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Risk Management (Tables)

9 Months Ended

Sep. 30, 2011

Risk Management - (Tables) [Abstract]

As of September 30, 2011, we had entered into the following outstanding commodity forward contracts to hedge our forecasted energy commodity purchases and sales:

	Net open position long/(short)
Derivatives designated as hedging contracts
Crude oil	(21.8) million barrels
Natural gas fixed price	(3.6) billion cubic feet
Natural gas basis	(4.2) billion cubic feet
Derivatives not designated as hedging contracts
Natural gas fixed price	0.2 billion cubic feet
Natural gas basis	2.3 billion cubic feet

Fair Value of Derivative Contracts

The fair values of our current and non-current asset and liability derivative contracts are each reported separately as "Fair value of derivative contracts" on our accompanying consolidated balance sheets. The following table summarizes the fair values of our derivative contracts included on our accompanying consolidated balance sheets as of September 30, 2011 and December 31, 2010 (in millions):

Fair Value of Derivative Contracts

		Asset derivatives				Liability derivatives
		September 30,		December 31,		September 30,			December 31,
		2011		2010		2011			2010
	Balance sheet location	Fair value		Fair value		Fair value			Fair value
Derivatives designated as hedging contracts
Energy commodity derivative contracts	Current	$	123.7	$	20.1	$	(67.0	)	$	(275.9	)
	Non-current		133.0		43.1		(21.4	)		(103.0	)
Subtotal			256.7		63.2		(88.4	)		(378.9	)

Interest rate swap agreements	Current		6.1		-		-			-
	Non-current		570.4		217.6		-			(69.2	)
Subtotal			576.5		217.6		-			(69.2	)

Total			833.2		280.8		(88.4	)		(448.1	)

Derivatives not designated as hedging contracts
Energy commodity derivative contracts	Current		5.4		3.9		(4.9	)		(5.6	)
Total			5.4		3.9		(4.9	)		(5.6	)

Total derivatives		$	838.6	$	284.7	$	(93.3	)	$	(453.7	)

____________

Effect of Derivative Contracts on the Income Statement

The following three tables summarize the impact of our derivative contracts on our accompanying consolidated statements of income for each of the three and nine months ended September 30, 2011 and 2010 (in millions):

Derivatives in fair value hedging relationships	Location of gain/(loss) recognized in income on derivative	Amount of gain/(loss) recognized in income on derivative(a)
		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2011		2010		2011		2010
Interest rate swap agreements	Interest, net - income/(expense)	$	436.8	$	219.9	$	501.1	$	634.1
Total		$	436.8	$	219.9	$	501.1	$	634.1

Hedged items in fair value hedging relationships	Location of gain/(loss) recognized in income on related hedged item	Amount of gain/(loss) recognized in income on related hedged item(a)
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2011			2010			2011			2010
Fixed rate debt	Interest, net - income/(expense)	$	(436.8	)	$	(219.9	)	$	(501.1	)	$	(634.1	)
Total		$	(436.8	)	$	(219.9	)	$	(501.1	)	$	(634.1	)

____________

(a)	Amounts reflect the change in the fair value of interest rate swap agreements and the change in the fair value of the associated fixed rate debt which exactly offset each other as a result of no hedge ineffectiveness.

____________

Derivatives in cash flow hedging relationships

Amount of gain/(loss) recognized in OCI on derivative (effective portion)

Location of gain/(loss) recognized from Accumulated OCI into income (effective portion)

Amount of gain/(loss) reclassified from Accumulated OCI into income (effective portion)

Location of gain/(loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)

Amount of gain/(loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)

	Three Months Ended								Three Months Ended									Three Months Ended
	September 30,								September 30,									September 30,
	2011			2010					2011				2010					2011			2010
Energy commodity derivative contracts		$	386.6		$	(83.3	)	Revenues-natural gas sales		$	-			$	3.6		Revenues-natural gas sales		$	-		$	-
								Revenues-product sales and other			(50.5	)			(44.2	)	Revenues-product sales and other			8.5			(7.9	)
								Gas purchases and other costs of sales			1.5				(7.0	)	Gas purchases and other costs of sales			-			(1.6	)
Total		$	386.6		$	(83.3	)	Total		$	(49.0	)		$	(47.6	)	Total		$	8.5		$	(9.5	)

	Nine Months Ended							Nine Months Ended									Nine Months Ended
	September 30,							September 30,									September 30,
	2011			2010				2011				2010					2011			2010
Energy commodity derivative contracts		$	288.8		$	84.4	Revenues-natural gas sales		$	1.0			$	5.3		Revenues-natural gas sales		$	-		$	-
							Revenues-product sales and other			(202.7	)			(142.6	)	Revenues-product sales and other			10.4			5.4
							Gas purchases and other costs of sales			12.9				2.7		Gas purchases and other costs of sales			-			(0.8	)
Total		$	288.8		$	84.4	Total		$	(188.8	)		$	(134.6	)	Total		$	10.4		$	4.6

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table of content

Derivatives not designated as hedging contracts	Location of gain/(loss) recognized in income on derivative	Amount of gain/(loss) recognized in income on derivative
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2011			2010		2011		2010
Energy commodity derivative contracts	Gas purchases and other costs of sales	$	(0.1	)	$	0.2	$	0.1	$	1.0
Total		$	(0.1	)	$	0.2	$	0.1	$	1.0

____________

Maximum Potential Exposure to Credit Losses on our Derivative Contracts

The maximum potential exposure to credit losses on our derivative contracts as of September 30, 2011 was (in millions):

	Asset position
Interest rate swap agreements	$	576.5
Energy commodity derivative contracts		262.1
Gross exposure		838.6
Netting agreement impact		(78.5	)
Net exposure	$	760.1

Additional Collateral Obligations

Credit ratings downgraded (a)	Incremental obligations		Cumulative obligations(b)
One notch to BBB-/Baa3	$	-	$	-

Two notches to below BBB-/Baa3 (below investment grade)	$	12.8	$	12.8

_________

(a)	If there are split ratings among the independent credit rating agencies, most counterparties use the higher credit rating to determine our incremental collateral obligations, while the remaining use the lower credit rating. Therefore, a two notch downgrade to below BBB-/Baa3 by one agency would not trigger the entire $12.8 million incremental obligation.
(b)	Includes current posting at current rating.