INTEREST

3.1 The rate of interest for each Advance for its Interest Period shall be the aggregate of:

(a) the applicable LIBOR; plus

(b) the Margin.

3.2 The Borrower shall pay interest on the Advances for each Interest Period in arrear on the Interest Payment Date.

3.3 Each Interest Period shall start on an Interest Payment Date and end on the next following Interest Payment Date except that the first Interest Period in respect of each Advance shall start on its Disbursement Date and end on the next Interest Payment Date and any Interest Period which would otherwise extend beyond the Final Repayment Date shall instead end on that date.

3.4 If interest is paid other than on an Interest Payment Date, the Borrower shall pay to the Lender, in addition to the interest due, an amount equal to the amount (if any) which the Lender certifies as necessary to indemnify it against the cost of breaking funds borrowed, contracted for or utilised to finance the relevant Advance.

3.5 If the Borrower fails to pay any amount payable by it under this Agreement on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment. Any interest accruing under this Clause 3.5 shall be immediately payable by the Borrower on demand by the Lender. Such interest shall be compounded with the overdue amount at the end of each month, but shall remain immediately due and payable on demand by the Lender, and shall be calculated by

Page 3 of 9

reference to successive periods of one (1) month beginning on the due date at the aggregate annual rate of:

(a) the applicable rate of interest prescribed under Clause 3.1; and

(b) one (1) per cent.

3.6 Interest shall accrue on a daily basis and be calculated on the basis of a three hundred and sixty (360) day year.

4. REPAYMENT

4.1 The Borrower shall repay each Advance and any accrued and unpaid interest thereon on the Repayment Date for that Advance.

4.2 Advances repaid may be re-borrowed.

5. PREPAYMENT

5.1 Except as provided in Clause 6, the Borrower may not prepay an Advance without the consent of the Lender, which may be given or withheld at the Lender’s sole discretion. If the Lender consents to a prepayment, the Borrower may prepay without penalty all or any part of the Advances on a Business Day by giving the Lender not less than five (5) Business Days' written notice of its intention to make such prepayment, such notice specifying the date and amount of the prepayment.

5.2 Any notice of prepayment shall be irrevocable and shall require the Borrower to make the prepayment on the date specified unless the Lender at its sole discretion agrees otherwise in writing.

5.3 Any prepayment must be accompanied by:

(a) accrued interest calculated in accordance with the provisions of this Agreement up to the day of prepayment on the amount prepaid; and

(b) an amount equal to the amount which the Lender certifies as necessary to indemnify it against the cost of breaking funds borrowed, contracted for or utilised to finance the relevant Advance.

5.4 Advances prepaid may be re-borrowed.

6. INCREASED COSTS AND CHANGE OF CIRCUMSTANCES

6.1 If any law, regulation or regulatory requirement or any judgment, order or direction of any court, tribunal or authority binding on the Lender comes into force and effect after the date of this Agreement or if compliance by the Lender with any direction, request or requirement (whether or not having the force of law) of any competent governmental or other authority comes into force and effect after the date of this Agreement the result of which is to subject the Lender to any Increased Costs then and in each such case:

(a) the Lender may notify the Borrower in writing of such event promptly upon its becoming aware of the same;

Page 4 of 9

(b) within thirty (30) days of a written demand the Borrower shall pay to the Lender the amount which the Lender specifies (in a certificate setting out the basis of the computation of such amount, which certificate shall be prima facie evidence of such Increased Cost) to be required to compensate the Lender for such Increased Cost; and

(c) the Borrower may, at any time after receipt of a notice referred to in Clause 6.1(a), notify the Lender that it will prepay the outstanding Advances within ten (10) days of such notice to the Lender. The provisions of Clauses 5.2 and 5.3 shall apply to such prepayment. Upon receipt of such prepayment from the Borrower, the Agreement shall be terminated.

6.2 Clause 6.1 does not apply to the extent any Increased Cost is attributable to the wilful breach by the Lender or its affiliates of any law or regulation or to the transfer, assignment or subparticipation of this facility in accordance with Clause 6.1.

6.3 If:

(a)there is a material disruption to LIBOR; or

(b)there is a material change in the methodology of calculating LIBOR such that the Lender determines that LIBOR is no longer a representative rate; or

(c)the administrator of LIBOR or its supervisor announces that LIBOR will cease to be published or that it will be permanently or indefinitely discontinued; or

(d)there is a change in the generally accepted market practice in the loan market to refer to a base rate endorsed in a public statement by the Bank of England, despite the continued existence of LIBOR,

the Lender may specify another benchmark rate generally accepted in the loan market to apply in relation to the Advances in place of LIBOR.

6.4 If Clause 6.3 applies, the Lender and the Borrower shall make such consequential amendments to this Agreement as they consider necessary to give effect to such replacement benchmark rate, including any amendments required to implement market practice for the operation of such replacement benchmark rate and any amendments which the Lender determines are required to enable such replacement benchmark rate to be used for the calculation of interest under this Agreement; provided, however, that Borrower may, at any time after which a replacement benchmark rate is put in place as referred to in Clause 6.3, notify the Lender that it will prepay the outstanding Advances within ten (10) days of such notice to the Lender. The provisions of Clauses 5.2 and 5.3 shall apply to such prepayment. Upon receipt of such prepayment from the Borrower, the Agreement shall be terminated.

6.5 If at any time the Lender determines (which determination shall be conclusive and binding on the Borrower) that by reason of circumstances affecting the relevant interbank market and/or the Lender or any of its lenders (directly or indirectly) it becomes impractical or uneconomical for the Lender to fund or continue to fund its Commitment or any part thereof, the Lender shall as soon as practicable give written notice of such determination to the Borrower. If such notice is given prior to the making of an Advance the Lender shall not be required to make the Advance until written notice to the contrary is given by the Lender. During a thirty (30)-day period from the date of such first mentioned notice the parties shall consult in good faith with a view to agreeing an alternative basis for continuance of the Agreement or the making of Advances. If it is not so agreed, then, if so required by written notice given by the Lender to the Borrower within five (5) days of the expiry of the thirty (30)-day period, the Borrower shall prepay the Advances together with (a) interest thereon from the end of the preceding Interest Period, or where there is no preceding Interest Period, from the Disbursement Date to the

Page 5 of 9

date of prepayment and (b) any other sums that may be due and payable under the terms of this Agreement. The provisions of Clauses 5.2 and 5.3 shall apply to such prepayment. Upon receipt of such prepayment from the Borrower, the Agreement shall be terminated.

7. PAYMENTS AND TAXES

7.1 All payments to be made by the Borrower hereunder shall be made without set-off or counter claim and free and clear of and without deduction for or withholding of or on account of any present or future taxes, levies or charges of whatever kind unless the Borrower is compelled by law to make payment subject to such tax, levy or charge.

7.2 If the Borrower is compelled by law to make any deduction or withholding on account of tax then the Borrower shall be permitted to make such deduction or withholding and shall ensure that such deduction or withholding does not exceed the minimum legal liability therefor and shall, within sixty (60) days of effecting such deduction or withholding, forward to the Lender an official receipt or other official documentation in each case in form and substance satisfactory to the Lender certifying payment of the tax.

7.3 Subject to Clause 7.4, if the Borrower is compelled by law to make payment subject to deduction of any amounts, then the Borrower shall, if requested by the Lender, make payment to the Lender of such additional amounts as shall yield to the Lender the full amounts which would be paid to the Lender under this Agreement as if such taxes, levies or other charges were not paid, deducted or withheld.

7.4 The Lender is entitled to request payment under Clause 7.3 ("Tax Payment") only if the Lender determines that a full credit against, relief or remission for, or repayment of tax is not attributable to that Tax Payment.

8. REPRESENTATIONS AND UNDERTAKINGS

The Borrower represents to the Lender on the date of this Agreement and on each Disbursement Date that:

(a) it is a limited liability company, duly formed and validly existing under the laws of its jurisdiction of incorporation and it has the power to own its assets and carry on its business as it is being conducted;

(b) it has the power to enter into and perform, and has taken all necessary action to authorise the entry into and performance of, this Agreement and transactions contemplated by this Agreement;

(c) this Agreement is its legally binding, valid and enforceable obligation;

(d) amounts owing to the Lender under this Agreement will rank at least pari passu with all the Borrower's other unsecured and unsubordinated obligations except for obligations mandatorily preferred by law applying to companies generally; and

(a)no Event of Default has occurred and is continuing.

9. DEFAULT

Page 6 of 9

Each of the events or circumstances set out in this Clause 9 is an "Event of Default", and the consequence of such an Event of Default being continuing is that the Lender may refuse to make (further) Advances, may reduce the Commitment to zero and/or may require the immediate repayment of all or any Advances already made together with all interest accrued (if any) and all other sums that may be due or payable under the terms of this Agreement. The Borrower shall, on demand by the Lender, indemnify the Lender against any cost, loss or liability incurred by the Lender as a result of the occurrence of an Event of Default. The Borrower shall promptly upon becoming aware of the same, notify the Lender in writing of the occurrence of an Event of Default, or an event which would with the lapse of time or giving of notice or both be an Event of Default.

(a) The Borrower does not pay on the due date any amount payable pursuant to this Agreement at the place and in the currency in which it is expressed to be payable and such failure continues for a period of ten (10) days or more.

(b) The Borrower fails to comply with any provision of, or perform any material obligation under this Agreement (other than the obligations to pay referred to in Clause 9(a)) except where the failure to comply or perform is, in the reasonable opinion of the Lender, capable of remedy and is remedied within ten (10) days of written notice from the Lender to the Borrower requiring such remedy.

(c) Any governmental or other authority having jurisdiction over the Borrower institutes any action or legislation forcing the Borrower to cease all or a substantial part of its normal business, or withdraws or withholds any authorisation or consent obtained or required by the Borrower for the due performance of its business and its obligations under this Agreement; or all or a substantial part of the business or assets of the Borrower is expropriated, nationalised, involuntarily liquidated or otherwise compulsorily withdrawn from the control of the Borrower.

(d) The Borrower suspends payment to its creditors or generally is, or admits in writing that it is, unable to pay its debts when they fall due or commences negotiations with its creditors or makes any composition or arrangement with its creditors, or goes into liquidation whether voluntary or compulsory, or if any step is taken by any person with a view to the winding up, administration or bankruptcy of the Borrower (except for the purpose of a solvent amalgamation or reconstruction), or if it ceases or prepares to cease trading, or if any step is taken to enforce security over, or a distress, execution or other similar process is levied or served against, the whole or any part of its assets, including without limitation the appointment of a receiver, administrative receiver, administrator or similar officer or any such analogous procedure or step is taken under the applicable laws of any jurisdiction or it takes any action in furtherance of, or indicating its consent to, approval of or acquiescence in, any of the foregoing acts.

(e) It is or becomes unlawful for the Borrower to perform any of its obligations under this Agreement.

10. SET-OFF

The Lender may set-off any matured obligation due from the Borrower under this Agreement against any obligation owed by the Lender to the Borrower (whether or not arising under this Agreement, matured or contingent and irrespective of the currency, place of payment or place of booking of either obligation). If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

11. COSTS AND EXPENSES

11.1 Transaction Expenses

Page 7 of 9

The Borrower shall pay any and all stamp duty, registration costs and similar duties, taxes and charges which may be payable or determined to be payable in connection with the execution, delivery, performance and enforcement of this Agreement.

11.2 Enforcement Costs

The Borrower shall pay to the Lender the amount of all costs and expenses (including legal fees) incurred by the Lender in connection with the enforcement of, or the preservations of, any rights under this Agreement.

12. ASSIGNMENT AND TRANSFER

12.1 The Lender may at any time assign any of its rights, transfer or novate any of its rights, benefits and obligations under this Agreement to a Group Company and the Borrower agrees to execute all necessary documents as may be reasonably required by the Lender to effect such assignment, transfer or novation.

12.2 The Borrower may not assign, transfer or novate any of its rights, benefits and obligations under this Agreement.

12.3 In the event the Group Companies dispose of all of their aggregate ownership interests in Borrower (whether held directly or indirectly), Lender shall have the right to terminate this Agreement by giving Borrower forty-five (45) days’ prior written notice requiring repayment of all outstanding amount by the end of the forty-five day period or as otherwise agreed by between Borrower and Lender.

13. APPLICABLE LAW AND JURISDICTION

This Agreement and any dispute or claim of whatever nature, whether contractual or non-contractual, arising out of or in connection with it is governed by the laws of the State of New York and the parties hereby submit to the non-exclusive jurisdiction of the American courts.

14. NOTICES

14.1 Any notice to be given hereunder shall be given in writing, in the English language, and only by letter or facsimile, save that requests for Advances under Clause 2.1 may be given by the Borrower to the Lender via e-mail or via the Virtual Treasurer Loan Advisor.

14.2 Any communication to be made by one party to the other hereunder shall (unless that other party has by fifteen (15) days' written notice to the other specified another address) be made to that other party at the address for notices set out below (or such other address as has been notified), but shall be effective only when received and then only if the same is expressly marked for the attention of such department or officer specified below (or such other department or officer as the addressee shall from time to time specify in writing for this purpose).

Page 8 of 9

14.3  Addresses for notices and communication to be sent under this Agreement are as follows:

(a) to the Borrower:

ZYDECO PIPELINE COMPANY LLC

C/O Shell Pipeline Company LP

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Attention: Treasurer

(b) to the Lender:

SHELL TREASURY CENTER (WEST) INC.

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Attention: Treasurer

with an email copy to: gxsiftoexternalmarketsteam@shell.com

15. AMENDMENTS

No variation or amendment of this Agreement or the obligations of the Borrower hereunder shall be valid unless it is in writing and signed by or on behalf of each of the Parties.

16. EFFECTIVE DATE

This Agreement shall come into effect on the date hereof, upon which the Zydeco Working Capital Facility dated as of August 4, 2014 shall be superseded by this Agreement.

17. COUNTERPARTS

This Agreement may be executed in any number of counterparts, either in original or telecopy form, each of which shall constitute an original, and this has the same effect as if the signatures on the counterparts were on a single copy of the Agreement.

EXECUTION

The parties have executed this Agreement as at the date written above.

Signed for and on behalf of     Signed for and on behalf of

ZYDECO PIPELINE COMPANY LLCSHELL TREASURY CENTER (WEST) INC.

/s/ Elaine McCown     /s/ Jennifer Betlejewski 

_____________________________   _____________________________

Name: Elaine McCown     Name: Jennifer Betlejewski

Designation: Treasurer     Designation: Treasurer

Date: 1 August 2019     Date: 1 August 2019

Page 9 of 9

EX-31

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Kevin M. Nichols, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Shell Midstream Partners, L.P.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2019	/s/ Kevin M. Nichols
	President and Chief Executive Officer
	of Shell Midstream Partners GP LLC
	(the general partner of Shell Midstream Partners, L.P.)

EX-31

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Shawn J. Carsten, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Shell Midstream Partners, L.P.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2019	/s/ Shawn J. Carsten
	Vice President and Chief Financial Officer
	of Shell Midstream Partners GP LLC
	(the general partner of Shell Midstream Partners, L.P.)

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Shell Midstream Partners, L.P. (the “Partnership”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin M. Nichols, Chief Executive Officer of Shell Midstream Partners GP LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date: August 1, 2019	/s/ Kevin M. Nichols
	President and Chief Executive Officer
	of Shell Midstream Partners GP LLC
	(the general partner of Shell Midstream Partners, L.P.)

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Shell Midstream Partners, L.P. (the “Partnership”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shawn J. Carsten, Chief Financial Officer of Shell Midstream Partners GP LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date: August 1, 2019	/s/ Shawn J. Carsten
	Vice President and Chief Financial Officer
	of Shell Midstream Partners GP LLC
	(the general partner of Shell Midstream Partners, L.P.)

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2019	Aug. 01, 2019
Cover page.
Document Quarterly Report	true
Document Transition Report	false
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Trading Symbol	SHLX
Entity Registrant Name	Shell Midstream Partners, L.P.
Entity Shell Company	false
Security Exchange Name	NYSE
Title of 12(b) Security	Common Units, Representing Limited Partner Interests
Entity Incorporation, State or Country Code	DE
Entity Central Index Key	0001610466
Current Fiscal Year End Date	--12-31
Entity Emerging Growth Company	false
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity File Number	001-36710
Entity Tax Identification Number	46-5223743
City Area Code	832
Local Phone Number	337-2034
Entity Address, Postal Zip Code	77079
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Address Line One	150 N. Dairy Ashford
Entity Common Stock, Shares Outstanding		233,289,537

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 257
Accounts receivable – third parties, net	12	$ 19
Accounts receivable – related parties	39	29
Allowance oil	13	13
Prepaid expenses	6	15
Total current assets	327	284
Equity method investments	930	823
Property, plant and equipment, net	738	742
Operating lease right-of-use assets	5	0
Other investments	2	62
Other assets – related parties	2	3
Total assets	2,004	1,914
Current liabilities
Accounts payable – third parties	5	4
Accounts payable – related parties	8	9
Deferred revenue – third parties	0	8
Deferred revenue – related party	0	3
Accrued liabilities – third parties	18	13
Accrued liabilities – related parties	17	16
Total current liabilities	48	53
Noncurrent liabilities
Debt payable – related party	2,691	2,091
Operating lease liabilities	5	0
Finance lease liabilities	25	25
Other unearned income	2	2
Total noncurrent liabilities	2,723	2,118
Total liabilities	2,771	2,171
Commitments and Contingencies (Note 14)
(DEFICIT) EQUITY
Accumulated other comprehensive loss	(6)	0
Total partners’ deficit	(792)	(282)
Noncontrolling interests	25	25
Total deficit	(767)	(257)
Total liabilities and deficit	2,004	1,914
Shell Pipeline Company L P
(DEFICIT) EQUITY
General partner – SPLC (4,761,012 and 4,567,588 units issued and outstanding as of June 30, 2019 and December 31, 2018)	(4,046)	(3,543)
Common Units | General Public
(DEFICIT) EQUITY
Common unitholders	3,458	3,459
Common Units | Shell Pipeline Company L P
(DEFICIT) EQUITY
Common unitholders	$ (198)	$ (198)

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares	Jun. 30, 2019	Dec. 31, 2018
Common unitholders' capital account, units outstanding (in shares)	233,289,537
Shell Pipeline Company L P
General partners' capital account, units issued (in shares)	4,761,012	4,567,588
General partners' capital account, units outstanding (in shares)	4,761,012	4,567,588
Common Units | General Public
Common unitholders' capital account, units issued (in shares)	123,832,233	123,832,233
Common unitholders' capital account, units outstanding (in shares)	123,832,233	123,832,233
Common Units | Shell Pipeline Company L P
Common unitholders' capital account, units issued (in shares)	109,457,304	99,979,548
Common unitholders' capital account, units outstanding (in shares)	109,457,304	99,979,548

