Asset Retirement Obligations

12 Months Ended

Dec. 31, 2011

Asset Retirement Obligation [Abstract]

ASSET RETIREMENT OBLIGATIONS

8. ASSET RETIREMENT OBLIGATIONS.

The accrued obligations relate to underground storage caverns, offshore platforms, pipelines, and gas transmission facilities. At the end of the useful life of each respective asset, we are legally obligated to plug storage caverns and remove any related surface equipment, to dismantle offshore platforms, to cap certain gathering pipelines at the wellhead connection and remove any related surface equipment, and to remove certain components of gas transmission facilities from the ground.

       The asset retirement obligation at December 31, 2011 and 2010 was $302.8 million and $251.6 million, respectively. During 2011 and 2010, our overall asset retirement obligation changed as follows (in thousands):

		2011		2010
Beginning balance		$	251,644	$	229,401
	Accretion		19,866		16,542
	New obligations		530		53
	Changes in estimates of existing obligations (1)		74,039		15,747
	Property dispositions/obligations settled		(43,311)		(10,099)
Ending balance		$	302,768	$	251,644

• The change in estimates of existing obligations from 2010 to 2011 includes revisions of $35 millionprimarily due to increases in the inflation rate and estimated removal costs, which are among several factors considered for revision in the annual review process. The 2011 and 2010 revisions also include increases of $39 million and $31 million, respectively, related to changes in the timing and method of abandonment of our Eminence natural gas storage caverns that were associated with a leak in 2010.

We are entitled to collect in rates the amounts necessary to fund our ARO. All funds received for such retirements are deposited into an external trust account dedicated to funding our ARO. We have an annual funding obligation of approximately $16.7 million, with installments to be deposited monthly.