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General (Policies)
 6 Months Ended
Jun. 30, 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 more than 53,000 miles of pipelines and 180 terminals, and conduct our business through five reportable business segments (described further in Note 7). We trade on the NYSE under the symbol “KMP.”
Our pipelines transport natural gas, refined petroleum products, crude oil, CO2 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 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 SEC. These rules and regulations conform to the accounting principles contained in the FASB’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 unaudited 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.
KMI Asset Drop-Downs
Effective August 1, 2012, we acquired a 100% interest in TGP and a 50% ownership interest in EPNG from KMI for an aggregate consideration of approximately $6.2 billion (including our proportional share of assumed debt borrowings as of August 1, 2012). In this report, we refer to this acquisition of assets from KMI as the August 2012 drop-down transaction; the combined group of assets acquired from KMI effective August 1, 2012 as the August 2012 drop-down asset group.
Effective March 1, 2013, we acquired from KMI both the remaining 50% ownership interest in EPNG and the remaining 50% ownership interest we did not already own in the EP midstream assets for an aggregate consideration of approximately $1.7 billion (including our proportional share of assumed debt borrowings as of March 1, 2013). In this report, we refer to this acquisition of assets from KMI as the March 2013 drop-down transaction; the combined group of assets acquired from KMI effective March 1, 2013 as the March 2013 drop-down asset group; the EP midstream assets or Kinder Morgan Altamont LLC (formerly, El Paso Midstream Investment Company, L.L.C.) as the midstream assets; and the combined August 2012 drop-down asset group (described above) and the March 2013 drop-down asset group as the drop-down asset groups. 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 the March 2013 drop-down transaction, we accounted for the March 1, 2013 drop-down asset group under the equity method of accounting.
KMI acquired all of the assets included in the drop-down asset groups as part of its acquisition of EP on May 25, 2012 (discussed above), and KMI accounted for its EP acquisition under the acquisition method of accounting. We, however, accounted for the drop-down transactions as combinations of entities under common control. Accordingly, we prepared our consolidated financial statements to reflect the transfer of TGP, EPNG and the remaining 50% ownership interest in the midstream assets from KMI to us as if such transfers had taken place on the date when TGP, EPNG and the midstream assets met the accounting requirements for entities under common control—May 25, 2012 for both TGP and EPNG, and June 1, 2012 for the midstream assets. Specifically, we (i) consolidated our now 100% investments in the drop-down asset groups as of the effective dates of common control, recognizing the acquired assets and assumed liabilities at KMI’s carrying value (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 groups for the periods beginning on the effective dates of common control (described above) and ending August 1, 2012 for the August 2012 drop-down asset group and March 1, 2013 for the March 2013 drop-down asset group, respectively (we refer to these earnings as “pre-acquisition” earnings and we reported these earnings separately as “Pre-acquisition income from operations of drop-down asset groups allocated to General Partner” within the Calculation of Limited Partners’ Interest in Net Income (Loss) section of our accompanying consolidated statements of income for the three and six months ended June 30, 2013 and 2012); 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 expense separately as “Drop-down asset groups’ severance expense allocated to General Partner” within the Calculation of Limited Partners’ Interest in Net Income (Loss) section of our accompanying consolidated statements of income for the three and six months ended June 30, 2013). The severance expense allocated to us was associated with the drop-down asset groups; however, we do not have any obligation, nor did we pay any amounts related to this expense.
For all periods beginning after our acquisition dates of August 1, 2012 and March 1, 2013, respectively, we allocated our earnings (including the earnings from the drop-down asset groups) to all of our partners according to our partnership agreement. For further information about the drop-down transactions, see Note 2 “Acquisitions and Divestitures—Acquisitions.”
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 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 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.  For this purpose, we have seven reporting units as follows: (i) Products Pipelines (excluding associated terminals); (ii) Products Pipelines Terminals (evaluated separately from Products Pipelines for goodwill purposes); (iii) Natural Gas Pipelines Regulated; (iv) Natural Gas Pipelines Non-Regulated; (v) CO2; (vi) Terminals; and (vii) Kinder Morgan Canada.  During the quarter ended June 30, 2013, the Natural Gas Pipelines Non-Regulated reporting unit was created to include the non-regulated businesses acquired from Copano on May 1, 2013 as well as other non-regulated businesses that were historically part of the former Natural Gas Pipelines reporting unit (now the Natural Gas Pipelines Regulated reporting unit). Goodwill was allocated between these two reporting units based on the relative fair values of the reporting units. There were no impairment charges resulting from our May 31, 2013 impairment testing, and no event indicating an impairment has occurred subsequent to that date.

The fair value of each reporting unit was determined based on a market approach utilizing an average dividend/distribution yield of comparable companies. The value of each reporting unit was determined on a stand-alone basis from the perspective of a market participant and represented the price estimated to be received in a sale of the unit as a whole in an orderly transaction between market participants at the measurement date.

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.

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.