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue
Revenue from contract with customer	$ 107	$ 115	$ 224	$ 201
Lease revenue – related parties	14	14	28	28
Total revenue	121	129	252	229
Costs and expenses
Operations and maintenance – third parties	16	25	29	68
Operations and maintenance – related parties	16	13	30	26
Cost of product sold – third parties	2	1	3	1
Cost of product sold – related parties	5	1	13	8
Loss from revision of asset retirement obligation	0	0	2	0
General and administrative – third parties	5	2	6	4
General and administrative – related parties	12	14	23	27
Depreciation, amortization and accretion	12	12	24	23
Property and other taxes	5	4	9	10
Total costs and expenses	73	72	139	167
Operating income	48	57	113	62
Income from equity method investments	80	48	150	88
Dividend income from cost investments	0	13	14	38
Other income	12	10	20	16
Investment, dividend and other income	92	71	184	142
Interest expense, net	21	13	41	24
Income before income taxes	119	115	256	180
Income tax expense	0	0	0	0
Net income	119	115	256	180
Less: Net income attributable to noncontrolling interests	4	4	9	5
Net income attributable to the Partnership	115	111	247	175
Limited Partners' interest in net income attributable to the Partnership	$ 85	$ 79	$ 190	$ 116
Net income per Limited Partner Unit - Basic and Diluted
Distributions per Limited Partner unit (in dollars per share)	$ 0.4300	$ 0.3650	$ 0.8450	$ 0.7130
Shell Pipeline Company L P
Costs and expenses
General partner's interest in net income attributable to the Partnership	$ 30	$ 32	$ 57	$ 59
Common
Costs and expenses
Net income attributable to the Partnership	$ 85	$ 79	$ 190	$ 116
Net income per Limited Partner Unit - Basic and Diluted
Net income per Limited Partner unit (in dollars per share)	$ 0.38	$ 0.35	$ 0.84	$ 0.54
Common units – public
Costs and expenses
Net income	$ 45	$ 43
Weighted average Limited Partner Units outstanding - Basic and Diluted (in millions)
Weighted average Limited Partner units outstanding - Common (in shares)	123.8	123.8	123.8	118.9
Common units – public | Shell Pipeline Company L P
Costs and expenses
Net income	$ 40	$ 36
Common units – SPLC | Shell Pipeline Company L P
Weighted average Limited Partner Units outstanding - Basic and Diluted (in millions)
Weighted average Limited Partner units outstanding - Common (in shares)	102.6	100.0	101.3	97.8
Third Parties | Transportation, Terminaling and Storage Services
Revenue
Revenue from contract with customer	$ 34	$ 57	$ 76	$ 92
Third Parties | Product Revenue
Revenue
Revenue from contract with customer	3	1	4	1
Related Parties | Transportation, Terminaling and Storage Services
Revenue
Revenue from contract with customer	64	55	128	98
Related Parties | Product Revenue
Revenue
Revenue from contract with customer	6	2	$ 16	$ 10
Noncontrolling Interests
Costs and expenses
Net income	$ 4	$ 4

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income	$ 256	$ 180
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and accretion	24	23
Loss from revision of asset retirement obligation	2	0
Undistributed equity earnings	(3)	(2)
Changes in operating assets and liabilities
Accounts receivable	(3)	(4)
Allowance oil	0	(6)
Prepaid expenses and other assets	10	6
Accounts payable	1	1
Deferred revenue and other unearned income	(11)	(3)
Accrued liabilities	7	18
Net cash provided by operating activities	283	213
Cash flows from investing activities
Capital expenditures	(24)	(25)
Acquisitions from Parent	(90)	(482)
Contributions to investment	(10)	(14)
Return of investment	47	33
Net cash used in investing activities	(77)	(488)
Cash flows from financing activities
Net proceeds from equity offerings	0	973
Borrowings under credit facilities	600	1,220
Repayments of credit facilities	0	(973)
Contributions from general partner	0	20
Capital distributions to general partner	(510)	(738)
Distributions to noncontrolling interests	(9)	(7)
Distributions to unitholders and general partner	(248)	(189)
Other contributions from Parent	10	6
Net cash (used in) provided by financing activities	(157)	312
Net increase in cash and cash equivalents	49	37
Cash and cash equivalents at beginning of the period	208	138
Cash and cash equivalents at end of the period	257	175
Non-cash investing and financing transactions:
Change in accrued capital expenditures	(2)	1
Other non-cash contributions from Parent	$ 0	$ 2

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN (DEFICIT) EQUITY - USD ($) $ in Millions	Total	Noncontrolling Interests	Accumulated Other Comprehensive Loss	Common Unitholders	Common Unitholders Shell Pipeline Company L P	General Partner Shell Pipeline Company L P
Beginning balance at Dec. 31, 2017	$ (566.0)	$ 23.0		$ 2,774.0	$ (507.0)	$ (2,856.0)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	65.0	1.0		21.0	16.0	27.0
Net proceeds from equity offerings	973.0			673.0	300.0
Contributions from general partner	20.0					20.0
Other contributions from Parent	5.0					5.0
Distributions to unitholders and general partner	(83.0)			(33.0)	(30.0)	(20.0)
Distributions to noncontrolling interests	(2.0)	(2.0)
Ending balance at Mar. 31, 2018	410.0	22.0		3,434.0	(220.0)	(2,826.0)
Beginning balance at Dec. 31, 2017	(566.0)	23.0		2,774.0	(507.0)	(2,856.0)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	180.0
Ending balance at Jun. 30, 2018	(321.0)	22.0		3,434.0	(219.0)	(3,558.0)
Beginning balance at Mar. 31, 2018	410.0	22.0		3,434.0	(220.0)	(2,826.0)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	115.0	4.0		43.0	36.0	32.0
Other contributions from Parent	2.0					2.0
Distributions to unitholders and general partner	(106.0)			(43.0)	(35.0)	(28.0)
Distributions to noncontrolling interests	(4.0)	(4.0)
Acquisition	(738.0)					(738.0)
Ending balance at Jun. 30, 2018	(321.0)	22.0		3,434.0	(219.0)	(3,558.0)
Beginning balance at Dec. 31, 2018	(257.0)	25.0	$ 0.0	3,459.0	(198.0)	(3,543.0)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	137.0	5.0		58.0	47.0	27.0
Other contributions from Parent	7.0					7.0
Distributions to unitholders and general partner	(129.0)			(49.0)	(40.0)	(40.0)
Distributions to noncontrolling interests	(3.0)	(3.0)
Ending balance at Mar. 31, 2019	(254.0)	27.0	0.0	3,464.0	(196.0)	(3,549.0)
Beginning balance at Dec. 31, 2018	(257.0)	25.0	0.0	3,459.0	(198.0)	(3,543.0)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	256.0
Ending balance at Jun. 30, 2019	(767.0)	25.0	(6.0)	3,458.0	(198.0)	(4,046.0)
Beginning balance at Mar. 31, 2019	(254.0)	27.0	0.0	3,464.0	(196.0)	(3,549.0)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	119.0	4.0		45.0	40.0	30.0
Other contributions from Parent	3.0		(6.0)			9.0
Distributions to unitholders and general partner	(119.0)			(51.0)	(42.0)	(26.0)
Distributions to noncontrolling interests	(6.0)	(6.0)
Acquisition	(510.0)					(510.0)
Ending balance at Jun. 30, 2019	$ (767.0)	$ 25.0	$ (6.0)	$ 3,458.0	$ (198.0)	$ (4,046.0)

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UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 119	$ 115	$ 256	$ 180
Other comprehensive loss, net of tax:
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax	0	0	0	0
Comprehensive income	119	115	256	180
Less comprehensive income attributable to noncontrolling interests	4	4	9	5
Comprehensive income attributable to the Partnership	$ 115	$ 111	$ 247	$ 175

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Description of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Except as noted within the context of each note disclosure, the dollar amounts presented in the tabular data within these note disclosures are stated in millions of dollars.

1. Description of Business and Basis of Presentation

Shell Midstream Partners, L.P. (“we,” “us,” “our” or “the Partnership”) is a Delaware limited partnership formed by Royal Dutch Shell plc on March 19, 2014 to own and operate pipeline and other midstream assets, including certain assets acquired from Shell Pipeline Company LP (“SPLC”) and its affiliates. We conduct our operations either through our wholly owned subsidiary Shell Midstream Operating LLC (“Operating Company”) or through direct ownership. Our general partner is Shell Midstream Partners GP LLC (“general partner” or “sponsor”). References to “RDS”, “Shell” or “Parent” refer collectively to Royal Dutch Shell plc and its controlled affiliates, other than us, our subsidiaries and our general partner.

Description of Business

We are a growth-oriented master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. As of June 30, 2019, our assets include interests in entities that own crude oil and refined products pipelines and terminals that serve as key infrastructure to (i) transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and (ii) deliver refined products from those markets to major demand centers. Our assets also include interests in entities that own natural gas and refinery gas pipelines that transport offshore natural gas to market hubs and deliver refinery gas from refineries and plants to chemical sites along the Gulf Coast.

We generate revenue from the transportation, terminaling and storage of crude oil and refined products through our pipelines and storage tanks, and generate income from our equity and other investments. Our operations consist of one reportable segment. 

The following table reflects our ownership interests as of June 30, 2019:

	SHLX Ownership
Pecten Midstream LLC (“Pecten”)	100.0	%
Sand Dollar Pipeline LLC (“Sand Dollar”)	100.0	%
Triton West LLC (“Triton”)	100.0	%
Zydeco Pipeline Company LLC (“Zydeco”) (1)	92.5	%
Amberjack Pipeline Company LLC (“Amberjack”) – Series A/Series B	75.0% / 50.0%
Mars Oil Pipeline Company LLC (“Mars”)	71.5	%
Odyssey Pipeline L.L.C. (“Odyssey”)	71.0	%
Bengal Pipeline Company LLC (“Bengal”)	50.0	%
Crestwood Permian Basin LLC (“Permian Basin”)	50.0	%
LOCAP LLC (“LOCAP”)	41.48	%
Explorer Pipeline Company (“Explorer”)	38.59	%
Poseidon Oil Pipeline Company, L.L.C. (“Poseidon”)	36.0	%
Colonial Pipeline Company (“Colonial”)	16.125	%
Proteus Oil Pipeline Company, LLC (“Proteus”)	10.0	%
Endymion Oil Pipeline Company, LLC (“Endymion”)	10.0	%
Cleopatra Gas Gathering Company, LLC (“Cleopatra”)	1.0	%

⁽¹⁾ SPLC owns the remaining 7.5% ownership interest is Zydeco.

Basis of Presentation

Our unaudited consolidated financial statements include all subsidiaries required to be consolidated under generally accepted accounting principles in the United States (“GAAP”). Our reporting currency is U.S. dollars, and all references to dollars are

U.S. dollars. The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. The year-end consolidated balance sheet data was derived from audited financial statements. During interim periods, we follow the accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 (our “2018 Annual Report”), filed with the United States Securities and Exchange Commission (“SEC”) unless otherwise described herein. The unaudited consolidated financial statements for the three and six months ended June 30, 2019 and June 30, 2018 include all adjustments we believe are necessary for a fair statement of the results of operations for the interim periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our 2018 Annual Report.

Our consolidated subsidiaries include Pecten, Sand Dollar, Triton, Zydeco, Odyssey and the Operating Company. Asset acquisitions of additional interests in previously consolidated subsidiaries and interests in equity and other investments are included in the financial statements prospectively from the effective date of each acquisition. In cases where these types of acquisitions are considered acquisitions of businesses under common control, the financial statements are retrospectively adjusted.

Summary of Significant Accounting Policies

The accounting policies are set forth in Note 2 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements of our 2018 Annual Report. There have been no significant changes to these policies during the six months ended June 30, 2019, other than those noted below.

Recent Accounting Pronouncements

Standards Adopted as of January 1, 2019

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02 to Topic 842, Leases. As permitted, we adopted the new standard using the modified retrospective approach, effective January 1, 2019, which provides a method for recording existing leases at the beginning of the period of adoption. As such, results and balances prior to January 1, 2019 are not adjusted and continue to be reported in accordance with our historical accounting under previous GAAP.

See Note 8 — Leases for additional information and disclosures required by the new standard.

Standards Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13 to Topic 326, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments, which replaces the current incurred loss impairment method with a method that reflects expected credit losses on financial instruments. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. While we are still evaluating the impact of ASU 2016-13, we do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

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Acquisitions

6 Months Ended

Jun. 30, 2019

Asset Acquisition [Abstract]

Acquisitions

Acquisitions

June 2019 Acquisition

On June 6, 2019, we acquired SPLC’s remaining 25.97% ownership interest in Explorer and 10.125% ownership interest in Colonial for consideration valued at $800 million (the “June 2019 Acquisition”). The June 2019 Acquisition increased our ownership interest in Explorer to 38.59% and in Colonial to 16.125%. The June 2019 Acquisition closed pursuant to a Contribution Agreement dated May 10, 2019 (the “May 2019 Contribution Agreement”) between us and SPLC, and is accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. As such, we recorded the acquired equity interests at SPLC’s historical carrying value of $90 million, which is included in Equity method investments in our unaudited consolidated balance sheet as of June 30, 2019. In addition, as a transfer between entities under common control, we recorded Accumulated other comprehensive loss of $6 million related to historical remeasurements

of pension and other postretirement benefits provided by Explorer and Colonial to their employees. We recognized $510 million of (cash) consideration in excess of the historical carrying value of equity interests acquired as a capital distribution to our general partner in accordance with our policy for common control transactions. We funded the June 2019 Acquisition with $600 million in cash consideration from borrowings under our Ten Year Fixed Facility (as defined in Note 7 — Related Party Debt) with Shell Treasury Center (West) Inc. (“STCW”) and non-cash equity consideration valued at $200 million. Pursuant to the May 2019 Contribution Agreement, the number of common units representing the equity consideration was determined by dividing the contribution amount (25% of total consideration of $800 million) by the price per unit of $20.68, which represents the volume weighted average sales prices of the common units calculated for the five trading day period ended on April 30, 2019, less the general partner units issued to the general partner in order to maintain its 2% general partner interest in us. The equity issued consisted of 9,477,756 common units issued to Shell Midstream LP Holdings LLC, an indirect subsidiary of Shell, and 193,424 general partner units issued to the general partner in order to maintain its 2% general partner interest in us.

As a result of the June 2019 Acquisition, we now have significant influence over both Explorer and Colonial and account for these investments as equity method investments (see Note 4 — Equity Method Investments for further details).

May 2018 Acquisition

On May 11, 2018, we acquired SPLC’s ownership interests in Amberjack, which is comprised of 75% of the issued and outstanding Series A membership interests of Amberjack and 50% of the issued and outstanding Series B membership interests of Amberjack for $1,220 million (the “May 2018 Acquisition”). The May 2018 Acquisition closed pursuant to a Purchase and Sale Agreement dated May 9, 2018 between us and SPLC, and is accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. We acquired historical carrying value of net assets under common control of $482 million, which is included in Equity method investments in our unaudited consolidated balance sheet. We recognized $738 million of consideration in excess of the historical carrying value of net assets acquired as a capital distribution to our general partner in accordance with our policy for common control transactions. We funded the May 2018 Acquisition with $494 million in borrowings under our Five Year Revolver due July 2023 (as defined in Note 7—Related Party Debt) and $726 million in borrowings under our Five Year Revolver due December 2022 (as defined in Note 7—Related Party Debt) with STCW.

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Related Party Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Related party transactions include transactions with SPLC and Shell, including those entities in which Shell has an ownership interest but does not have control.

Acquisition Agreements

Refer to Note 2—Acquisitions for a description of agreements applicable to the current reporting periods. For a description of all other applicable agreements, see Note 4—Acquisitions and Divestiture in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

2019 Omnibus Agreement

On November 3, 2014, we entered into an Omnibus Agreement with SPLC and our general partner concerning our payment of an annual general and administrative services fee to SPLC as well as our reimbursement of certain costs incurred by SPLC on our behalf. On February 19, 2019, we, our general partner, SPLC, Operating Company and Shell Oil Company terminated the Omnibus Agreement effective as of February 1, 2019, and we, our general partner, SPLC and Operating Company entered into a new Omnibus Agreement effective February 1, 2019 (the “2019 Omnibus Agreement”).

The 2019 Omnibus Agreement addresses, among other things, the following matters:

•our payment of an annual general and administrative fee of approximately $11 million for the provision of certain services by SPLC;

•our obligation to reimburse SPLC for certain direct or allocated costs and expenses incurred by SPLC on our behalf; and

•our obligation to reimburse SPLC for all expenses incurred by SPLC as a result of us becoming and continuing as a publicly traded entity; we will reimburse our general partner for these expenses to the extent the fees relating to such services are not included in the general and administrative fee.

Under the 2019 Omnibus Agreement, SPLC agreed to indemnify us against tax liabilities relating to our assets acquired at initial public offering (our “initial assets”) that are identified prior to the date that is 60 days after the expiration of the statute of limitations applicable to such liabilities. This obligation has no threshold or cap. We in turn agreed to indemnify SPLC against events and conditions associated with the ownership or operation of our initial assets (other than any liabilities against which SPLC is specifically required to indemnify us as described above).

During the six months ended June 30, 2019, neither we nor SPLC made any claims for indemnification under the 2019 Omnibus Agreement.

Trade Marks License Agreement

We, our general partner and SPLC entered into a Trade Marks License Agreement with Shell Trademark Management Inc. effective as of February 1, 2019. The Trade Marks License Agreement grants us the use of certain Shell trademarks and trade names and expires on January 1, 2024 unless earlier terminated by either party upon 360 days’ notice.

Tax Sharing Agreement

For a discussion of the Tax Sharing Agreement, see Note 3—Related Party Transactions—Tax Sharing Agreement in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Other Agreements

We have entered into several customary agreements with SPLC and Shell. These agreements include pipeline operating agreements, reimbursement agreements and services agreements. See Note 3—Related Party Transactions—Other Agreements in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Partnership Agreement

On December 21, 2018, we executed Amendment No. 2 (the “Second Amendment”) to the Partnership’s First Amended and

Restated Agreement of Limited Partnership dated November 3, 2014. Under the Second Amendment, our sponsor agreed to

waive $50 million of distributions in 2019 by agreeing to reduce distributions to holders of the incentive distribution rights (“IDR’s”) by: (1) $17 million for the three months ended March 31, 2019, (2) $17 million for the three months ended June 30, 2019 and (3) $16 million for the three months ending September 30, 2019.

Noncontrolling Interests

For Zydeco, noncontrolling interest consists of SPLC’s 7.5% retained ownership interest as of both June 30, 2019 and December 31, 2018. For Odyssey, noncontrolling interest consists of GEL Offshore Pipeline LLC’s (“GEL”) 29.0% retained ownership interest as of both June 30, 2019 and December 31, 2018.

Other Related Party Balances

Other related party balances consist of the following:

	June 30, 2019		December 31, 2018
Accounts receivable	$	39	$	29
Prepaid expenses	6		15
Other assets	2		3
Accounts payable (1)	8		9
Deferred revenue	—		3
Accrued liabilities (2)	17		16
Debt payable (3)	2,691		2,091

⁽¹⁾ Accounts payable reflects amounts owed to SPLC for reimbursement of third-party expenses incurred by SPLC for our benefit.

