Property, Plant and Equipment

12 Months Ended

Dec. 31, 2011

Property, Plant and Equipment [Abstract]

Note 7. Property, Plant and Equipment


December 31	2011		2010
(In millions)

Pipeline equipment (net of accumulated DD&A of $926 and $724)	$	6,749	$	6,358
Offshore drilling equipment (net of accumulated DD&A of $3,378 and $2,986)		4,119		4,242
Natural gas and oil proved and unproved properties (net of accumulated DD&A of $2,056 and $1,991)		1,330		1,099
Other (net of accumulated DD&A of $899 and $963)		799		822
Construction in process		621		115
Property, plant and equipment, net	$	13,618	$	12,636

DD&A expense and capital expenditures are as follows:


Year Ended December 31	2011				2010				2009
	DD&A		Capital Expend.		DD&A		Capital Expend.		DD&A		Capital Expend.
(In millions)

CNA Financial	$	70	$	85	$	69	$	51	$	75	$	65
Diamond Offshore		399		783		396		399		350		1,355
HighMount		94		324		92		188		119		196
Boardwalk Pipeline		231		142		222		204		207		588
Loews Hotels		29		19		29		13		26		36
Corporate and other		10		19		8		5		7		2
Total	$	833	$	1,372	$	816	$	860	$	784	$	2,242

Capitalized interest related to the construction and upgrade of qualifying assets amounted to approximately $31 million, $23 million and $29 million for the years ended December 31, 2011, 2010 and 2009.

Pipeline Equipment

In December of 2011, HP Storage acquired seven salt dome natural gas storage caverns and associated assets in Mississippi for $550 million of which $486 million was allocated to Pipeline equipment. See Note 2 for additional information related to this purchase.

Offshore Drilling Equipment

In 2011, Diamond Offshore recorded $490 million in Construction in process for three new, ultra-deepwater drillships with delivery expected in the second and fourth quarters of 2013 and in the second quarter of 2014. The total cost of the three drillships, including commissioning, spares and project management, is expected to be $1.8 billion.

In 2010, Diamond Offshore completed the sale of one of its high performance, premium jack-up drilling rigs, the Ocean Shield for a gross purchase price of $186 million and recognized a pretax gain of approximately $33 million.

Natural Gas and Oil Proved and Unproved Properties

Purchase of Assets

In the fourth quarter of 2011, HighMount paid $106 million to acquire working interests in oil and gas properties located in Oklahoma. See Note 2 for additional information related to this purchase.

Sale of Assets

In 2010, HighMount completed the sales of substantially all exploration and production assets located in the Antrim Shale in Michigan and in the Black Warrior Basin in Alabama for $530 million. In accordance with the full cost method of accounting, proceeds from these sales were accounted for as reductions of capitalized costs, and recorded as credits to Accumulated DD&A. See Note 2 for additional information related to these sales.

Impairment of Natural Gas and Oil Properties

At March 31, 2009, HighMount recorded a non-cash ceiling test impairment charge of $1.0 billion ($660 million after tax), related to its carrying value of natural gas and oil properties. The impairment was recorded as a credit to Accumulated DD&A. The write-down was the result of declines in commodity prices. Had the effects of HighMount's cash flow hedges not been considered in calculating the ceiling limitation, the impairment would have been $1.2 billion ($784 million after tax) in 2009. No such impairment was required during 2010 and 2011.

Costs Not Being Amortized

HighMount excludes from amortization the cost of unproved properties, the cost of exploratory wells in progress and major development projects in progress. Natural gas and oil property and equipment costs not being amortized as of December 31, 2011, are as follows, by the year in which such costs were incurred:


	Total		2011		2010		2009		Prior
(In millions)

Acquisition costs	$	334	$	108	$	5			$	221
Exploration costs		9		8		1
Capitalized interest		41		15		15	$	4		7
Total excluded costs	$	384	$	131	$	21	$	4	$	228

- Definition

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

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