Property, Plant and Equipment

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Note 7.  Property, Plant and Equipment

December 31	2014		2013
(In millions)
Pipeline equipment (net of accumulated DD&A of $1,620 and $1,360)	$	7,491	$      7,062
Offshore drilling equipment (net of accumulated DD&A of $4,159 and $3,727)		6,459	3,750
Other (net of accumulated DD&A of $730 and $778)		1,083	785
Construction in process		578	1,927
Property, plant and equipment, net	$	15,611	$    13,524

DD&A expense and capital expenditures are as follows:

Year Ended December 31	2014				2013				2012
	DD&A		Capital Expend.		DD&A		Capital Expend.		DD&A		Capital     Expend.
(In millions)
CNA Financial	$	69	$	72	$	72	$	90	$	71	$	98
Diamond Offshore		457		2,050		389		987		394		721
Boardwalk Pipeline		292		378		275		305		256		247
Loews Hotels		37		289		32		369		30		30
Corporate and other		6		24		6		4		7		10
Total	$	861	$	2,813	$	774	$	1,755	$	758	$	1,106

Capitalized interest related to the construction and upgrade of qualifying assets amounted to approximately $80 million, $92 million and $43 million for the years ended December 31, 2014, 2013 and 2012.

Offshore Drilling Equipment

Purchase of Assets

In 2014, Diamond Offshore took delivery of three ultra-deepwater drillships and two deepwater floaters. The aggregate net book value of these newly constructed rigs was $2.7 billion at December 31, 2014, of which $1.3 billion was reported in Construction in process at December 31, 2013. At December 31, 2014, Construction in process included $439 million related to two rigs still under construction.

Sale of Assets

In 2014, Diamond Offshore sold a jack-up rig for $17 million, resulting in a gain of $9 million ($3 million after tax and noncontrolling interests). In 2012, Diamond Offshore sold six jack-up rigs for total proceeds of $132 million, resulting in a gain of approximately $76 million ($32 million after tax and noncontrolling interests). These gains were recorded in Other revenues on the Consolidated Statements of Income.

Asset Impairment

In the third quarter of 2014, Diamond Offshore determined it would retire and scrap six rigs, including a rig upon completion of its contract term in 2015. Demand for offshore drilling rigs continues to decline and is exacerbated by an oversupply of rigs including newbuilds scheduled for delivery in 2015. As a result, Diamond Offshore performed an impairment analysis to determine whether the carrying amount of these assets was recoverable. Based on this analysis, an impairment loss was recognized aggregating $109 million ($55 million after tax and noncontrolling interests) for the year ended December 31, 2014. The fair value was determined through discussions and a quote from a rig broker, and for the rig currently under contract using an internally developed income approach, which are Level 3 inputs of the fair value hierarchy. In the fourth quarter of 2014, two of the rigs were scrapped and at December 31, 2014, the carrying value of the remaining rigs amounted to $9 million. In 2012, Diamond Offshore recorded an impairment charge of $62 million ($19 million after tax and noncontrolling interests) related to three mid-water rigs. These impairment losses were recorded within Other operating expenses on the Consolidated Statements of Income.