⁽²⁾ As of June 30, 2019, accrued liabilities reflects $16 million accrued interest and $1 million other accrued liabilities. As of December 31, 2018, accrued liabilities reflects $14 million accrued interest and $2 million other accrued liabilities.

⁽³⁾ Debt payable reflects borrowings outstanding after taking into account unamortized debt issuance costs of $3 million as of both June 30, 2019 and December 31, 2018.

Related Party Credit Facilities

We have entered into five credit facilities with STCW: the Ten Year Fixed Facility, the Seven Year Fixed Facility, the Five Year Revolver due July 2023, the Five Year Revolver due December 2022 and the Five Year Fixed Facility. Zydeco has also entered into the Zydeco Revolver with STCW. For definitions and additional information regarding these credit facilities, see Note 7 – Related Party Debt in this report and Note 9 – Related Party Debt in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Related Party Revenues and Expenses

We provide crude oil transportation, terminaling and storage services to related parties under long-term contracts. We entered into these contracts in the normal course of our business. Our revenue from related parties for the three and six months ended June 30, 2019 and June 30, 2018 are disclosed in Note 11 – Revenue Recognition.

In the three and six months ended June 30, 2019, we converted excess allowance oil to cash through sales to affiliates of Shell of $1 million and $3 million net proceeds, respectively. In the three and six months ended June 30, 2018, we converted excess allowance oil to cash through sales to affiliates of Shell of $1 million and $2 million net proceeds, respectively. We include the revenue in Product revenue – related parties and the cost in Cost of product sold – related parties.

The majority of our insurance coverage is provided by a wholly owned subsidiary of Shell with the remaining coverage provided by third-party insurers. The related party portion of insurance expense, which is included within Operations and maintenance – related parties, was $5 million and $9 million for the three and six months ended June 30, 2019, respectively, and $3 million and $7 million for the three and six months ended June 30, 2018, respectively.

The following table shows related party expenses, including certain personnel costs, incurred by Shell and SPLC on our behalf that are reflected in the accompanying unaudited consolidated statements of income for the indicated periods. Included in these amounts, and disclosed below, is our share of operating and general corporate expenses, as well as the fees paid to SPLC under certain agreements.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Operations and maintenance – related parties	$	16	$	13	$	30	$	26
General and administrative – related parties	12		14		23		27
Allocated operating expenses	$	3	$	3	$	8	$	7
Allocated general corporate expenses	6		8		13		16
Management Agreement fee	2		2		4		4
Omnibus Agreement fee	2		2		5		4

For a discussion of services performed by Shell on our behalf, see Note 1 – Description of Business and Basis of Presentation – Basis of Presentation in the Notes to Consolidated Financial Statements of our 2018 Annual Report.

Pension and Retirement Savings Plans

Employees who directly or indirectly support our operations participate in the pension, postretirement health and life insurance, and defined contribution benefit plans sponsored by Shell, which include other Shell subsidiaries. Our share of pension and postretirement health and life insurance costs for the three and six months ended June 30, 2019 were $2 million and $3 million, respectively. Our share of pension and postretirement health and life insurance costs for the three and six months ended June 30, 2018 were $2 million and $3 million, respectively. Our share of defined contribution benefit plan costs for the three months ended June 30, 2019 were less than $1 million and for the six months ended June 30, 2019 was $1 million. Our share of defined contribution benefit plan costs for the three and six months ended June 30, 2018 were $1 million and $2 million, respectively. Pension and defined contribution benefit plan expenses are included in either General and administrative – related parties or Operations and maintenance – related parties, depending on the nature of the employee’s role in our operations.

Share-based Compensation

Certain SPLC and Shell employees supporting our operations as well as other Shell operations were historically granted awards

under the Performance Share Plan, Shell’s incentive compensation program. Share-based compensation expense is

included in General and administrative – related parties in the accompanying unaudited consolidated statements of income. These costs for both the three and six months ended June 30, 2019 and June 30, 2018 were not material.

Equity and Other Investments

We have equity and other investments in various entities. As of June 30, 2019, SPLC no longer owns an interest in any of these entities. See Note 2 – Acquisitions for additional details. In some cases, we may be required to make capital contributions or other payments to these entities. See Note 4 – Equity Method Investments for additional details.

Reimbursements

The following table reflects reimbursements from our Parent for the three and six months ended June 30, 2019 and June 30, 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cash received (1)	$	3	$	5	$	10	$	6
Changes in receivable from Parent (2)	—		(3)		—		—
Total reimbursements (3)	$	3	$	2	$	10	$	6

⁽¹⁾ These reimbursements are included in Other contributions from Parent in the accompanying unaudited consolidated statements of cash flows.

⁽²⁾ These reimbursements are included in Other non-cash contributions from Parent in the accompanying unaudited consolidated statements of cash flows.

⁽³⁾ These reimbursements are included in Other contributions from Parent in the accompanying unaudited consolidated statements of (deficit) equity and are exclusive of zero and $1 million for the six months ended June 30, 2019 and June 30, 2018, respectively, related to contributions from Parent.

During the three and six months ended June 30, 2019, we filed claims for reimbursement from our Parent of $3 million and $10 million, respectively. During the three and six months ended June 30, 2018, we filed claims for reimbursement from our Parent of $2 million and $6 million, respectively. For each of these periods, this reflects our proportionate share of Zydeco directional drill project costs and expenses.

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Equity Method Investments

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments

For each of the following investments, we have the ability to exercise significant influence over these investments based on certain governance provisions and our participation in the significant activities and decisions that impact the management and economic performance of the investments.

Equity method investments comprise the following as of the dates indicated:

	June 30, 2019			December 31, 2018
	Ownership	Investment Amount		Ownership	Investment Amount
Amberjack – Series A / Series B	75.0% / 50.0%	$	441	75.0% / 50.0%	$	458
Mars	71.5%	162		71.5%	169
Bengal	50.0%	84		50.0%	82
Permian Basin	50.0%	79		50.0%	72
LOCAP	41.48%	8		41.48%	8
Explorer (1)	38.59%	92		12.62%	—
Poseidon	36.0%	—		36.0%	—
Colonial (1)	16.125%	30		6.0%	—
Proteus	10.0%	16		10.0%	16
Endymion	10.0%	18		10.0%	18
		$	930		$	823

⁽¹⁾ As part of the June 2019 Acquisition, these interests have been accounted for prospectively. See below for additional information.

We acquired an additional 25.97% interest in Explorer and an additional 10.125% interest in Colonial in the June 2019 Acquisition. As a result, these investments now qualify for equity method accounting as we have the ability to exercise significant influence over these investments as of the acquisition date. Prior to the acquisition date, Explorer and Colonial were accounted for as Other investments without readily determinable fair values and were therefore carried at cost. Upon acquisition, we added our Parent’s historical carrying value of the equity interests transferred as a transaction between entities under common control, totaling $90 million, to the basis of our previously held interests of $60 million as this is the date these investments qualified for equity method accounting. Subsequent to the June 2019 Acquisition date, we received second quarter distributions for Explorer and Colonial in the amounts of $23 million and $16 million, respectively. We recorded these distributions as reductions to the respective equity method investment balances for Explorer and Colonial as these amounts were no longer considered dividend income due to the change in the method of accounting. We recorded equity earnings for both Explorer and Colonial prospectively from the date of acquisition.

Unamortized differences in the basis of the initial investments and our interest in the separate net assets within the financial statements of the investees are amortized into net income over the remaining useful lives of the underlying assets. As of June 30, 2019 and December 31, 2018, the unamortized basis differences included in our equity investments are $97 million and $40 million, respectively. For the three and six months ended June 30, 2019 the net amortization expense was $1 million and $2 million, respectively, and for the three and six months ended June 30, 2018, the net amortization expense was $1 million and $2 million, respectively.

During the first quarter of 2018, the investment amount for Poseidon was reduced to zero due to distributions received that were in excess of our investment balance and we, therefore, suspended the equity method of accounting. Further, we have no commitments to provide further financial support to Poseidon. As such, we have recorded excess distributions in Other income of $9 million and $17 million for the three and six months ended June 30, 2019, respectively, and $9 million and $10 million for the three and six months ended June 30, 2018, respectively. Once our cumulative share of equity earnings becomes greater than the amount of distributions received, we will resume the equity method of accounting as long as the equity method investment balance remains greater than zero.

Earnings from our equity method investments were as follows during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Amberjack (1)	$	31	$	16	$	63	$	16
Mars	29		21		58		46
Bengal	5		6		10		10
Explorer (2)	7		—		7		—
Colonial (2)	4		—		4		—
Poseidon (3)	—		—		—		6
Other (4)	4		5		8		10
	$	80	$	48	$	150	$	88

⁽¹⁾ We acquired an interest in Amberjack in May 2018. The acquisition of this interest has been accounted for prospectively.

⁽²⁾ As stated above, we acquired additional interests in Explorer and Colonial in June 2019. The acquisition of these interests has been accounted for prospectively.

⁽³⁾ As stated above, the equity method of accounting has been suspended for Poseidon and excess distributions are recorded in Other income.

⁽⁴⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

The adoption of the revenue standard for the majority of our equity method investments followed the non-public business entity adoption date of January 1, 2019 for their stand-alone financial statements, with the exception of Mars and Permian Basin which adopted on January 1, 2018. As a result of the adoption of the revenue standard on January 1, 2019, we recognized our proportionate share of Amberjack’s cumulative effect transition adjustments as a decrease to opening equity (deficit) in the amount of $9 million under the modified retrospective transition method. As a result of the adoption of the revenue standard on January 1, 2018, we recognized our proportionate share of Mars’ cumulative effect transition adjustments as a decrease to opening equity (deficit) in the amount of $7 million under the modified retrospective transition method.

Under the new lease standard (as defined in Note 8 - Leases), the adoption date for our equity method investments will follow the non-public business entity adoption date of January 1, 2020 for their stand-alone financial statements.

Summarized Financial Information

The following tables present aggregated selected unaudited income statement data for our equity method investments on a 100% basis. However, during periods in which an acquisition occurs, the selected unaudited income statement data is pro-rated based on the number of days in which the Partnership owned and accounted for the investment under the equity method of accounting.

	Three Months Ended June 30, 2019
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	74	$	17	$	57	$	58
Mars	67		26		41		42
Bengal	19		9		10		10
Explorer (1)	37		13		24		18
Colonial (2)	88		44		44		27
Poseidon	34		8		26		23
Other (3)	56		37		19		17

⁽¹⁾ Our additional interest in Explorer was acquired on June 6, 2019. Explorer's total revenues, total operating expenses and operating income (on a 100% basis) were $133 million, $48 million and $85 million, respectively.

⁽²⁾ Our additional interest in Colonial was acquired on June 6, 2019. Colonial's total revenues, total operating expenses and operating income (on a 100% basis) were $325 million, $164 million and $161 million, respectively.

⁽³⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Six Months Ended June 30, 2019
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	155	$	36	$	119	$	120
Mars	130		48		82		83
Bengal	37		16		21		21
Explorer (1)	37		13		24		18
Colonial (2)	88		44		44		27
Poseidon	65		17		48		43
Other (3)	86		55		31		26

⁽¹⁾ Our additional interest in Explorer was acquired on June 6, 2019. Explorer's total revenues, total operating expenses and operating income (on a 100% basis) were $222 million, $94 million and $128 million, respectively.

⁽²⁾ Our additional interest in Colonial was acquired on June 6, 2019. Colonial's total revenues, total operating expenses and operating income (on a 100% basis) were $696 million, $330 million and $366 million, respectively.

⁽³⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Three Months Ended June 30, 2018
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack (1)	$	40	$	10	$	30	$	30
Mars	52		22		30		30
Bengal	18		7		11		11
Poseidon	27		8		19		17
Other (2)	39		15		24		21

⁽¹⁾ Our interest in Amberjack was acquired on May 11, 2018. Amberjack’s total revenues, total operating expenses and operating income (on a 100% basis) were $70 million, $17 million and $53 million, respectively.

⁽²⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Six Months Ended June 30, 2018
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack (1)	$	40	$	10	$	30	$	30
Mars	109		43		66		66
Bengal	33		14		19		19
Poseidon	56		17		39		36
Other (2)	75		30		45		40

⁽¹⁾ Our interest in Amberjack was acquired on May 11, 2018. Amberjack’s total revenues, total operating expenses and operating income (on a 100% basis) were $132 million, $36 million and $96 million, respectively.

⁽²⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

Capital Contributions

We make capital contributions for our pro-rata interest in Permian Basin to fund capital and other expenditures. We have made capital contributions of $10 million during the first six months of 2019.

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Equity (Deficit)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Equity (Deficit)

(Deficit) Equity

Our capital accounts are comprised of 2% general partner interests and 98% limited partner interests. The common units represent limited partner interests in us. The holders of common units, both public and SPLC, are entitled to participate in partnership distributions and have limited rights of ownership as provided for under our partnership agreement. Our general partner participates in our distributions and also currently holds IDR’s that entitle it to receive increasing percentages of the cash we distribute from operating surplus.

Shelf Registrations

We have a universal shelf registration statement on Form S-3 on file with the SEC under which we, as a well-known seasoned issuer, have the ability to issue and sell an indeterminate amount of common units and partnership securities representing limited partner units. We also have on file with the SEC a shelf registration statement on Form S-3 relating to $1,000,000,000 of common units and partnership securities representing limited partner units to be used in connection with the at-the-market equity distribution program, direct sales, or other sales consistent with the plan of distribution set forth in the registration statement.

Public Offering and Private Placement

On February 6, 2018, we completed the sale of 25,000,000 common units in a registered public offering for $673 million net proceeds ($680 million gross proceeds, or $27.20 per common unit, less $6 million of underwriter’s fees and $1 million of transaction fees). In connection with the issuance of common units, we issued 510,204 general partner units to our general partner for $14 million in order to maintain its 2% general partner interest in us. On February 6, 2018, we also completed the sale of 11,029,412 common units in a private placement with Shell Midstream LP Holdings LLC for an aggregate purchase

price of $300 million, or $27.20 per common unit. In connection with the issuance of the common units, we issued 225,091 general partner units to the general partner for $6 million in order to maintain its 2% general partner interest in us. We used net proceeds from these sales to repay $247 million of borrowings outstanding under the Five Year Revolver due July 2023 and $726 million of borrowings outstanding under the Five Year Revolver due December 2022, as well as for general partnership purposes.

At-the-Market Program

On March 2, 2016, we commenced an “at-the-market” equity distribution program pursuant to which we may issue and sell common units for up to $300 million in gross proceeds.

During the six months ended June 30, 2019 and June 30, 2018, we did not have any sales under this program.

Units Outstanding

As of June 30, 2019, we had 233,289,537 common units outstanding, of which 123,832,233 were publicly owned. SPLC owned 109,457,304 common units, representing an aggregate 46.0% limited partner interest in us, all of the IDR’s, and 4,761,012 general partner units, representing a 2% general partner interest in us.

The changes in the number of units outstanding from December 31, 2018 through June 30, 2019 are as follows:

	Public	SPLC	General
(in units)	Common	Common	Partner	Total
Balance as of December 31, 2018	123,832,233	99,979,548	4,567,588	228,379,369
June 2019 Acquisition(1)	—	9,477,756	193,424	9,671,180
Balance as of June 30, 2019	123,832,233	109,457,304	4,761,012	238,050,549

⁽¹⁾ See Note 2 – Acquisitions in the Notes to the Unaudited Consolidated Financial Statements for additional information.

Distributions to our Unitholders

Our sponsor has elected to waive $50 million of IDR’s in 2019 to be used for future investment by the Partnership. See Note 3 - Related Party Transactions for terms of the Second Amendment.

The following table details the distributions declared and/or paid for the periods presented:

Date Paid or		Public		SPLC		General Partner						Distributions per Limited Partner Unit
to be Paid	Three Months Ended	Common		Common		IDR's		2%		Total
		(in millions, except per unit amounts)
February 14, 2018	December 31, 2017	$	33	$	30	$	18	$	2	$	83	$	0.3330
May 15, 2018	March 31, 2018	43		35		26		2		106		0.3480
August 14, 2018	June 30, 2018	45		36		30		2		113		0.3650
November 14, 2018	September 30, 2018	47		38		33		3		121		0.3820
February 14, 2019	December 31, 2018	49		40		37		3		129		0.4000
May 15, 2019	March 31, 2019 (1)	51		42		23		3		119		0.4150
August 14, 2019	June 30, 2019 (1)(2)	53		47		28		3		131		0.4300

⁽¹⁾ Includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional information.

⁽²⁾ For more information see Note 15— Subsequent Events.

Distributions to Noncontrolling Interests

Distributions to SPLC for its noncontrolling interest in Zydeco for the three and six months ended June 30, 2019 were $2 million and $3 million, respectively, and for both the three and six months ended June 30, 2018 were $3 million. Distributions to GEL for its noncontrolling interest in Odyssey for the three and six months ended June 30, 2019 were $4 million and $6

million, respectively, and for the three and six months ended June 30, 2018 were $2 million and $4 million, respectively. See Note 3—Related Party Transactions for additional details

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment consist of the following as of the dates indicated:

	Depreciable Life	June 30, 2019		December 31, 2018
Land	—	$	12	$	11
Building and improvements	10 - 40 years	40		39
Pipeline and equipment (1)	10 - 30 years	1,202		1,162
Other	5 - 25 years	18		18
		1,272		1,230
Accumulated depreciation and amortization (2)		(591)		(567)
		681		663
Construction in progress		57		79
Property, plant and equipment, net		$	738	$	742

⁽¹⁾ As of June 30, 2019 and December 31, 2018, includes cost of $368 million and $366 million, respectively, related to assets under operating lease (as lessor). As of both June 30, 2019 and December 31, 2018, includes cost of $23 million related to right-of-use (“ROU”) assets under finance lease (as lessee).

⁽²⁾ As of June 30, 2019 and December 31, 2018, includes accumulated depreciation of $128 million and $121 million, respectively, related to assets under operating lease (as lessor). As of both June 30, 2019 and December 31, 2018, includes accumulated amortization of $5 million, related to ROU assets under finance lease (as lessee).

Depreciation and amortization expense on property, plant and equipment for the three and six months ended June 30, 2019 was $12 million and $24 million, respectively, and for the three and six months ended June 30, 2018 was $12 million and $23 million, respectively, and is included in costs and expenses in the accompanying unaudited consolidated statements of income. Depreciation and amortization expense on property, plant and equipment includes amounts pertaining to assets under operating (as lessor) and finance leases (as lessee).

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Accrued Liabilities - Third Parties

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Accrued Liabilities - Third Parties

Accrued Liabilities – Third Parties

Accrued liabilities – third parties consist of the following as of the dates indicated:

	June 30, 2019		December 31, 2018
Project accruals	$	7	$	7
Property taxes	9		4
Other accrued liabilities	2		2
Accrued liabilities – third parties	$	18	$	13

See Note 3—Related Party Transactions for a discussion of Accrued liabilities – related parties.

