Asset Retirement Obligations

12 Months Ended

Dec. 31, 2012

AssetRetirementObligationDisclosureAbstract

AssetRetirementObligationDisclosureTextBlock

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.

       During 2012 and 2011, our overall asset retirement obligation changed as follows (in thousands):

		2012		2011
Beginning balance		$	302,768	$	251,644
	Accretion		23,052		19,866
	New obligations		2,556		530
	Changes in estimates of existing obligations (1)		10,895		74,039
	Property dispositions/obligations settled		(42,401)		(43,311)
Ending balance		$	296,870	$	302,768

• The change in estimates of existing obligations in 2012 are primarily due to an increase of $13 million 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. The 2011 change in estimates of existing obligations included revisions of $35 million primarily 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 revision also included an increase of $39 million related to changes in the timing and method of abandonment of our Eminence natural gas storage caverns.

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. Under our current rate settlement our annual funding obligation is approximately $16.7 million, with installments to be deposited monthly.