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General (Policies)
 3 Months Ended
Mar. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization
Organization
Kinder Morgan Energy Partners, L.P. is a leading pipeline transportation and energy storage company in North America, and unless the context requires otherwise, references to “we,” “us,” “our,” “KMP” or the “Partnership” are intended to mean Kinder Morgan Energy Partners, L.P., our operating limited partnerships and their majority-owned and controlled subsidiaries. We own an interest in or operate approximately 44,000 miles of pipelines and 180 terminals, and conduct our business through five reportable business segments (described further in Note 7). We trade on the New York Stock Exchange under the symbol “KMP.”
Our pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide and other products, and our terminals store petroleum products and chemicals, and handle such products as ethanol, coal, petroleum coke and steel. We are also the leading producer and transporter of carbon dioxide, commonly called CO2, for enhanced oil recovery projects in North America.
Basis of Presentation
Basis of Presentation
General
We have prepared our accompanying unaudited consolidated financial statements under the rules and regulations of the United States Securities and Exchange Commission. These rules and regulations conform to the accounting principles contained in the Financial Accounting Standards Board’s Accounting Standards Codification. Under such rules and regulations, we have condensed or omitted certain information and notes normally included in financial statements prepared in conformity with the Codification. We believe, however, that our disclosures are adequate to make the information presented not misleading.
Our accompanying consolidated financial statements reflect normal adjustments, and also recurring adjustments that are, in the opinion of our management, necessary for a fair statement of our financial results for the interim periods, and certain amounts from prior periods have been reclassified to conform to the current presentation. Interim results are not necessarily indicative of results for a full year; accordingly, you should read these consolidated financial statements in conjunction with our consolidated financial statements and related notes included in our 2012 Form 10-K.
Our accounting records are maintained in United States dollars, and all references to dollars are United States dollars, except where stated otherwise. Canadian dollars are designated as C$. Our consolidated financial statements include our accounts and those of our operating partnerships and their majority-owned and controlled subsidiaries, and all significant intercompany items have been eliminated in consolidation.
Our financial statements are consolidated into the consolidated financial statements of KMI; however, except for the related party transactions described in Note 8 “Related Party Transactions—Asset Acquisitions,” KMI is not liable for, and its assets are not available to satisfy, the obligations of us and/or our subsidiaries and vice versa.  Responsibility for payments of obligations reflected in our or KMI’s financial statements is a legal determination based on the entity that incurs the liability. Furthermore, the determination of responsibility for payment among entities in our consolidated group of subsidiaries is not impacted by the consolidation of our financial statements into the consolidated financial statements of KMI.
March 2013 KMI Asset Drop-Down
Effective March 1, 2013, we acquired from KMI the remaining 50% ownership interest we did not already own in both the El Paso Natural Gas pipeline system and the EP midstream assets for an aggregate consideration of approximately $1.7 billion (including our proportional 50% of assumed debt borrowings as of March 1, 2013). In this report, we refer to this acquisition of assets from KMI as the drop-down transaction; the combined group of assets acquired from KMI as the drop-down asset group; the El Paso Natural Gas pipeline system or El Paso Natural Gas Company, L.L.C. as EPNG; and the EP midstream assets or Kinder Morgan Altamont LLC (formerly, El Paso Midstream Investment Company, L.L.C.) as the midstream assets. We acquired our initial 50% ownership interest in EPNG from KMI effective August 1, 2012, and we acquired our initial 50% ownership interest in the midstream assets from an investment vehicle affiliated with Kohlberg Kravis Roberts & Co. L.P. (together with its affiliates, referred to as KKR) effective June 1, 2012. Prior to our acquisition from KMI, we accounted for our initial 50% interest in both EPNG and the midstream assets (the March 1, 2013 drop-down asset group) under the equity method of accounting.
KMI acquired a 100% ownership interest in EPNG and a 50% ownership interest in the midstream assets as part of its acquisition of EP on May 25, 2012 (discussed above). KMI accounted for its acquisition of the drop-down asset group under the acquisition method of accounting, and we accounted for the drop-down transaction as a combination of entities under common control. We prepared our consolidated financial statements to reflect the transfer of the remaining 50% ownership interests in EPNG and the midstream assets from KMI to us as if such transfers had taken place on the date when both EPNG and the midstream assets met the accounting requirements for entities under common control—May 25, 2012 for EPNG, and June 1, 2012 for the midstream assets. Specifically, we (i) consolidate our now 100% investments in both EPNG and the midstream assets having recognized the acquired assets and assumed liabilities at KMI’s carrying value as of the effective dates of common control (including all of KMI’s purchase accounting adjustments); (ii) recognized any difference between our purchase price and the carrying value of the net assets we acquired as an adjustment to our Partners’ Capital (specifically, as an adjustment to our general partner’s and our noncontrolling interests’ capital interests); and (iii) retrospectively adjusted our consolidated financial statements, for any date after the effective dates of common control.
Additionally, because KMI both controls us and consolidates our financial statements into its consolidated financial statements as a result of its ownership of our general partner, we fully allocated to our general partner:
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the earnings of the drop-down asset group for the periods beginning on the effective dates of common control and ending March 1, 2013 (and we reported this amount separately as “Pre-acquisition income from operations of drop-down asset group allocated to General Partner” within the Calculation of Limited Partners’ Interest in Net Income (Loss) section of our accompanying consolidated statement of income for the three months ended March 31, 2013); and
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incremental severance expense related to KMI’s acquisition of EP and allocated to us from KMI (and we reported this amount separately as “Drop-down asset group severance expense allocated to General Partner” within the Calculation of Limited Partners’ Interest in Net Income (Loss) section of our accompanying consolidated statement of income for the three months ended March 31, 2013). The severance expense allocated to us was associated with both the drop-down asset group and the assets we acquired from KMI effective August 1, 2012; however, we do not have any obligation, nor did we pay any amounts related to this expense.
For all periods beginning after our acquisition date of March 1, 2013, we allocated our earnings (including the earnings from the drop-down asset group) to all of our partners according to our partnership agreements.
FTC Natural Gas Pipelines Disposal Group – Discontinued Operations
Effective November 1, 2012, we sold our (i) Kinder Morgan Interstate Gas Transmission natural gas pipeline system; (ii) Trailblazer natural gas pipeline system; (iii) Casper and Douglas natural gas processing operations; and (iv) 50% equity investment in the Rockies Express natural gas pipeline system to Tallgrass Development, LP (now known as Tallgrass Energy Partners, LP) (Tallgrass) for approximately $1.8 billion in cash (before selling costs), or $3.3 billion including our share of joint venture debt. In this report, we refer to this combined group of assets as our FTC Natural Gas Pipelines disposal group. The sale of our FTC Natural Gas Pipelines disposal group satisfied the terms of a March 15, 2012 agreement between KMI and the U.S. Federal Trade Commission (FTC) to divest certain of our assets in order to receive regulatory approval for KMI’s EP acquisition. For more information about the presentation of our FTC Natural Gas Pipelines disposal group as discontinued operations, see Note 2 “Summary of Significant Accounting Policies—Basis of Presentation—FTC Natural Gas Pipelines Disposal Group - Discontinued Operations” to our consolidated financial statements included in our 2012 Form 10-K.
Goodwill
We evaluate goodwill for impairment on May 31 of each year. There were no impairment charges resulting from our May 31, 2012 impairment testing, and no event indicating an impairment has occurred subsequent to that date.
Earnings Per Share
Limited Partners’ Net Income (Loss) per Unit
We compute Limited Partners’ Net Income (Loss) per Unit by dividing our limited partners’ interest in net income (loss) by the weighted average number of units outstanding during the period.