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Related Party Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Related Party Debt

Related Party Debt

Consolidated related party debt obligations comprise the following as of the dates indicated:

	June 30, 2019						December 31, 2018
	Outstanding Balance		Total Capacity		Available Capacity		Outstanding Balance		Total Capacity		Available Capacity
Ten Year Fixed Facility	$	600	$	600	$	—	$	—	$	—	$	—
Seven Year Fixed Facility	600		600		—		600		600		—
Five Year Revolver due July 2023	494		760		266		494		760		266
Five Year Revolver due December 2022	400		1,000		600		400		1,000		600
Five Year Fixed Facility	600		600		—		600		600		—
Zydeco Revolver	—		30		30		—		30		30
Unamortized debt issuance costs	(3)		n/a		n/a		(3)		n/a		n/a
Debt payable – related party	$	2,691	$	3,590	$	896	$	2,091	$	2,990	$	896

For the three and six months ended June 30, 2019, interest and fee expenses associated with our borrowings were $22 million and $41 million, respectively, of which we paid $20 million and $39 million, respectively. For the three and six months ended June 30, 2018, interest and fee expenses associated with our borrowings were $13 million and $23 million, respectively, of which we paid $8 million and $19 million, respectively.

Borrowings under our revolving credit facilities approximate fair value as the interest rates are variable and reflective of market rates, which results in Level 2 instruments. The fair value of our fixed rate credit facilities is estimated based on the published market prices for issuances of similar risk and tenor and is categorized as Level 2 within the fair value hierarchy. As of June 30, 2019, the carrying amount and estimated fair value of total debt (before amortization of issuance costs) was $2,694 million and $2,808 million, respectively. As of December 31, 2018, the carrying amount and estimated fair value of total debt (before amortization of issuance costs) was $2,094 million and $2,099 million, respectively.

On June 4, 2019, we entered into a ten-year fixed rate credit facility with STCW with a borrowing capacity of $600 million (the “Ten Year Fixed Facility”). The Ten Year Fixed Facility bears an interest rate of 4.18% per annum and matures on June 4, 2029. No issuance fee was incurred in connection with the Ten Year Fixed Facility. The Ten Year Fixed Facility contains customary representations, warranties, covenants and events of default, the occurrence of which would permit the lender to accelerate the maturity date of amounts borrowed under the Ten Year Fixed Facility. The Ten Year Fixed Facility was fully drawn on June 6, 2019 to partially fund the June 2019 Acquisition.

On May 11, 2018, we funded the May 2018 Acquisition with $494 million in borrowings under the Five Year Revolver due July 2023 and $726 million in borrowings under the Five Year Revolver due December 2022.

On February 6, 2018, we used net proceeds from sales of common units and from our general partner’s proportionate capital contribution to repay $247 million of borrowings outstanding under our Five Year Revolver due July 2023 and $726 million of borrowings outstanding under our Five Year Revolver due December 2022.

For additional information on our credit facilities, refer to Note 9 – Related Party Debt in the Notes to Consolidated Financial Statements in our 2018 Annual Report.

Borrowings and repayments under our credit facilities for the six months ended June 30, 2019 and June 30, 2018 are disclosed in our unaudited consolidated statements of cash flows. See Note 10 – (Deficit) Equity for additional information regarding the source of our repayments.

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Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Leases

Adoption of ASC Topic 842 “Leases”

On January 1, 2019, we adopted ASC Topic 842 (“the new lease standard”) by applying the modified retrospective approach to all leases on January 1, 2019. We elected the package of practical expedients upon transition that permits us to not reassess (1) whether any contracts entered into prior to adoption are or contain leases, (2) the lease classification of existing leases and (3) initial direct costs for any leases that existed prior to adoption. We also elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. Generally, we account for term-based land easements where we control the use of the land surface as leases.

Upon adoption on January 1, 2019, we recognized operating lease right-of-use (“ROU”) assets and corresponding lease liabilities of $5 million. As lessor, the accounting for operating leases has not changed and the adoption did not have an impact on our existing transportation and terminaling services agreements that are considered operating leases. As lessee, the accounting for finance leases (capital leases) was substantially unchanged.

Lessee accounting

We determine if an arrangement is or contains a lease at inception. Our assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period and (3) whether we have the right to direct the use of the asset. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease classification affects the expense recognition in the income statement. Operating lease costs are recorded entirely in operating expenses. Finance lease costs are split, where amortization of the ROU asset is recorded in operating expenses and an implied interest component is recorded in interest expense.

Under the new lease standard, operating leases (as lessee) are included in Operating lease right-of-use assets, Accrued liabilities - third parties and Operating lease liabilities in our unaudited consolidated balance sheets. Finance leases (as lessee) are included in Property, plant and equipment, Accrued liabilities – third parties and Finance lease liabilities in our unaudited consolidated balance sheets. ROU assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at transition date in determining the present value of future payments. The ROU asset includes any lease payments made but excludes lease incentives and initial direct costs incurred, if any. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have long-term non-cancelable third-party operating leases for land. Several of the leases provide for renewal terms. We hold cancellable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline systems. Obligations under these easements are not material to the results of our operations.  In addition, Odyssey has a third-party operating lease for use of offshore platform space at Main Pass 289C. This lease will continue to be in effect until the continued operation of the platform is uneconomic.

We are also obligated under two finance leases. We have a terminaling services agreement in which we took possession of certain storage tanks located in Port Neches, Texas and a lease of offshore platform space on the Garden Banks 128 “A” platform.

Lease extensions. Many of our leases have options to either extend or terminate the lease. In determining the lease term, we considered all available contract extensions which are reasonably certain of occurring. In many cases, the lease term is equal to the economic life of the underlying asset.

Significant assumptions and judgments

Incremental borrowing rate. We are generally not made aware of the interest rate implicit in a lease due to several reasons, including: (1) uncertainty as to the total amount of the costs incurred by the lessor in negotiating the lease or whether certain costs incurred by the lessor would qualify as initial direct costs and (2) uncertainty as to the lessor’s expectation of the residual value of the asset at the end of the lease. Therefore, we use our incremental borrowing rate (“IBR”) at the commencement of the lease and estimate the IBR for each lease agreement taking into consideration lease contract term, collateral and entity credit ratings, and use sensitivity analyses to evaluate the reasonableness of the rates determined.

Lease balances and costs

The following tables summarize our lease costs as of and for the three and six months ended June 30, 2019:

Leases	Classification	June 30, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	5
Finance lease assets	Property, plant and equipment, net (1)	18
Total lease assets		$	23
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1
Noncurrent
Operating	Operating lease liabilities	5
Finance	Finance lease liabilities	25
Total lease liabilities		$	31

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $5 million as of June 30, 2019.

		Three Months Ended		Six Months Ended
Lease cost	Classification	June 30, 2019		June 30, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1
Interest on lease liabilities	Interest expense, net	1		2
Total lease cost		$	2	$	3

⁽¹⁾ Amounts for the three and six months ended June 30, 2019 were less than $1 million.

Other information

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—
Operating cash flows from finance leases (1)	—
Financing cash flows from finance leases (1)	—

⁽¹⁾ Amounts for the six months ended June 30, 2019 were less than $1 million.

	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	20
Finance leases	12
Weighted-average discount rate
Operating leases	5.8	%
Finance leases	14.3	%

Annual maturity analysis

The future annual maturity of lease payments as of June 30, 2019 for the above lease obligations was:

Maturity of lease liabilities	Operating leases (1)		Finance leases (2)		Total
Remainder of 2019	$	—	$	2	$	2
2020	—		4		4
2021	1		4		5
2022	—		4		4
2023	1		4		5
Remainder	6		36		42
Total lease payments	8		54		$	62
Less: Interest (3)	(3)		(29)		(32)
Present value of lease liabilities (4)	$	5	$	25	$	30

⁽¹⁾ Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

⁽²⁾ Includes $26 million in principal and excludes $9 million in executory costs.

⁽³⁾ Calculated using the interest rate for each lease.

⁽⁴⁾ Includes the current portion of $1 million for the finance lease.

Lessor accounting

We have certain transportation and terminaling services agreements with related parties entered into prior to the adoption date of January 1, 2019 that are considered operating leases and include both lease and non-lease components. Certain of these agreements were entered into for terms of ten years with the option to extend for two additional five year terms, and we have additional agreements with an initial term of ten years with the option to extend for up to ten additional one year terms. It is reasonably certain that these contracts will be extended. Our transportation, terminaling and storage services revenue and lease revenue from related parties for both the three and six months ended June 30, 2019 and 2018 are disclosed in Note 11 – Revenue Recognition.

Our risk management strategy for the residual assets is mitigated by the long-term nature of the underlying assets and the long-term nature of our lease agreements.

Significant assumptions and judgments

Lease and non-lease components. Certain of our revenues are accounted for under Topic 842, Leases, as the underlying contracts convey the right to control the use of the identified asset for a period of time. We allocate the arrangement consideration between the lease components that fall within the scope of ASC Topic 842 and any non-lease service components within the scope of ASC Topic 606 based on the relative stand-alone selling price of each component. See Note 11 ­– Revenue Recognition for additional information regarding the allocation of the consideration in a contract between the lease and non-lease components.

Annual maturity analysis

As of June 30, 2019, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease liabilities	Operating leases (1)
Remainder of 2019	$	28
2020	56
2021	56
2022	56
2023	56
Remainder	750
Total lease payments	$	1,002

⁽¹⁾ Operating lease payments include $556 million related to options to extend lease terms that are reasonably certain of being exercised.

Leases

Leases

Adoption of ASC Topic 842 “Leases”

On January 1, 2019, we adopted ASC Topic 842 (“the new lease standard”) by applying the modified retrospective approach to all leases on January 1, 2019. We elected the package of practical expedients upon transition that permits us to not reassess (1) whether any contracts entered into prior to adoption are or contain leases, (2) the lease classification of existing leases and (3) initial direct costs for any leases that existed prior to adoption. We also elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. Generally, we account for term-based land easements where we control the use of the land surface as leases.

Upon adoption on January 1, 2019, we recognized operating lease right-of-use (“ROU”) assets and corresponding lease liabilities of $5 million. As lessor, the accounting for operating leases has not changed and the adoption did not have an impact on our existing transportation and terminaling services agreements that are considered operating leases. As lessee, the accounting for finance leases (capital leases) was substantially unchanged.

Lessee accounting

We determine if an arrangement is or contains a lease at inception. Our assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period and (3) whether we have the right to direct the use of the asset. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease classification affects the expense recognition in the income statement. Operating lease costs are recorded entirely in operating expenses. Finance lease costs are split, where amortization of the ROU asset is recorded in operating expenses and an implied interest component is recorded in interest expense.

Under the new lease standard, operating leases (as lessee) are included in Operating lease right-of-use assets, Accrued liabilities - third parties and Operating lease liabilities in our unaudited consolidated balance sheets. Finance leases (as lessee) are included in Property, plant and equipment, Accrued liabilities – third parties and Finance lease liabilities in our unaudited consolidated balance sheets. ROU assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at transition date in determining the present value of future payments. The ROU asset includes any lease payments made but excludes lease incentives and initial direct costs incurred, if any. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have long-term non-cancelable third-party operating leases for land. Several of the leases provide for renewal terms. We hold cancellable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline systems. Obligations under these easements are not material to the results of our operations.  In addition, Odyssey has a third-party operating lease for use of offshore platform space at Main Pass 289C. This lease will continue to be in effect until the continued operation of the platform is uneconomic.

We are also obligated under two finance leases. We have a terminaling services agreement in which we took possession of certain storage tanks located in Port Neches, Texas and a lease of offshore platform space on the Garden Banks 128 “A” platform.

Lease extensions. Many of our leases have options to either extend or terminate the lease. In determining the lease term, we considered all available contract extensions which are reasonably certain of occurring. In many cases, the lease term is equal to the economic life of the underlying asset.

Significant assumptions and judgments

Incremental borrowing rate. We are generally not made aware of the interest rate implicit in a lease due to several reasons, including: (1) uncertainty as to the total amount of the costs incurred by the lessor in negotiating the lease or whether certain costs incurred by the lessor would qualify as initial direct costs and (2) uncertainty as to the lessor’s expectation of the residual value of the asset at the end of the lease. Therefore, we use our incremental borrowing rate (“IBR”) at the commencement of the lease and estimate the IBR for each lease agreement taking into consideration lease contract term, collateral and entity credit ratings, and use sensitivity analyses to evaluate the reasonableness of the rates determined.

Lease balances and costs

The following tables summarize our lease costs as of and for the three and six months ended June 30, 2019:

Leases	Classification	June 30, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	5
Finance lease assets	Property, plant and equipment, net (1)	18
Total lease assets		$	23
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1
Noncurrent
Operating	Operating lease liabilities	5
Finance	Finance lease liabilities	25
Total lease liabilities		$	31

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $5 million as of June 30, 2019.

		Three Months Ended		Six Months Ended
Lease cost	Classification	June 30, 2019		June 30, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1
Interest on lease liabilities	Interest expense, net	1		2
Total lease cost		$	2	$	3

⁽¹⁾ Amounts for the three and six months ended June 30, 2019 were less than $1 million.

Other information

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—
Operating cash flows from finance leases (1)	—
Financing cash flows from finance leases (1)	—

⁽¹⁾ Amounts for the six months ended June 30, 2019 were less than $1 million.

	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	20
Finance leases	12
Weighted-average discount rate
Operating leases	5.8	%
Finance leases	14.3	%

Annual maturity analysis

The future annual maturity of lease payments as of June 30, 2019 for the above lease obligations was:

Maturity of lease liabilities	Operating leases (1)		Finance leases (2)		Total
Remainder of 2019	$	—	$	2	$	2
2020	—		4		4
2021	1		4		5
2022	—		4		4
2023	1		4		5
Remainder	6		36		42
Total lease payments	8		54		$	62
Less: Interest (3)	(3)		(29)		(32)
Present value of lease liabilities (4)	$	5	$	25	$	30

⁽¹⁾ Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

⁽²⁾ Includes $26 million in principal and excludes $9 million in executory costs.

⁽³⁾ Calculated using the interest rate for each lease.

⁽⁴⁾ Includes the current portion of $1 million for the finance lease.

Lessor accounting

We have certain transportation and terminaling services agreements with related parties entered into prior to the adoption date of January 1, 2019 that are considered operating leases and include both lease and non-lease components. Certain of these agreements were entered into for terms of ten years with the option to extend for two additional five year terms, and we have additional agreements with an initial term of ten years with the option to extend for up to ten additional one year terms. It is reasonably certain that these contracts will be extended. Our transportation, terminaling and storage services revenue and lease revenue from related parties for both the three and six months ended June 30, 2019 and 2018 are disclosed in Note 11 – Revenue Recognition.

Our risk management strategy for the residual assets is mitigated by the long-term nature of the underlying assets and the long-term nature of our lease agreements.

Significant assumptions and judgments

Lease and non-lease components. Certain of our revenues are accounted for under Topic 842, Leases, as the underlying contracts convey the right to control the use of the identified asset for a period of time. We allocate the arrangement consideration between the lease components that fall within the scope of ASC Topic 842 and any non-lease service components within the scope of ASC Topic 606 based on the relative stand-alone selling price of each component. See Note 11 ­– Revenue Recognition for additional information regarding the allocation of the consideration in a contract between the lease and non-lease components.

Annual maturity analysis

As of June 30, 2019, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease liabilities	Operating leases (1)
Remainder of 2019	$	28
2020	56
2021	56
2022	56
2023	56
Remainder	750
Total lease payments	$	1,002

⁽¹⁾ Operating lease payments include $556 million related to options to extend lease terms that are reasonably certain of being exercised.

Leases

Leases

Adoption of ASC Topic 842 “Leases”

On January 1, 2019, we adopted ASC Topic 842 (“the new lease standard”) by applying the modified retrospective approach to all leases on January 1, 2019. We elected the package of practical expedients upon transition that permits us to not reassess (1) whether any contracts entered into prior to adoption are or contain leases, (2) the lease classification of existing leases and (3) initial direct costs for any leases that existed prior to adoption. We also elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. Generally, we account for term-based land easements where we control the use of the land surface as leases.

Upon adoption on January 1, 2019, we recognized operating lease right-of-use (“ROU”) assets and corresponding lease liabilities of $5 million. As lessor, the accounting for operating leases has not changed and the adoption did not have an impact on our existing transportation and terminaling services agreements that are considered operating leases. As lessee, the accounting for finance leases (capital leases) was substantially unchanged.

Lessee accounting

We determine if an arrangement is or contains a lease at inception. Our assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period and (3) whether we have the right to direct the use of the asset. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease classification affects the expense recognition in the income statement. Operating lease costs are recorded entirely in operating expenses. Finance lease costs are split, where amortization of the ROU asset is recorded in operating expenses and an implied interest component is recorded in interest expense.

Under the new lease standard, operating leases (as lessee) are included in Operating lease right-of-use assets, Accrued liabilities - third parties and Operating lease liabilities in our unaudited consolidated balance sheets. Finance leases (as lessee) are included in Property, plant and equipment, Accrued liabilities – third parties and Finance lease liabilities in our unaudited consolidated balance sheets. ROU assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at transition date in determining the present value of future payments. The ROU asset includes any lease payments made but excludes lease incentives and initial direct costs incurred, if any. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have long-term non-cancelable third-party operating leases for land. Several of the leases provide for renewal terms. We hold cancellable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline systems. Obligations under these easements are not material to the results of our operations.  In addition, Odyssey has a third-party operating lease for use of offshore platform space at Main Pass 289C. This lease will continue to be in effect until the continued operation of the platform is uneconomic.

We are also obligated under two finance leases. We have a terminaling services agreement in which we took possession of certain storage tanks located in Port Neches, Texas and a lease of offshore platform space on the Garden Banks 128 “A” platform.

Lease extensions. Many of our leases have options to either extend or terminate the lease. In determining the lease term, we considered all available contract extensions which are reasonably certain of occurring. In many cases, the lease term is equal to the economic life of the underlying asset.

Significant assumptions and judgments

Incremental borrowing rate. We are generally not made aware of the interest rate implicit in a lease due to several reasons, including: (1) uncertainty as to the total amount of the costs incurred by the lessor in negotiating the lease or whether certain costs incurred by the lessor would qualify as initial direct costs and (2) uncertainty as to the lessor’s expectation of the residual value of the asset at the end of the lease. Therefore, we use our incremental borrowing rate (“IBR”) at the commencement of the lease and estimate the IBR for each lease agreement taking into consideration lease contract term, collateral and entity credit ratings, and use sensitivity analyses to evaluate the reasonableness of the rates determined.

Lease balances and costs

The following tables summarize our lease costs as of and for the three and six months ended June 30, 2019:

Leases	Classification	June 30, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	5
Finance lease assets	Property, plant and equipment, net (1)	18
Total lease assets		$	23
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1
Noncurrent
Operating	Operating lease liabilities	5
Finance	Finance lease liabilities	25
Total lease liabilities		$	31

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $5 million as of June 30, 2019.

		Three Months Ended		Six Months Ended
Lease cost	Classification	June 30, 2019		June 30, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1
Interest on lease liabilities	Interest expense, net	1		2
Total lease cost		$	2	$	3

⁽¹⁾ Amounts for the three and six months ended June 30, 2019 were less than $1 million.

Other information

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—
Operating cash flows from finance leases (1)	—
Financing cash flows from finance leases (1)	—

⁽¹⁾ Amounts for the six months ended June 30, 2019 were less than $1 million.

	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	20
Finance leases	12
Weighted-average discount rate
Operating leases	5.8	%
Finance leases	14.3	%

Annual maturity analysis

The future annual maturity of lease payments as of June 30, 2019 for the above lease obligations was:

Maturity of lease liabilities	Operating leases (1)		Finance leases (2)		Total
Remainder of 2019	$	—	$	2	$	2
2020	—		4		4
2021	1		4		5
2022	—		4		4
2023	1		4		5
Remainder	6		36		42
Total lease payments	8		54		$	62
Less: Interest (3)	(3)		(29)		(32)
Present value of lease liabilities (4)	$	5	$	25	$	30

⁽¹⁾ Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

⁽²⁾ Includes $26 million in principal and excludes $9 million in executory costs.

⁽³⁾ Calculated using the interest rate for each lease.

⁽⁴⁾ Includes the current portion of $1 million for the finance lease.

Lessor accounting

We have certain transportation and terminaling services agreements with related parties entered into prior to the adoption date of January 1, 2019 that are considered operating leases and include both lease and non-lease components. Certain of these agreements were entered into for terms of ten years with the option to extend for two additional five year terms, and we have additional agreements with an initial term of ten years with the option to extend for up to ten additional one year terms. It is reasonably certain that these contracts will be extended. Our transportation, terminaling and storage services revenue and lease revenue from related parties for both the three and six months ended June 30, 2019 and 2018 are disclosed in Note 11 – Revenue Recognition.

Our risk management strategy for the residual assets is mitigated by the long-term nature of the underlying assets and the long-term nature of our lease agreements.

Significant assumptions and judgments

Lease and non-lease components. Certain of our revenues are accounted for under Topic 842, Leases, as the underlying contracts convey the right to control the use of the identified asset for a period of time. We allocate the arrangement consideration between the lease components that fall within the scope of ASC Topic 842 and any non-lease service components within the scope of ASC Topic 606 based on the relative stand-alone selling price of each component. See Note 11 ­– Revenue Recognition for additional information regarding the allocation of the consideration in a contract between the lease and non-lease components.

Annual maturity analysis

As of June 30, 2019, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease liabilities	Operating leases (1)
Remainder of 2019	$	28
2020	56
2021	56
2022	56
2023	56
Remainder	750
Total lease payments	$	1,002

⁽¹⁾ Operating lease payments include $556 million related to options to extend lease terms that are reasonably certain of being exercised.

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Accumulated Other Comprehensive Income (Notes)	6 Months Ended
	Jun. 30, 2019
Equity [Abstract]
Accumulated Other Comprehensive Income	Accumulated Other Comprehensive LossAs a result of the June 2019 Acquisition, we recorded an accumulated other comprehensive loss related to pension and other post-retirement benefits provided by Explorer and Colonial to their employees. We are not a sponsor of these benefits plans. The June 2019 Acquisition is accounted for as a transaction between entities under common control on a prospective basis and we have recorded the acquisition on our unaudited consolidated balance sheet at SPLC's historical basis which included accumulated other comprehensive loss. Our assumption of the accumulated other comprehensive loss balance had no effect on our comprehensive income during the period as the balance was accumulated while under the ownership of SPLC.

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Revenue Recognition

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The revenue standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The revenue standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract; identification of the performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations; and recognition of revenue as the entity satisfies the performance obligations.

Disaggregation of Revenue

The following table provides information about disaggregated revenue by service type and customer type:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Transportation services revenue – third parties	$	32	$	55	$	72	$	87
Transportation services revenue – related parties (1)	51		42		101		73
Storage services revenue – third parties	2		2		4		5
Storage services revenue – related parties	2		2		4		3
Terminaling services revenue – related parties (2)	11		11		23		22
Product revenue – third parties (3)	3		1		4		1
Product revenue – related parties (3)	6		2		16		10
Total Topic 606 revenue	107		115		224		201
Lease revenue – related parties	14		14		28		28
Total revenue	$	121	$	129	$	252	$	229

⁽¹⁾ Transportation services revenue - related parties includes $1 million and $2 million, respectively, of the non-lease service component in our transportation services contracts for the both three and six months ended June 30, 2019 and 2018.

⁽²⁾ Terminaling services revenue - related parties is entirely comprised of the non-lease service component in our terminaling services contracts.

⁽³⁾ Product revenue is comprised of allowance oil sales.

Lease revenue

Certain of our long-term transportation and terminaling services contracts with related parties are accounted for as operating

leases under Topic 840, Leases, prior to January 1, 2019 and Topic 842, Leases, on or subsequent to January 1, 2019. These agreements have both a lease component and an implied operation and maintenance service component (“non-lease service component”). We allocate the arrangement consideration between the lease components that fall within the scope of Topic 840 or Topic 842 and any non-lease service components within the scope of the revenue standard based on the relative stand-alone selling price of each component. We estimate the stand-alone selling price of the lease and non-lease service components based on an analysis of service-related and lease-related costs for each contract, adjusted for a representative profit margin. The contracts have a minimum fixed monthly payment for both the lease and non-lease service components. We present the non-lease service components under the revenue standard within Transportation, terminaling and storage services – related parties in the unaudited consolidated statements of income.

Revenues from the lease components of these agreements are recorded within Lease revenue – related parties in the

unaudited consolidated statements of income. Certain of these agreements were entered into for terms of ten years, with the option to extend for two additional five year terms, and we have additional agreements with an initial term of ten years with the option to extend for up to ten additional one-year terms. As of June 30, 2019, future minimum payments of both the lease and service components to be received under the initial ten-year contract term of these operating leases were estimated to be:

	Total		Less than 1 year		Years 2 to 3		Years 4 to 5		More than 5 years
Operating leases	$	882	$	108	$	216	$	217	$	341

Contract Balances

The following table provides information about receivables and contract liabilities from contracts with customers:

	January 1, 2019		June 30, 2019
Receivables from contracts with customers – third parties	$	19	$	12
Receivables from contracts with customers – related parties	21		33
Deferred revenue – third parties (1)	8		—
Deferred revenue – related party (1)	3		—

⁽¹⁾ Amounts as of June 30, 2019 were less than $1 million.

Significant changes in the deferred revenue balances with customers during the period are as follows:

	December 31, 2018		Additions (1)		Reductions (2)		June 30, 2019 (3)
Deferred revenue – third parties	$	8	$	—	$	(8)	$	—
Deferred revenue – related party	3		—		(3)		—

⁽¹⁾ Contract liability additions resulted from deficiency payments from minimum volume commitment contracts.

⁽²⁾ Contract liability reductions resulted from revenue earned through the actual or estimated use and expiration of deficiency credits.

⁽³⁾ Amounts as of June 30, 2019 were less than $1 million.

We currently have no assets recognized from the costs to obtain or fulfill a contract as of both June 30, 2019 and December 31, 2018.

Remaining Performance Obligations

The following table includes revenue expected to be recognized in the future related to performance obligations exceeding one year of their initial terms that are unsatisfied or partially unsatisfied as of June 30, 2019:

	Total		Remainder of 2019		2020		2021		2022		2023 and beyond
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2019 (1)	$	632	$	55	$	106	$	63	$	63	$	345
Revenue expected to be recognized on other multi-year committed shipper transportation contracts in place as of June 30, 2019 (2)	41		3		5		5		5		23
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2019	2		2		—		—		—		—
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2019 (2)	394		23		47		47		47		230
	$	1,069	$	83	$	158	$	115	$	115	$	598

⁽¹⁾ Excludes revenue deferred for deficiency payments of less than $1 million as of June 30, 2019.

⁽²⁾ Relates to the non-lease service components of certain of our long-term transportation and terminaling service contracts which are accounted for as operating leases.

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Net Income Per Limited Partner Unit

6 Months Ended

Jun. 30, 2019

Partners' Capital Notes [Abstract]

Net Income Per Limited Partner Unit

Net Income Per Limited Partner UnitNet income per unit applicable to common limited partner units is computed by dividing the respective limited partners’ interest in net income attributable to the Partnership for the period by the weighted average number of common units outstanding for the period. Because we have more than one class of participating securities, we use the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units, general partner units and IDR’s. Basic and diluted net income per unit are the same because we do not have any potentially dilutive units outstanding for the periods presented.

Net income earned by the Partnership is allocated between the limited partners and the general partner (including IDR’s) in accordance with our partnership agreement. Earnings are allocated based on actual cash distributions declared to our unitholders, including those attributable to IDR’s. To the extent net income attributable to the Partnership exceeds or is less than cash distributions, this difference is allocated based on the unitholders’ respective ownership percentages.

The following tables show the allocation of net income attributable to the Partnership to arrive at net income per limited partner unit:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Net income	$	119	$	115	$	256	$	180
Less:
Net income attributable to noncontrolling interests	4		4		9		5
Net income attributable to the Partnership	115		111		247		175
Less:
General partner’s distribution declared (1)	31		32		57		60
Limited partners’ distribution declared on common units	100		81		193		159
Distributions in excess of income	$	(16)	$	(2)	$	(3)	$	(44)

⁽¹⁾ For the three and six months ended June 30, 2019, this includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional information.

	Three Months Ended June 30, 2019
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared (1)	$	31	$	100	$	131
Distributions in excess of income	(1)		(15)		(16)
Net income attributable to the Partnership	$	30	$	85	$	115
Weighted average units outstanding:
Basic and diluted			226.4
Net income per limited partner unit:
Basic and diluted			$	0.38

⁽¹⁾ This includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional  information.

	Six Months Ended June 30, 2019
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared (1)	$	57	$	193	$	250
Distributions in excess of income	—		(3)		(3)
Net income attributable to the Partnership	$	57	$	190	$	247
Weighted average units outstanding:
Basic and diluted			225.1
Net income per limited partner unit:
Basic and diluted			$	0.84

⁽¹⁾ This includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional  information.

	Three Months Ended June 30, 2018
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared	$	32	$	81	$	113
Distributions in excess of income	—		(2)		(2)
Net income attributable to the Partnership	$	32	$	79	$	111
Weighted average units outstanding:
Basic and diluted			223.8
Net income per limited partner unit:
Basic and diluted			$	0.35

	Six Months Ended June 30, 2018
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared	$	60	$	159	$	219
Distributions in excess of income	(1)		(43)		(44)
Net income attributable to the Partnership	$	59	$	116	$	175
Weighted average units outstanding:
Basic and diluted			216.7
Net income per limited partner unit:
Basic and diluted			$	0.54

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax. Taxes on our net income are generally borne by our partners through the allocation of taxable income. Our income tax expense results from partnership activity in the state of Texas, as conducted by Zydeco, Sand Dollar and Triton. Income tax expense for both the three and six months ended June 30, 2019 and June 30, 2018 was not material.

With the exception of the operations of Colonial, Explorer and LOCAP, which are treated as corporations for federal income tax purposes, the operations of the Partnership are not subject to federal income tax.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Environmental Matters

We are subject to federal, state, and local environmental laws and regulations. We routinely conduct reviews of potential environmental issues and claims that could impact our assets or operations. These reviews assist us in identifying environmental issues and estimating the costs and timing of remediation efforts. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us and potential third-party liability claims. Often, as the remediation evaluation and effort progresses, additional information is obtained, requiring revisions to estimated costs. These revisions are reflected in income in the period in which they are probable and reasonably estimable. As of both June 30, 2019 and December 31, 2018, these costs and any related liabilities are not material.

Legal Proceedings

We are named defendants in lawsuits and governmental proceedings that arise in the ordinary course of business. For each of our outstanding legal matters, we evaluate the merits of the case, our exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. While there are still uncertainties related to the ultimate costs we may

incur, based upon our evaluation and experience to date, we do not expect that the ultimate resolution of these matters will have a material adverse effect on our financial position, operating results or cash flows.

Indemnification

Under the 2019 Omnibus Agreement, certain tax liabilities are indemnified by SPLC. See Note 3—Related Party Transactions for additional information.

Minimum Throughput

On September 1, 2016, the in-service date of the finance lease for the Port Neches storage tanks, a joint tariff agreement with a third party became effective. The tariff will be reviewed annually and the rate updated based on the Federal Energy Regulatory Commission (“FERC”) indexing adjustment effective July 1 of each year. Effective July 1, 2019, there was an approximately 4.3% increase to this rate based on FERC indexing adjustment. The initial term of the agreement is ten years with automatic one year renewal terms with the option to cancel prior to each renewal period.

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Subsequent Events

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

We have evaluated events that have occurred after June 30, 2019 through the issuance of these unaudited consolidated financial statements. Any material subsequent events that occurred during this time have been properly recognized or disclosed in the unaudited consolidated financial statements and accompanying notes.

Distribution

On July 24, 2019, the Board declared a cash distribution of $0.4300 per limited partner unit for the three months ended June 30, 2019. The distribution will be paid on August 14, 2019 to unitholders of record as of August 5, 2019.

Revolving Loan Facility

On August 1, 2019, Zydeco entered into a senior unsecured revolving loan facility agreement with STCW, effective August 6, 2019 (the “2019 Zydeco Revolver”). The 2019 Zydeco Revolver has a borrowing capacity of $30 million and matures on August 6, 2024. Borrowings under the credit facility bear interest at the three-month LIBOR rate plus a margin.

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Description of Business and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Description of Business

We are a growth-oriented master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. As of June 30, 2019, our assets include interests in entities that own crude oil and refined products pipelines and terminals that serve as key infrastructure to (i) transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and (ii) deliver refined products from those markets to major demand centers. Our assets also include interests in entities that own natural gas and refinery gas pipelines that transport offshore natural gas to market hubs and deliver refinery gas from refineries and plants to chemical sites along the Gulf Coast.

We generate revenue from the transportation, terminaling and storage of crude oil and refined products through our pipelines and storage tanks, and generate income from our equity and other investments. Our operations consist of one reportable segment.

Basis of Presentation

Basis of Presentation

Our unaudited consolidated financial statements include all subsidiaries required to be consolidated under generally accepted accounting principles in the United States (“GAAP”). Our reporting currency is U.S. dollars, and all references to dollars are

U.S. dollars. The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. The year-end consolidated balance sheet data was derived from audited financial statements. During interim periods, we follow the accounting policies disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 (our “2018 Annual Report”), filed with the United States Securities and Exchange Commission (“SEC”) unless otherwise described herein. The unaudited consolidated financial statements for the three and six months ended June 30, 2019 and June 30, 2018 include all adjustments we believe are necessary for a fair statement of the results of operations for the interim periods presented. These adjustments are of a normal recurring nature unless otherwise disclosed. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our 2018 Annual Report.Our consolidated subsidiaries include Pecten, Sand Dollar, Triton, Zydeco, Odyssey and the Operating Company. Asset acquisitions of additional interests in previously consolidated subsidiaries and interests in equity and other investments are included in the financial statements prospectively from the effective date of each acquisition. In cases where these types of acquisitions are considered acquisitions of businesses under common control, the financial statements are retrospectively adjusted.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Standards Adopted as of January 1, 2019

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02 to Topic 842, Leases. As permitted, we adopted the new standard using the modified retrospective approach, effective January 1, 2019, which provides a method for recording existing leases at the beginning of the period of adoption. As such, results and balances prior to January 1, 2019 are not adjusted and continue to be reported in accordance with our historical accounting under previous GAAP.

See Note 8 — Leases for additional information and disclosures required by the new standard.

Standards Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13 to Topic 326, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments, which replaces the current incurred loss impairment method with a method that reflects expected credit losses on financial instruments. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. While we are still evaluating the impact of ASU 2016-13, we do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

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Description of Business and Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Ownership Percentage

The following table reflects our ownership interests as of June 30, 2019:

	SHLX Ownership
Pecten Midstream LLC (“Pecten”)	100.0	%
Sand Dollar Pipeline LLC (“Sand Dollar”)	100.0	%
Triton West LLC (“Triton”)	100.0	%
Zydeco Pipeline Company LLC (“Zydeco”) (1)	92.5	%
Amberjack Pipeline Company LLC (“Amberjack”) – Series A/Series B	75.0% / 50.0%
Mars Oil Pipeline Company LLC (“Mars”)	71.5	%
Odyssey Pipeline L.L.C. (“Odyssey”)	71.0	%
Bengal Pipeline Company LLC (“Bengal”)	50.0	%
Crestwood Permian Basin LLC (“Permian Basin”)	50.0	%
LOCAP LLC (“LOCAP”)	41.48	%
Explorer Pipeline Company (“Explorer”)	38.59	%
Poseidon Oil Pipeline Company, L.L.C. (“Poseidon”)	36.0	%
Colonial Pipeline Company (“Colonial”)	16.125	%
Proteus Oil Pipeline Company, LLC (“Proteus”)	10.0	%
Endymion Oil Pipeline Company, LLC (“Endymion”)	10.0	%
Cleopatra Gas Gathering Company, LLC (“Cleopatra”)	1.0	%

⁽¹⁾ SPLC owns the remaining 7.5% ownership interest is Zydeco.

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Schedule of Other Related Party Balances

Other related party balances consist of the following:

	June 30, 2019		December 31, 2018
Accounts receivable	$	39	$	29
Prepaid expenses	6		15
Other assets	2		3
Accounts payable (1)	8		9
Deferred revenue	—		3
Accrued liabilities (2)	17		16
Debt payable (3)	2,691		2,091

⁽¹⁾ Accounts payable reflects amounts owed to SPLC for reimbursement of third-party expenses incurred by SPLC for our benefit.

⁽²⁾ As of June 30, 2019, accrued liabilities reflects $16 million accrued interest and $1 million other accrued liabilities. As of December 31, 2018, accrued liabilities reflects $14 million accrued interest and $2 million other accrued liabilities.

⁽³⁾ Debt payable reflects borrowings outstanding after taking into account unamortized debt issuance costs of $3 million as of both June 30, 2019 and December 31, 2018.

Schedule of Related Party Expenses Including Personnel Costs

The following table shows related party expenses, including certain personnel costs, incurred by Shell and SPLC on our behalf that are reflected in the accompanying unaudited consolidated statements of income for the indicated periods. Included in these amounts, and disclosed below, is our share of operating and general corporate expenses, as well as the fees paid to SPLC under certain agreements.

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Operations and maintenance – related parties	$	16	$	13	$	30	$	26
General and administrative – related parties	12		14		23		27
Allocated operating expenses	$	3	$	3	$	8	$	7
Allocated general corporate expenses	6		8		13		16
Management Agreement fee	2		2		4		4
Omnibus Agreement fee	2		2		5		4

Schedule of Reimbursements from Parent

The following table reflects reimbursements from our Parent for the three and six months ended June 30, 2019 and June 30, 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cash received (1)	$	3	$	5	$	10	$	6
Changes in receivable from Parent (2)	—		(3)		—		—
Total reimbursements (3)	$	3	$	2	$	10	$	6

⁽¹⁾ These reimbursements are included in Other contributions from Parent in the accompanying unaudited consolidated statements of cash flows.

⁽²⁾ These reimbursements are included in Other non-cash contributions from Parent in the accompanying unaudited consolidated statements of cash flows.

⁽³⁾ These reimbursements are included in Other contributions from Parent in the accompanying unaudited consolidated statements of (deficit) equity and are exclusive of zero and $1 million for the six months ended June 30, 2019 and June 30, 2018, respectively, related to contributions from Parent.

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Equity Method Investments (Tables)

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Investments in Affiliates

Equity method investments comprise the following as of the dates indicated:

	June 30, 2019			December 31, 2018
	Ownership	Investment Amount		Ownership	Investment Amount
Amberjack – Series A / Series B	75.0% / 50.0%	$	441	75.0% / 50.0%	$	458
Mars	71.5%	162		71.5%	169
Bengal	50.0%	84		50.0%	82
Permian Basin	50.0%	79		50.0%	72
LOCAP	41.48%	8		41.48%	8
Explorer (1)	38.59%	92		12.62%	—
Poseidon	36.0%	—		36.0%	—
Colonial (1)	16.125%	30		6.0%	—
Proteus	10.0%	16		10.0%	16
Endymion	10.0%	18		10.0%	18
		$	930		$	823

⁽¹⁾ As part of the June 2019 Acquisition, these interests have been accounted for prospectively. See below for additional information.

Schedule of Equity Investments in Affiliates Balance Affected

Earnings from our equity method investments were as follows during the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Amberjack (1)	$	31	$	16	$	63	$	16
Mars	29		21		58		46
Bengal	5		6		10		10
Explorer (2)	7		—		7		—
Colonial (2)	4		—		4		—
Poseidon (3)	—		—		—		6
Other (4)	4		5		8		10
	$	80	$	48	$	150	$	88

⁽¹⁾ We acquired an interest in Amberjack in May 2018. The acquisition of this interest has been accounted for prospectively.

⁽²⁾ As stated above, we acquired additional interests in Explorer and Colonial in June 2019. The acquisition of these interests has been accounted for prospectively.

⁽³⁾ As stated above, the equity method of accounting has been suspended for Poseidon and excess distributions are recorded in Other income.

(4) Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

Summary of Income Statement Data for Equity Method Investments

The following tables present aggregated selected unaudited income statement data for our equity method investments on a 100% basis. However, during periods in which an acquisition occurs, the selected unaudited income statement data is pro-rated based on the number of days in which the Partnership owned and accounted for the investment under the equity method of accounting.

	Three Months Ended June 30, 2019
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	74	$	17	$	57	$	58
Mars	67		26		41		42
Bengal	19		9		10		10
Explorer (1)	37		13		24		18
Colonial (2)	88		44		44		27
Poseidon	34		8		26		23
Other (3)	56		37		19		17

⁽¹⁾ Our additional interest in Explorer was acquired on June 6, 2019. Explorer's total revenues, total operating expenses and operating income (on a 100% basis) were $133 million, $48 million and $85 million, respectively.

⁽²⁾ Our additional interest in Colonial was acquired on June 6, 2019. Colonial's total revenues, total operating expenses and operating income (on a 100% basis) were $325 million, $164 million and $161 million, respectively.

⁽³⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Six Months Ended June 30, 2019
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack	$	155	$	36	$	119	$	120
Mars	130		48		82		83
Bengal	37		16		21		21
Explorer (1)	37		13		24		18
Colonial (2)	88		44		44		27
Poseidon	65		17		48		43
Other (3)	86		55		31		26

⁽¹⁾ Our additional interest in Explorer was acquired on June 6, 2019. Explorer's total revenues, total operating expenses and operating income (on a 100% basis) were $222 million, $94 million and $128 million, respectively.

⁽²⁾ Our additional interest in Colonial was acquired on June 6, 2019. Colonial's total revenues, total operating expenses and operating income (on a 100% basis) were $696 million, $330 million and $366 million, respectively.

⁽³⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Three Months Ended June 30, 2018
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack (1)	$	40	$	10	$	30	$	30
Mars	52		22		30		30
Bengal	18		7		11		11
Poseidon	27		8		19		17
Other (2)	39		15		24		21

⁽¹⁾ Our interest in Amberjack was acquired on May 11, 2018. Amberjack’s total revenues, total operating expenses and operating income (on a 100% basis) were $70 million, $17 million and $53 million, respectively.

⁽²⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

	Six Months Ended June 30, 2018
	Total revenues		Total operating expenses		Operating income		Net income
Statements of Income
Amberjack (1)	$	40	$	10	$	30	$	30
Mars	109		43		66		66
Bengal	33		14		19		19
Poseidon	56		17		39		36
Other (2)	75		30		45		40

⁽¹⁾ Our interest in Amberjack was acquired on May 11, 2018. Amberjack’s total revenues, total operating expenses and operating income (on a 100% basis) were $132 million, $36 million and $96 million, respectively.

⁽²⁾ Included in Other is the activity associated with our investments in Permian Basin, LOCAP, Proteus and Endymion.

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Equity (Deficit) (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of Distributions Declared and/or Paid

The following table details the distributions declared and/or paid for the periods presented:

Date Paid or		Public		SPLC		General Partner						Distributions per Limited Partner Unit
to be Paid	Three Months Ended	Common		Common		IDR's		2%		Total
		(in millions, except per unit amounts)
February 14, 2018	December 31, 2017	$	33	$	30	$	18	$	2	$	83	$	0.3330
May 15, 2018	March 31, 2018	43		35		26		2		106		0.3480
August 14, 2018	June 30, 2018	45		36		30		2		113		0.3650
November 14, 2018	September 30, 2018	47		38		33		3		121		0.3820
February 14, 2019	December 31, 2018	49		40		37		3		129		0.4000
May 15, 2019	March 31, 2019 (1)	51		42		23		3		119		0.4150
August 14, 2019	June 30, 2019 (1)(2)	53		47		28		3		131		0.4300

⁽¹⁾ Includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional information.

⁽²⁾ For more information see Note 15— Subsequent Events.

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Components of Property, Plant and Equipment

Property, plant and equipment consist of the following as of the dates indicated:

	Depreciable Life	June 30, 2019		December 31, 2018
Land	—	$	12	$	11
Building and improvements	10 - 40 years	40		39
Pipeline and equipment (1)	10 - 30 years	1,202		1,162
Other	5 - 25 years	18		18
		1,272		1,230
Accumulated depreciation and amortization (2)		(591)		(567)
		681		663
Construction in progress		57		79
Property, plant and equipment, net		$	738	$	742

⁽¹⁾ As of June 30, 2019 and December 31, 2018, includes cost of $368 million and $366 million, respectively, related to assets under operating lease (as lessor). As of both June 30, 2019 and December 31, 2018, includes cost of $23 million related to right-of-use (“ROU”) assets under finance lease (as lessee).

⁽²⁾ As of June 30, 2019 and December 31, 2018, includes accumulated depreciation of $128 million and $121 million, respectively, related to assets under operating lease (as lessor). As of both June 30, 2019 and December 31, 2018, includes accumulated amortization of $5 million, related to ROU assets under finance lease (as lessee).

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Accrued Liabilities - Third Parties (Tables)

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities – third parties consist of the following as of the dates indicated:

	June 30, 2019		December 31, 2018
Project accruals	$	7	$	7
Property taxes	9		4
Other accrued liabilities	2		2
Accrued liabilities – third parties	$	18	$	13

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Related Party Debt (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of Consolidated Related Party Debt Obligations

Consolidated related party debt obligations comprise the following as of the dates indicated:

	June 30, 2019						December 31, 2018
	Outstanding Balance		Total Capacity		Available Capacity		Outstanding Balance		Total Capacity		Available Capacity
Ten Year Fixed Facility	$	600	$	600	$	—	$	—	$	—	$	—
Seven Year Fixed Facility	600		600		—		600		600		—
Five Year Revolver due July 2023	494		760		266		494		760		266
Five Year Revolver due December 2022	400		1,000		600		400		1,000		600
Five Year Fixed Facility	600		600		—		600		600		—
Zydeco Revolver	—		30		30		—		30		30
Unamortized debt issuance costs	(3)		n/a		n/a		(3)		n/a		n/a
Debt payable – related party	$	2,691	$	3,590	$	896	$	2,091	$	2,990	$	896

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Assets And Liabilities, Lessee

The following tables summarize our lease costs as of and for the three and six months ended June 30, 2019:

Leases	Classification	June 30, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	5
Finance lease assets	Property, plant and equipment, net (1)	18
Total lease assets		$	23
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1
Noncurrent
Operating	Operating lease liabilities	5
Finance	Finance lease liabilities	25
Total lease liabilities		$	31

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $5 million as of June 30, 2019.

Lease, Cost

		Three Months Ended		Six Months Ended
Lease cost	Classification	June 30, 2019		June 30, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1
Interest on lease liabilities	Interest expense, net	1		2
Total lease cost		$	2	$	3

⁽¹⁾ Amounts for the three and six months ended June 30, 2019 were less than $1 million.

Supplemental Cash Flows, Lessee

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—
Operating cash flows from finance leases (1)	—
Financing cash flows from finance leases (1)	—

⁽¹⁾ Amounts for the six months ended June 30, 2019 were less than $1 million.

	June 30, 2019
Weighted-average remaining lease term (years)
Operating leases	20
Finance leases	12
Weighted-average discount rate
Operating leases	5.8	%
Finance leases	14.3	%

Lessee, Operating Lease, Liability, Maturity

The future annual maturity of lease payments as of June 30, 2019 for the above lease obligations was:

Maturity of lease liabilities	Operating leases (1)		Finance leases (2)		Total
Remainder of 2019	$	—	$	2	$	2
2020	—		4		4
2021	1		4		5
2022	—		4		4
2023	1		4		5
Remainder	6		36		42
Total lease payments	8		54		$	62
Less: Interest (3)	(3)		(29)		(32)
Present value of lease liabilities (4)	$	5	$	25	$	30

⁽¹⁾ Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

⁽²⁾ Includes $26 million in principal and excludes $9 million in executory costs.

⁽³⁾ Calculated using the interest rate for each lease.

⁽⁴⁾ Includes the current portion of $1 million for the finance lease.

Finance Lease, Liability, Maturity

The future annual maturity of lease payments as of June 30, 2019 for the above lease obligations was:

Maturity of lease liabilities	Operating leases (1)		Finance leases (2)		Total
Remainder of 2019	$	—	$	2	$	2
2020	—		4		4
2021	1		4		5
2022	—		4		4
2023	1		4		5
Remainder	6		36		42
Total lease payments	8		54		$	62
Less: Interest (3)	(3)		(29)		(32)
Present value of lease liabilities (4)	$	5	$	25	$	30

⁽¹⁾ Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

⁽²⁾ Includes $26 million in principal and excludes $9 million in executory costs.

⁽³⁾ Calculated using the interest rate for each lease.

⁽⁴⁾ Includes the current portion of $1 million for the finance lease.

Lessor, Operating Lease, Payments to be Received, Maturity

As of June 30, 2019, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease liabilities	Operating leases (1)
Remainder of 2019	$	28
2020	56
2021	56
2022	56
2023	56
Remainder	750
Total lease payments	$	1,002

⁽¹⁾ Operating lease payments include $556 million related to options to extend lease terms that are reasonably certain of being exercised.

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table provides information about disaggregated revenue by service type and customer type:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Transportation services revenue – third parties	$	32	$	55	$	72	$	87
Transportation services revenue – related parties (1)	51		42		101		73
Storage services revenue – third parties	2		2		4		5
Storage services revenue – related parties	2		2		4		3
Terminaling services revenue – related parties (2)	11		11		23		22
Product revenue – third parties (3)	3		1		4		1
Product revenue – related parties (3)	6		2		16		10
Total Topic 606 revenue	107		115		224		201
Lease revenue – related parties	14		14		28		28
Total revenue	$	121	$	129	$	252	$	229

⁽¹⁾ Transportation services revenue - related parties includes $1 million and $2 million, respectively, of the non-lease service component in our transportation services contracts for the both three and six months ended June 30, 2019 and 2018.

⁽²⁾ Terminaling services revenue - related parties is entirely comprised of the non-lease service component in our terminaling services contracts.

⁽³⁾ Product revenue is comprised of allowance oil sales.

Operating Lease, Lease Income

As of June 30, 2019, future minimum payments of both the lease and service components to be received under the initial ten-year contract term of these operating leases were estimated to be:

	Total		Less than 1 year		Years 2 to 3		Years 4 to 5		More than 5 years
Operating leases	$	882	$	108	$	216	$	217	$	341

Contract Balances

The following table provides information about receivables and contract liabilities from contracts with customers:

	January 1, 2019		June 30, 2019
Receivables from contracts with customers – third parties	$	19	$	12
Receivables from contracts with customers – related parties	21		33
Deferred revenue – third parties (1)	8		—
Deferred revenue – related party (1)	3		—

⁽¹⁾ Amounts as of June 30, 2019 were less than $1 million.

Significant changes in the deferred revenue balances with customers during the period are as follows:

	December 31, 2018		Additions (1)		Reductions (2)		June 30, 2019 (3)
Deferred revenue – third parties	$	8	$	—	$	(8)	$	—
Deferred revenue – related party	3		—		(3)		—

⁽¹⁾ Contract liability additions resulted from deficiency payments from minimum volume commitment contracts.

⁽²⁾ Contract liability reductions resulted from revenue earned through the actual or estimated use and expiration of deficiency credits.

⁽³⁾ Amounts as of June 30, 2019 were less than $1 million.

Remaining Performance Obligations

The following table includes revenue expected to be recognized in the future related to performance obligations exceeding one year of their initial terms that are unsatisfied or partially unsatisfied as of June 30, 2019:

	Total		Remainder of 2019		2020		2021		2022		2023 and beyond
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2019 (1)	$	632	$	55	$	106	$	63	$	63	$	345
Revenue expected to be recognized on other multi-year committed shipper transportation contracts in place as of June 30, 2019 (2)	41		3		5		5		5		23
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2019	2		2		—		—		—		—
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2019 (2)	394		23		47		47		47		230
	$	1,069	$	83	$	158	$	115	$	115	$	598

⁽¹⁾ Excludes revenue deferred for deficiency payments of less than $1 million as of June 30, 2019.

⁽²⁾ Relates to the non-lease service components of certain of our long-term transportation and terminaling service contracts which are accounted for as operating leases.

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Net Income Per Limited Partner Unit (Tables)

6 Months Ended

Jun. 30, 2019

Partners' Capital Notes [Abstract]

Schedule of Allocation of Net Income Attributable to the Partnership to Arrive at Net Income Per Limited Partner Unit

The following tables show the allocation of net income attributable to the Partnership to arrive at net income per limited partner unit:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Net income	$	119	$	115	$	256	$	180
Less:
Net income attributable to noncontrolling interests	4		4		9		5
Net income attributable to the Partnership	115		111		247		175
Less:
General partner’s distribution declared (1)	31		32		57		60
Limited partners’ distribution declared on common units	100		81		193		159
Distributions in excess of income	$	(16)	$	(2)	$	(3)	$	(44)

⁽¹⁾ For the three and six months ended June 30, 2019, this includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional information.

Schedule of Basic and Diluted Net Income Per Unit

	Three Months Ended June 30, 2019
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared (1)	$	31	$	100	$	131
Distributions in excess of income	(1)		(15)		(16)
Net income attributable to the Partnership	$	30	$	85	$	115
Weighted average units outstanding:
Basic and diluted			226.4
Net income per limited partner unit:
Basic and diluted			$	0.38

⁽¹⁾ This includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional  information.

	Six Months Ended June 30, 2019
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared (1)	$	57	$	193	$	250
Distributions in excess of income	—		(3)		(3)
Net income attributable to the Partnership	$	57	$	190	$	247
Weighted average units outstanding:
Basic and diluted			225.1
Net income per limited partner unit:
Basic and diluted			$	0.84

⁽¹⁾ This includes the impact of waived distributions to the holders of IDR’s. See Note 3—Related Party Transactions for additional  information.

	Three Months Ended June 30, 2018
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared	$	32	$	81	$	113
Distributions in excess of income	—		(2)		(2)
Net income attributable to the Partnership	$	32	$	79	$	111
Weighted average units outstanding:
Basic and diluted			223.8
Net income per limited partner unit:
Basic and diluted			$	0.35

	Six Months Ended June 30, 2018
	General Partner		Limited Partners’ Common Units		Total
	(in millions of dollars, except per unit data)
Distributions declared	$	60	$	159	$	219
Distributions in excess of income	(1)		(43)		(44)
Net income attributable to the Partnership	$	59	$	116	$	175
Weighted average units outstanding:
Basic and diluted			216.7
Net income per limited partner unit:
Basic and diluted			$	0.54

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Description of Business and Basis of Presentation (Details) - segment	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Description Of Business And Basis Of Presentation [Line Items]
Number of reportable segments	1
Pecten Midstream LLC (“Pecten”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	100.00%
Sand Dollar Pipeline LLC (“Sand Dollar”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	100.00%
Triton West LLC (“Triton”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	100.00%
Zydeco Pipeline Company LLC (“Zydeco”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	92.50%
Shell’s Retained Ownership	7.50%
Amberjack Pipeline Company LLC (“Amberjack”) - Series A
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	75.00%	75.00%
Amberjack Pipeline Company LLC (“Amberjack”) - Series B
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	50.00%	50.00%
Shell’s Retained Ownership			0.00%
Mars Oil Pipeline Company LLC (“Mars”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	71.50%	71.50%
Odyssey Pipeline L.L.C. (“Odyssey”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	71.00%
Bengal Pipeline Company LLC (“Bengal”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	50.00%	50.00%
Crestwood Permian Basin LLC (“Permian Basin”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	50.00%	50.00%
LOCAP LLC (“LOCAP”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	41.48%	41.48%
Poseidon Oil Pipeline Company LLC (“Poseidon”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	36.00%	36.00%
Explorer Pipeline Company ("Explorer")
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	38.59%	12.62%
Proteus Oil Pipeline Company, LLC (“Proteus”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	10.00%	10.00%
Endymion Oil Pipeline Company, LLC (“Endymion”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	10.00%	10.00%
Colonial Pipeline Company (“Colonial”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	16.125%	6.00%
Cleopatra Gas Gathering Company, LLC (“Cleopatra”)
Description Of Business And Basis Of Presentation [Line Items]
SHLX Ownership	1.00%

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Acquisitions - June 2019 Acquisitions (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended
	Jun. 06, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Asset Acquisition [Line Items]
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax		$ 0	$ 0	$ 0	$ 0
June 2019 Acquisition
Asset Acquisition [Line Items]
Consideration transferred	$ 800
Historical carrying value of net assets under common control	90
Remeasurements of pension and other postretirement benefits related to equity method investments, net of tax	6
Capital distribution to general partner	510
Non-cash equity consideration	$ 200
Common units, weighted average sales price (in dollars per unit)	$ 20.68
General partners' capital account, units issued (in shares)	193,424
General Partner | June 2019 Acquisition
Asset Acquisition [Line Items]
Noncontrolling interest	2.00%
Subsidiary | Shell Midstream LP Holdings LLC | June 2019 Acquisition
Asset Acquisition [Line Items]
Common units issued (in shares)	9,477,756
Revolving Credit Facility | Ten Year Fixed Facility
Asset Acquisition [Line Items]
Debt instrument term				10 years
Revolving Credit Facility | Shell Treasury Center West Inc | Ten Year Fixed Facility
Asset Acquisition [Line Items]
Debt instrument term				10 years
Revolving Credit Facility | Shell Treasury Center West Inc | Ten Year Fixed Facility | June 2019 Acquisition
Asset Acquisition [Line Items]
Consideration, cash on hand	$ 600
Debt instrument term	10 years
Explorer
Asset Acquisition [Line Items]
Ownership		38.59%		38.59%		12.62%
Explorer | June 2019 Acquisition
Asset Acquisition [Line Items]
Equity method investment, ownership interest acquired	25.97%
Ownership		38.59%		38.59%
Colonial Pipeline Company (“Colonial”)
Asset Acquisition [Line Items]
Ownership		16.125%		16.125%		6.00%
Colonial Pipeline Company (“Colonial”) | June 2019 Acquisition
Asset Acquisition [Line Items]
Equity method investment, ownership interest acquired	10.125%
Ownership		16.125%		16.125%

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Acquisitions - May 2018 Acquisitions (Details) - USD ($) $ in Millions			6 Months Ended
	May 11, 2018	May 10, 2017	Jun. 30, 2019
May 2018 Acquisition
Asset Acquisition [Line Items]
Consideration in excess of the historical carrying value of net assets under common control	$ 738
Historical carrying value of net assets under common control	482
Consideration transferred	$ 1,220
May 2018 Acquisition | Amberjack Pipeline Company LLC (“Amberjack”) - Series A
Asset Acquisition [Line Items]
Percentage of voting interests acquired	75.00%
May 2018 Acquisition | Amberjack Pipeline Company LLC (“Amberjack”) - Series B
Asset Acquisition [Line Items]
Percentage of voting interests acquired	50.00%
Revolving Credit Facility | Five Year Revolver due July 2023
Asset Acquisition [Line Items]
Debt instrument term			5 years
Shell Treasury Center West Inc | Revolving Credit Facility | Five Year Revolver due July 2023 | May 2018 Acquisition
Asset Acquisition [Line Items]
Debt instrument term		5 years
Consideration transferred	$ 494
Shell Treasury Center West Inc | Revolving Credit Facility | Five Year Revolver Due December 2022
Asset Acquisition [Line Items]
Debt instrument term			5 years
Shell Treasury Center West Inc | Revolving Credit Facility | Five Year Revolver Due December 2022 | May 2018 Acquisition
Asset Acquisition [Line Items]
Debt instrument term		5 years
Consideration transferred	$ 726

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Related Party Transactions - Additional Information (Details) $ in Millions		3 Months Ended						6 Months Ended		12 Months Ended
	Nov. 03, 2014 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) term	Jun. 30, 2018 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018	Sep. 30, 2018 credit_facility
Related Party Transaction [Line Items]
Statute of limitations expirations, number of days	60 days
Distributions to holders of incentive distribution rights waived					$ 17.0	$ 17.0
Gain (loss) from sale of excess allowance oil					1.0		$ 1.0	$ 3.0	$ 2.0
Health and life insurance costs							2.0	3.0	3.0
Defined contribution benefit plan costs					1.0		1.0	1.0	2.0
Reimbursement of cost and expenses					3.0		2.0	10.0	6.0
Operations and maintenance – related parties					$ 16.0		13.0	$ 30.0	26.0
Transportation Services Operating Leases
Related Party Transaction [Line Items]
Initial term					10 years			10 years
Transportation Services Operating Leases, Five Year Terms
Related Party Transaction [Line Items]
Initial term					10 years			10 years
Number of additional terms | term								2
Additional term					5 years			5 years
Transportation Services Operating Leases, One Year Terms
Related Party Transaction [Line Items]
Initial term					10 years			10 years
Number of additional terms | term								10
Additional term					1 year			1 year
SPLC
Related Party Transaction [Line Items]
Distributions to holders of incentive distribution rights waived					$ 17.0
General insurance expense					$ 5.0		$ 3.0	$ 9.0	$ 7.0
Shell Treasury Center West Inc
Related Party Transaction [Line Items]
Number of revolving credit facilities | credit_facility												5
Refinery Gas Pipeline
Related Party Transaction [Line Items]
Reimbursement of cost and expenses								$ 0.6
Five Year Fixed Facility | Revolving Credit Facility
Related Party Transaction [Line Items]
Debt instrument term								5 years
Five Year Fixed Facility | Shell Treasury Center West Inc | Revolving Credit Facility
Related Party Transaction [Line Items]
Debt instrument term								5 years
Five Year Revolver Due December 2022 | Shell Treasury Center West Inc | Revolving Credit Facility
Related Party Transaction [Line Items]
Debt instrument term								5 years
Seven Year Fixed Facility | Revolving Credit Facility
Related Party Transaction [Line Items]
Debt instrument term								7 years
Seven Year Fixed Facility | Shell Treasury Center West Inc | Revolving Credit Facility
Related Party Transaction [Line Items]
Debt instrument term								7 years
Ten Year Fixed Facility | Revolving Credit Facility
Related Party Transaction [Line Items]
Debt instrument term								10 years
Ten Year Fixed Facility | Shell Treasury Center West Inc | Revolving Credit Facility
Related Party Transaction [Line Items]
Debt instrument term								10 years
Shell Pipeline Company L P
Related Party Transaction [Line Items]
Payment of general and administrative fee	$ 11.0
Odyssey Pipeline L.L.C. (“Odyssey”)
Related Party Transaction [Line Items]
Noncontrolling interest					29.00%			29.00%			29.00%
Zydeco Pipeline Company LLC (“Zydeco”)
Related Party Transaction [Line Items]
Noncontrolling interest					7.50%			7.50%			7.50%
Scenario, Forecast
Related Party Transaction [Line Items]
Distributions to holders of incentive distribution rights waived				$ 16.0						$ 50.0
Scenario, Forecast | SPLC
Related Party Transaction [Line Items]
Distributions to holders of incentive distribution rights waived		$ 50.0	$ 16.0	$ 17.0

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Related Party Transactions - Schedule of Other Related Party Balances (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Accounts receivable	$ 39	$ 29
Prepaid expenses	6	15
Other assets	2	3
Accounts payable	8	9
Deferred revenue	0	3
Accrued liabilities	17	16
Debt payable	2,691	2,091
Accrued interest, related parties	16	14
Other accrued liabilities, related parties	1	2
Unamortized debt issuance costs	3	3
Affiliated Entity
Related Party Transaction [Line Items]
Unamortized debt issuance costs	$ 3	$ 3

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Related Party Transactions - Related Party Revenues (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Related Party Transaction [Line Items]
Lease revenue – related parties	$ 14	$ 14

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Related Party Transactions - Schedule of Condensed Combined Statement of Operations (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Related Party Transactions [Abstract]
Operations and maintenance – related parties	$ 16	$ 13	$ 30	$ 26
General and administrative – related parties	12	14	23	27
Allocated operating expenses	6	8	13	16
Allocated general corporate expenses	3	3	8	7
Management Agreement fee	2	2	4	4
Omnibus Agreement fee	$ 2	$ 2	$ 5	$ 4

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Related Party Transactions - Reimbursements from Our General Partner (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Related Party Transaction [Line Items]
Changes in receivable from Parent					$ 0	$ 2
Reimbursement of cost and expenses	$ 3		$ 2		10	6
Contributions from Parent	3	$ 7	2	$ 5
Shell Pipeline Company L P
Related Party Transaction [Line Items]
Cash received	3		5		10	6
Changes in receivable from Parent	0		(3)		0	0
Total reimbursements	$ 3		$ 2
Reimbursement of cost and expenses					10	6
Contributions from Parent					$ 0	$ 1

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Equity Method Investments - Schedule of Equity Investments in Affiliates (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018	Mar. 31, 2018
Schedule of Equity Method Investments [Line Items]
Investment Amount	$ 930,000,000	$ 823,000,000
Amberjack – Series A / Series B
Schedule of Equity Method Investments [Line Items]
Investment Amount	$ 441,000,000	$ 458,000,000.0
Amberjack - Series A
Schedule of Equity Method Investments [Line Items]
Ownership	75.00%	75.00%
Amberjack - Series B
Schedule of Equity Method Investments [Line Items]
Ownership	50.00%	50.00%
Mars
Schedule of Equity Method Investments [Line Items]
Ownership	71.50%	71.50%
Investment Amount	$ 162,000,000	$ 169,000,000
Bengal
Schedule of Equity Method Investments [Line Items]
Ownership	50.00%	50.00%
Investment Amount	$ 84,000,000	$ 82,000,000
Crestwood Permian Basin LLC (“Permian Basin”)
Schedule of Equity Method Investments [Line Items]
Ownership	50.00%	50.00%
Investment Amount	$ 79,000,000	$ 72,000,000
LOCAP
Schedule of Equity Method Investments [Line Items]
Ownership	41.48%	41.48%
Investment Amount	$ 8,000,000	$ 8,000,000
Explorer
Schedule of Equity Method Investments [Line Items]
Ownership	38.59%	12.62%
Investment Amount	$ 92,000,000	$ 0
Poseidon
Schedule of Equity Method Investments [Line Items]
Ownership	36.00%	36.00%
Investment Amount	$ 0	$ 0	$ 0
Colonial Pipeline Company (“Colonial”)
Schedule of Equity Method Investments [Line Items]
Ownership	16.125%	6.00%
Investment Amount	$ 30,000,000	$ 0
Proteus
Schedule of Equity Method Investments [Line Items]
Ownership	10.00%	10.00%
Investment Amount	$ 16,000,000	$ 16,000,000
Endymion
Schedule of Equity Method Investments [Line Items]
Ownership	10.00%	10.00%
Investment Amount	$ 18,000,000	$ 18,000,000

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Equity Method Investments - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 06, 2019	Jun. 05, 2019	Jan. 01, 2019	Dec. 31, 2018	Mar. 31, 2018	Jan. 01, 2018
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 930,000,000		$ 930,000,000					$ 823,000,000
Unamortized basis differences included in equity investments	97,000,000		97,000,000					40,000,000
Amortization expense (income)	1,000,000	$ 1,000,000	2,000,000	$ 2,000,000
Cumulative effect to total (deficit)/equity							$ 9,000,000			$ 2,000,000
June 2019 Acquisition
Schedule of Equity Method Investments [Line Items]
Equity method investments					$ 90,000,000
Poseidon
Schedule of Equity Method Investments [Line Items]
Equity method investments	0		0					0	$ 0
Investment, excess distribution	9,000,000	$ 9,000,000	17,000,000	$ 10,000,000
Mars
Schedule of Equity Method Investments [Line Items]
Equity method investments	162,000,000		162,000,000					169,000,000
Mars | Accounting Standards Update 2016-01
Schedule of Equity Method Investments [Line Items]
Cumulative effect to total (deficit)/equity										$ 7,000,000
Amberjack – Series A / Series B
Schedule of Equity Method Investments [Line Items]
Equity method investments	441,000,000		441,000,000					458,000,000.0
Amberjack – Series A / Series B | Accounting Standards Update 2016-01
Schedule of Equity Method Investments [Line Items]
Cumulative effect to total (deficit)/equity							$ 9,000,000
Explorer
Schedule of Equity Method Investments [Line Items]
Equity method investments	92,000,000		92,000,000					0
Distributions Received			23,000,000
Colonial Pipeline Company (“Colonial”)
Schedule of Equity Method Investments [Line Items]
Equity method investments	30,000,000		30,000,000					0
Distributions Received			16,000,000
Explorer and Colonial
Schedule of Equity Method Investments [Line Items]
Other investments						$ 60,000,000
Crestwood Permian Basin LLC (“Permian Basin”)
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 79,000,000		79,000,000					$ 72,000,000
Capital contribution			$ 10,000,000

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Equity Method Investments - Summary of Income Statement Data for Equity Method Investments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	$ 80	$ 48	$ 150	$ 88
Total revenue	121	129	252	229
Operating income	48	57	113	62
Amberjack
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	31	16	63	16
Total Revenues	74	40	155	40
Total Operating Expenses	17	10	36	10
Operating Income	57	30	119	30
Net Income	58	30	120	30
Amberjack | May 2018 Acquisition
Schedule of Equity Method Investments [Line Items]
Total Revenues		70		132
Total Operating Expenses		17		36
Operating Income		53		96
Mars
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	29	21	58	46
Total Revenues	67	52	130	109
Total Operating Expenses	26	22	48	43
Operating Income	41	30	82	66
Net Income	42	30	83	66
Bengal
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	5	6	10	10
Total Revenues	19	18	37	33
Total Operating Expenses	9	7	16	14
Operating Income	10	11	21	19
Net Income	10	11	21	19
Explorer
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	7	0	7	0
Total Revenues	37		37
Total Operating Expenses	13		13
Operating Income	24		24
Net Income	18		18
Explorer | June 2019 Acquisition
Schedule of Equity Method Investments [Line Items]
Total Revenues	133		222
Total Operating Expenses	48		94
Operating Income	85		128
Colonial Pipeline Company (“Colonial”)
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	4	0	4	0
Total Revenues	88		88
Total Operating Expenses	44		44
Operating Income	44		44
Net Income	27		27
Colonial Pipeline Company (“Colonial”) | June 2019 Acquisition
Schedule of Equity Method Investments [Line Items]
Total Revenues	325		696
Total Operating Expenses	164		330
Operating Income	161		366
Poseidon
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	0	0	0	6
Total Revenues	34	27	65	56
Total Operating Expenses	8	8	17	17
Operating Income	26	19	48	39
Net Income	23	17	43	36
Other
Schedule of Equity Method Investments [Line Items]
Income from equity method investments	4	5	8	10
Total Revenues	56	39	86	75
Total Operating Expenses	37	15	55	30
Operating Income	19	24	31	45
Net Income	$ 17	$ 21	$ 26	$ 40

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Equity (Deficit) (Details) - USD ($)			3 Months Ended					6 Months Ended		9 Months Ended	12 Months Ended
	Feb. 06, 2018	Mar. 02, 2016	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018	Dec. 31, 2019	Dec. 31, 2018
Class of Stock [Line Items]
Aggregate percentage of general partner interest										2.00%
Issuance of common units, maximum proceeds		$ 300,000,000
Units issued in connection with public offering (in shares)								9,671,180
Net proceeds from equity offerings							$ 973,000,000
Contribution from general partner for additional shares issued	$ 14,000,000
Net proceeds from equity offerings								$ 0	$ 973,000,000
Consideration for units issued to our general partner								$ 0	20,000,000
Common unitholders' capital account, units outstanding (in shares)				233,289,537				233,289,537
Ownership interest percentage								46.00%
Capital units, publicly owned (in shares)				238,050,549				238,050,549				228,379,369
Distributions to holders of incentive distribution rights waived				$ 17,000,000	$ 17,000,000
Scenario, Forecast
Class of Stock [Line Items]
Distributions to holders of incentive distribution rights waived			$ 16,000,000								$ 50,000,000
Five Year Fixed Facility
Class of Stock [Line Items]
Repayments of debt								$ 247,000,000
Debt instrument term								5 years
Five Year Revolver due December 2022
Class of Stock [Line Items]
Repayments of debt								$ 726,000,000
Debt instrument term								5 years
General Partner
Class of Stock [Line Items]
Aggregate percentage of general partner interest								2.00%
Units issued in connection with public offering (in shares)	510,204							193,424
Units issued under the ATM Program (in shares)	225,091
Capital units, publicly owned (in shares)				4,761,012				4,761,012				4,567,588
Common Units
Class of Stock [Line Items]
Common units per share (in USD per share)	$ 27.20
Units issued under the ATM Program (in shares)	11,029,412
Net proceeds from equity offerings	$ 300,000,000
Consideration for units issued to our general partner	$ 6,000,000
Shell Pipeline Company L P | General Partner
Class of Stock [Line Items]
Aggregate percentage of general partner interest	2.00%							2.00%
Shell Pipeline Company L P | Limited Partner
Class of Stock [Line Items]
Aggregate percentage of general partner interest								98.00%
Shell Pipeline Company L P | Common Units
Class of Stock [Line Items]
Units issued in connection with public offering (in shares)								9,477,756
Common unitholders' capital account, units outstanding (in shares)				109,457,304				109,457,304				99,979,548
Capital units, publicly owned (in shares)				109,457,304				109,457,304				99,979,548
General Public | Common Units
Class of Stock [Line Items]
Units issued in connection with public offering (in shares)	25,000,000							0
Net proceeds from equity offerings	$ 673,000,000
Gross proceeds from public offering	$ 680,000,000
Common units per share (in USD per share)	$ 27.20
Underwriter fees	$ 6,000,000
Transaction fees	$ 1,000,000
Common unitholders' capital account, units outstanding (in shares)				123,832,233				123,832,233				123,832,233
Capital units, publicly owned (in shares)				123,832,233				123,832,233				123,832,233
Zydeco
Class of Stock [Line Items]
Distributions to noncontrolling interest				$ 2,000,000		$ 3,000,000		$ 3,000,000	3,000,000
Odyssey
Class of Stock [Line Items]
Distributions to noncontrolling interest				$ 4,000,000		$ 2,000,000		$ 6,000,000	$ 4,000,000

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Equity (Deficit) - Schedule of Number of Units Outstanding (Details) - shares		6 Months Ended
	Feb. 06, 2018	Jun. 30, 2019
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in shares)		228,379,369
Units issued in connection with equity offerings (in shares)		9,671,180
Ending balance (in shares)		238,050,549
General Partner
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in shares)		4,567,588
Units issued in connection with equity offerings (in shares)	510,204	193,424
Ending balance (in shares)		4,761,012
General Public | Common Units
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in shares)		123,832,233
Units issued in connection with equity offerings (in shares)	25,000,000	0
Ending balance (in shares)		123,832,233
Shell Pipeline Company L P | Common Units
Increase (Decrease) in Partners' Capital [Roll Forward]
Beginning balance (in shares)		99,979,548
Units issued in connection with equity offerings (in shares)		9,477,756
Ending balance (in shares)		109,457,304

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Equity (Deficit) - Schedule of Distributions Declared and/or Paid (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended							6 Months Ended		9 Months Ended
	Feb. 06, 2018	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2018
Distribution Made To Limited Partner [Line Items]
Aggregate percentage of general partner interest											2.00%
Distributions declared and/or paid		$ 131	$ 119	$ 129	$ 121	$ 113	$ 106	$ 83
Distributions paid per limited partner unit (in dollars per share)		$ 0.4300	$ 0.4150	$ 0.4000	$ 0.3820	$ 0.3650	$ 0.3480	$ 0.3330	$ 0.8450	$ 0.7130
Common Units | General Public
Distribution Made To Limited Partner [Line Items]
Distributions declared and/or paid		$ 53	$ 51	$ 49	$ 47	$ 45	$ 43	$ 33
Common Units | Shell Pipeline Company L P
Distribution Made To Limited Partner [Line Items]
Distributions declared and/or paid		47	42	40	38	36	35	30
General Partner
Distribution Made To Limited Partner [Line Items]
Aggregate percentage of general partner interest									2.00%
Distributions declared and/or paid		3	3	3	3	2	2	2
General Partner | Shell Pipeline Company L P
Distribution Made To Limited Partner [Line Items]
Aggregate percentage of general partner interest	2.00%								2.00%
General Partner | IDR's
Distribution Made To Limited Partner [Line Items]
Distributions declared and/or paid		$ 28	$ 23	$ 37	$ 33	$ 30	$ 26	$ 18

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Property, Plant and Equipment - Components of Property, Plant and Equipment (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Land	$ 12.0		$ 12.0		$ 11.0
Building and improvements	40.0		40.0		39.0
Pipeline and equipment	1,202.0		1,202.0		1,162.0
Other	18.0		18.0		18.0
Property, plant and equipment, gross	1,272.0		1,272.0		1,230.0
Accumulated depreciation and amortization	(591.0)		(591.0)		(567.0)
Property plant and equipment excluding construction in progress	681.0		681.0		663.0
Construction in progress	57.0		57.0		79.0
Property, plant and equipment, net	738.0		738.0		742.0
Costs related to assets under capital lease	23.0		23.0		22.8
Accumulated depreciation on assets under operating lease	128.0		128.0		121.0
Accumulated depreciation on assets under capital lease	5.0		5.0		5.0
Depreciation and amortization expense	12.0	$ 12.0	$ 24.0	$ 23.0
Building and Improvements | Minimum
Property Plant And Equipment [Line Items]
Property, plant and equipment, depreciable life			10 years
Building and Improvements | Maximum
Property Plant And Equipment [Line Items]
Property, plant and equipment, depreciable life			40 years
Pipeline and Equipment
Property Plant And Equipment [Line Items]
Operating leased assets, cost	$ 368.0		$ 368.0		$ 366.0
Pipeline and Equipment | Minimum
Property Plant And Equipment [Line Items]
Property, plant and equipment, depreciable life			10 years
Pipeline and Equipment | Maximum
Property Plant And Equipment [Line Items]
Property, plant and equipment, depreciable life			30 years
Other | Minimum
Property Plant And Equipment [Line Items]
Property, plant and equipment, depreciable life			5 years
Other | Maximum
Property Plant And Equipment [Line Items]
Property, plant and equipment, depreciable life			25 years

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Accrued Liabilities - Third Parties - Schedule of Accrued Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Project accruals	$ 7	$ 7
Property taxes	9	4
Other accrued liabilities	2	2
Accrued liabilities – third parties	$ 18	$ 13

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Related Party Debt - Schedule of Consolidated Related Party Debt Obligations (Details) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 04, 2019	Dec. 31, 2018
Line Of Credit Facility [Line Items]
Outstanding Balance	$ 2,691,000,000		$ 2,091,000,000
Unamortized debt issuance costs	(3,000,000)		(3,000,000)
Total Capacity	3,590,000,000		2,990,000,000
Available Capacity	$ 896,000,000		896,000,000
Five Year Revolver due December 2022
Line Of Credit Facility [Line Items]
Debt instrument term	5 years
Revolving Credit Facility | Ten Year Fixed Facility
Line Of Credit Facility [Line Items]
Debt instrument term	10 years
Outstanding Balance	$ 600,000,000		0
Total Capacity	600,000,000	$ 600,000,000	0
Available Capacity	$ 0		0
Revolving Credit Facility | Ten Year Fixed Facility | Shell Treasury Center West Inc
Line Of Credit Facility [Line Items]
Debt instrument term	10 years
Revolving Credit Facility | Seven Year Fixed Facility
Line Of Credit Facility [Line Items]
Debt instrument term	7 years
Outstanding Balance	$ 600,000,000		600,000,000
Total Capacity	600,000,000		600,000,000
Available Capacity	$ 0		0
Revolving Credit Facility | Seven Year Fixed Facility | Shell Treasury Center West Inc
Line Of Credit Facility [Line Items]
Debt instrument term	7 years
Revolving Credit Facility | Five Year Revolver due July 2023
Line Of Credit Facility [Line Items]
Debt instrument term	5 years
Outstanding Balance	$ 494,000,000		494,000,000
Total Capacity	760,000,000		760,000,000
Available Capacity	$ 266,000,000		266,000,000
Revolving Credit Facility | Five Year Revolver due December 2022
Line Of Credit Facility [Line Items]
Debt instrument term	5 years
Outstanding Balance	$ 400,000,000		400,000,000
Total Capacity	1,000,000,000		1,000,000,000
Available Capacity	$ 600,000,000		600,000,000
Revolving Credit Facility | Five Year Fixed Facility
Line Of Credit Facility [Line Items]
Debt instrument term	5 years
Outstanding Balance	$ 600,000,000		600,000,000
Total Capacity	600,000,000		600,000,000
Available Capacity	$ 0		0
Revolving Credit Facility | Five Year Fixed Facility | Shell Treasury Center West Inc
Line Of Credit Facility [Line Items]
Debt instrument term	5 years
Revolving Credit Facility | Zydeco Revolver
Line Of Credit Facility [Line Items]
Outstanding Balance	$ 0		0
Total Capacity	30,000,000		30,000,000
Available Capacity	$ 30,000,000		$ 30,000,000

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Related Party Debt - Additional Information (Details) - USD ($)				3 Months Ended		6 Months Ended
	May 11, 2018	Feb. 06, 2018	May 10, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Jun. 04, 2019	Dec. 31, 2018
Line Of Credit Facility [Line Items]
Interest and fee expenses				$ 22,000,000	$ 13,000,000	$ 41,000,000	$ 23,000,000
Interest paid				20,000,000	$ 8,000,000	39,000,000	19,000,000
Borrowing capacity				3,590,000,000		3,590,000,000			$ 2,990,000,000
Repayments of debt						0	$ 973,000,000
May 2018 Acquisition
Line Of Credit Facility [Line Items]
Consideration transferred	$ 1,220,000,000
Level 2
Line Of Credit Facility [Line Items]
Long-term debt, carrying value				2,694,000,000		2,694,000,000			2,094,000,000
Long-term debt, fair value				2,808,000,000		$ 2,808,000,000			2,099,000,000
Ten Year Fixed Facility | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument term						10 years
Borrowing capacity				600,000,000		$ 600,000,000		$ 600,000,000	0
Debt instrument, interest rate								4.18%
Ten Year Fixed Facility | Shell Treasury Center West Inc | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument term						10 years
Five Year Revolver due July 2023 | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument term						5 years
Borrowing capacity				$ 760,000,000		$ 760,000,000			$ 760,000,000
Repayments of debt		$ 247,000,000
Five Year Revolver due July 2023 | Shell Treasury Center West Inc | Revolving Credit Facility | May 2018 Acquisition
Line Of Credit Facility [Line Items]
Debt instrument term			5 years
Consideration transferred	494,000,000
Five Year Revolver Due December 2022 | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Repayments of debt		$ 726,000,000
Five Year Revolver Due December 2022 | Shell Treasury Center West Inc | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument term						5 years
Five Year Revolver Due December 2022 | Shell Treasury Center West Inc | Revolving Credit Facility | May 2018 Acquisition
Line Of Credit Facility [Line Items]
Debt instrument term			5 years
Consideration transferred	$ 726,000,000

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Leases - Additional Information (Details) $ in Millions	Jun. 30, 2019 USD ($) renewal_option	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets	$ 5		$ 0
Operating lease liability	$ 5
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets		$ 5
Operating lease liability		$ 5
Ten Year Agreement, Five Year Renewal Option
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Initial term	10 years
Additional term	5 years
Number of options to extend | renewal_option	2
Ten Year Agreement, One Year Renewal Option
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Initial term	10 years
Additional term	1 year
Number of options to extend | renewal_option	10

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Leases - Assets and Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease right-of-use assets	$ 5	$ 0
Finance lease assets	18
Total lease assets	23
Current finance lease liabilities	1
Noncurrent operating liabilities	5	0
Noncurrent finance lease liabilities	25	$ 25
Total lease liabilities	31
Finance lease, right-of-use asset, accumulated amortization	$ 5

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Leases - Lease Cost (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 0	$ 0
Finance lease cost, amortization of leased assets	1	1
Finance lease cost, interest on lease liabilities	1	2
Total lease cost	$ 2	$ 3

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Leases - Supplemental Cash Flows (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Leases [Abstract]
Operating cash flows from operating leases	$ 0
Operating cash flows from finance leases	0
Financing cash flows from finance leases	$ 0
Weighted-average remaining lease term - operating leases	20 years
Weighted-average remaining lease term - finance leases	12 years
Weighted-average discount rate - operating leases	5.80%
Weighted-average discount rate - finance leases	14.30%

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Leases - Maturities of Operating and Financing Lease Liabilities (Details) $ in Millions	Jun. 30, 2019 USD ($)
Operating Lease Liabilities, Payments Due [Abstract]
Remainder of 2019	$ 0
2020	0
2021	1
2022	0
2023	1
Remainder	6
Total lease payments	8
Less: Interest	(3)
Present value of lease liabilities	5
Operating lease, payments due, related to options to extend	2
Finance Lease Liabilities, Payments, Due [Abstract]
Remainder of 2019	2
2020	4
2021	4
2022	4
2023	4
Remainder	36
Total lease payments	54
Less: Interest	(29)
Present value of lease liabilities	25
Finance lease, liability, payments due, principal amount	26
Finance lease, liability, payments due, executory costs	9
Current finance lease liabilities	1
Operating And Finance Lease, Liabilities, Payments Due [Abstract]
Remainder of 2019	2
2020	4
2021	5
2022	4
2023	5
Remainder	42
Total lease payments	62
Less: Interest	(32)
Present value of lease liabilities	$ 30

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Leases - Maturity of Lease Payments to be Received (Details) $ in Millions	Jun. 30, 2019 USD ($)
Leases [Abstract]
2019	$ 28
2020	56
2021	56
2022	56
2023	56
Remainder	750
Total lease payments	1,002
Operating lease, payments to be received, related to options to extend	$ 556

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Revenue Recognition - Disaggregated Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	$ 107	$ 115	$ 224	$ 201
Lease revenue	14	14
Total revenue	121	129	252	229
Related Parties
Disaggregation of Revenue [Line Items]
Lease revenue			28	28
Transportation Services | Third Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	32	55	72	87
Transportation Services | Related Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	51	42	101	73
Storage Services | Third Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	2	2	4	5
Storage Services | Related Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	2	2	4	3
Terminaling Services | Related Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	11	11	23	22
Product Revenue | Third Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	3	1	4	1
Product Revenue | Related Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	6	2	16	10
Transportation Services, Non-lease Service | Related Parties
Disaggregation of Revenue [Line Items]
Total Topic 606 revenue	$ 1	$ 1	$ 2	$ 2

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Revenue Recognition - Impact of Adoption (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue from contract with customer	$ 107		$ 115		$ 224	$ 201
Lease revenue – related parties	14		14		28	28
Cost of product sold – third parties	2		1		3	1
Cost of product sold – related parties	5		1		13	8
Operations and maintenance – third parties	16		25		29	68
Operations and maintenance – related parties	16		13		30	26
Net income	119	$ 137	115	$ 65	256	180
Deferred revenue – related party	0				0		$ 3
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest	119		115		256	180
Third Parties | Transportation, Terminaling and Storage Services
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue from contract with customer	34		57		76	92
Third Parties | Product Revenue
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue from contract with customer	3		1		4	1
Related Parties | Transportation, Terminaling and Storage Services
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue from contract with customer	64		55		128	98
Related Parties | Product Revenue
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue from contract with customer	$ 6		$ 2		$ 16	$ 10

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Revenue Recognition - Receivables and Contract Liabilities (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($) term	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)
Disaggregation of Revenue [Line Items]
Receivables from contracts with customers	$ 12		$ 19
Deferred revenue	0	$ 8	8
Total	882
Less than 1 year	108
Years 2 to 3	216
Years 4 to 5	217
More than 5 years	341
Related Parties
Disaggregation of Revenue [Line Items]
Receivables from contracts with customers	33	21
Deferred revenue	0	3	3
Third Parties
Disaggregation of Revenue [Line Items]
Receivables from contracts with customers	12	$ 19
Deferred revenue	$ 0		$ 8
Transportation Services Operating Leases, Five Year Terms
Disaggregation of Revenue [Line Items]
Initial term	10 years
Number of additional terms | term	2
Additional term	5 years
Transportation Services Operating Leases, One Year Terms
Disaggregation of Revenue [Line Items]
Initial term	10 years
Number of additional terms | term	10
Additional term	1 year
Transportation Services Operating Leases
Disaggregation of Revenue [Line Items]
Initial term	10 years

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Revenue Recognition - Contract Balances (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Movement in Deferred Revenue [Roll Forward]
Deferred revenue, beginning balance	$ 8
Deferred revenue, ending balance	0
Third Parties
Movement in Deferred Revenue [Roll Forward]
Deferred revenue, beginning balance	8
Additions	0
Reductions	(8)
Deferred revenue, ending balance	0
Related Parties
Movement in Deferred Revenue [Roll Forward]
Deferred revenue, beginning balance	3
Additions	0
Reductions	(3)
Deferred revenue, ending balance	$ 0

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Revenue Recognition - Remaining Performance Obligations (Details) $ in Millions	Jun. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 83
Revenue, remaining performance obligation, expected timing of satisfaction, period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 158
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 115
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 115
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 598
Revenue, remaining performance obligation, expected timing of satisfaction, period
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 1,069
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	55
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	106
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	63
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	63
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	345
Revenue expected to be recognized on multi-year committed shipper transportation contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	632
Revenue expected to be recognized on other multi-year transportation service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	3
Revenue expected to be recognized on other multi-year transportation service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	5
Revenue expected to be recognized on other multi-year transportation service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	5
Revenue expected to be recognized on other multi-year transportation service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	5
Revenue expected to be recognized on other multi-year transportation service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	23
Revenue expected to be recognized on other multi-year transportation service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	41
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	2
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	0
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	0
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	0
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	0
Revenue expected to be recognized on multi-year storage service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	2
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	23
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	47
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	47
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	47
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	230
Revenue expected to be recognized on multi-year terminaling service contracts in place as of June 30, 2018 | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 394

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Net Income Per Limited Partner Unit - Schedule of Allocation of Net Income to Arrive at Net Income Per Limited Partner Unit (Details) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Limited Partners Capital Account [Line Items]
Net income	$ 119.0	$ 137.0	$ 115.0	$ 65.0	$ 256.0	$ 180.0
Less: Net income attributable to noncontrolling interests	4.0		4.0		9.0	5.0
Net income attributable to the Partnership	115.0		111.0		247.0	175.0
Distributions declared	131.0		113.0		250.0	219.0
Income (less than) / in excess of distributions	(16.0)		(2.0)		(3.0)	(44.0)
General Partner
Limited Partners Capital Account [Line Items]
Net income attributable to the Partnership	30.0		32.0		57.0	59.0
Distributions declared	31.0		32.0		57.0	60.0
Income (less than) / in excess of distributions	(1.0)		0.0		0.0	(1.0)
Limited Partners’ Common Units
Limited Partners Capital Account [Line Items]
Net income attributable to the Partnership	85.0		79.0		190.0	116.0
Distributions declared	100.0		81.0		193.0	159.0
Income (less than) / in excess of distributions	$ (15.0)		$ (2.0)		$ (3.0)	$ (43.0)

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Net Income Per Limited Partner Unit - Schedule of Basic and Diluted Net Income Per Unit (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Distribution Made To Limited Partner [Line Items]
Distributions declared	$ 131.0	$ 113.0	$ 250.0	$ 219.0
Income (less than) / in excess of distributions	(16.0)	(2.0)	(3.0)	(44.0)
Net income attributable to the Partnership	115.0	111.0	247.0	175.0
General Partner
Distribution Made To Limited Partner [Line Items]
Distributions declared	31.0	32.0	57.0	60.0
Income (less than) / in excess of distributions	(1.0)	0.0	0.0	(1.0)
Net income attributable to the Partnership	30.0	32.0	57.0	59.0
Limited Partners’ Common Units
Distribution Made To Limited Partner [Line Items]
Distributions declared	100.0	81.0	193.0	159.0
Income (less than) / in excess of distributions	(15.0)	(2.0)	(3.0)	(43.0)
Net income attributable to the Partnership	$ 85.0	$ 79.0	$ 190.0	$ 116.0
Weighted average units outstanding (in millions)
Weighted average units outstanding, basic and diluted (in shares)	226.4	223.8	225.1	216.7
Net income per Limited Partner Unit (in dollars)
Net income per Limited Partner unit, basic and diluted (in dollars per share)	$ 0.38	$ 0.35	$ 0.84	$ 0.54

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Commitments and Contingencies (Details)	Jul. 01, 2019	Jul. 01, 2018	Sep. 01, 2016
Commitments and Contingencies Disclosure [Abstract]
Tariff rate increase		4.30%
Initial term			10 years
Renewal term	1 year

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Subsequent Events (Details) - USD ($)		3 Months Ended							6 Months Ended
	Jul. 24, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2019	Jun. 30, 2018	Aug. 01, 2019
Subsequent Event [Line Items]
Distributions paid per limited partner unit (in dollars per share)		$ 0.4300	$ 0.4150	$ 0.4000	$ 0.3820	$ 0.3650	$ 0.3480	$ 0.3330	$ 0.8450	$ 0.7130
Borrowing capacity		$ 3,590,000,000		$ 2,990,000,000					$ 3,590,000,000
Subsequent Event
Subsequent Event [Line Items]
Distributions paid per limited partner unit (in dollars per share)	$ 0.4300
Subsequent Event | Revolving Credit Facility | 2019 Zydeco Revolver Due August 2024
Subsequent Event [Line Items]
Borrowing capacity											$ 30,000,000

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Label	Element	Value
Common Units Public [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (1,000,000)
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(4,000,000)
Shell Pipeline Company LP [Member] | General Partner [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(2,000,000)
Shell Pipeline Company LP [Member] | Common Units Public [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(5,000,000)
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 1,000,000