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Revenue Recognition | 12 Months Ended
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Dec. 31, 2012
Revenue Recognition [Abstract] |
Revenue Recognition | Note 4. Revenue Recognition The following information summarizes our revenue recognition policies by business segment. See Note 14 for general information regarding our segments. NGL Pipelines & Services In our natural gas processing business, we utilize contracts that are either fee-based, commodity-based or a combination of the two. When a cash fee for natural gas processing services is stipulated by a contract, we record revenue when a producer's natural gas has been processed and redelivered. Our commodity-based contracts include keepwhole and margin-band contracts, percent-of-liquids contracts, percent-of-proceeds contracts and contracts featuring a combination of commodity and fee-based terms. Under keepwhole and margin-band contracts, we take ownership of mixed NGLs extracted from the producer's natural gas stream while replacing the equivalent quantity of energy on a natural gas basis to producers. We recognize revenue when the extracted NGLs are delivered and sold to customers under NGL marketing sales contracts. Under percent-of-liquids contracts, we take ownership of a portion of the mixed NGLs extracted from the producer's natural gas stream (in lieu of a cash processing fee) and recognize revenue when the extracted NGLs are delivered and sold to customers under NGL marketing sales contracts. Under percent-of-proceeds contracts, we share in the proceeds generated from the sale of mixed NGLs we extract on the producer's behalf (in lieu of a cash processing fee). In certain cases, we also utilize contracts that include a combination of commodity-based terms (such as those described above) and fee-based terms. Our NGL marketing activities generate revenues from the sale and delivery of NGLs we take title to through our natural gas processing activities and open market and contract purchases. Revenue from these sales contracts is recognized when the NGLs are delivered to customers. In general, sales prices referenced in these contracts are market-based and may include pricing differentials for factors such as delivery location or NGL product quality. Revenues from our NGL pipeline transportation contracts and tariffs are generally based upon a fixed fee per gallon of liquids transported multiplied by the volume delivered. Certain of our NGL pipelines offer firm capacity reservation services whereby the shipper pays a contractually stated fee based on the level of throughput capacity reserved in our pipelines whether or not the shipper actually utilizes such capacity. Revenues are recognized when volumes have been delivered to customers or in the period we provide firm capacity reservation services. Transportation fees charged to shippers are based on either contractual arrangements or tariffs regulated by governmental agencies, including the Federal Energy Regulatory Commission ("FERC"). We collect storage revenue under our NGL and related product storage contracts based on the number of days a customer has volumes in storage multiplied by a storage fee (as defined in each contract). Under these contracts, revenue is recognized ratably over the length of the storage period. With respect to capacity reservation agreements, we collect a fee for reserving storage capacity for certain customers in our underground storage wells. Customers pay reservation fees based on the level of storage capacity reserved rather than the actual volumes stored. Under these agreements, revenue is recognized ratably over the specified reservation period. When a customer exceeds its reserved capacity, we charge those customers excess storage fees, which are recognized in the period of occurrence. In addition, we generally charge customers throughput fees based on volumes delivered into and subsequently withdrawn from storage, which are recognized as the service is provided. We typically earn revenues from NGL fractionation under fee-based arrangements, including a significant level of demand-based fees. These fees are contractually subject to adjustment for changes in certain fractionation expenses (e.g., natural gas fuel costs). Under fee-based arrangements, revenue is recognized in the period services are provided. Certain of our NGL fractionation facilities generate revenue using percent-of-liquids contracts. Such contracts allow us to retain a contractually determined percentage of the customer's fractionated NGLs as payment for services rendered. Revenue is recognized from such arrangements when we sell and deliver the retained NGLs to customers. Revenue from import and export terminaling activities is recorded in the period services are provided. Customers are typically billed a fee per unit of volume loaded or unloaded. With respect to our export terminal operations, revenue may also include deficiency fees charged to customers who reserve capacity at our export facilities and later fail to use such capacity. Deficiency fees are recognized as revenue when the customer fails to utilize the specified export capacity as required by contract. Revenue from the remainder of our NGL terminaling activities is recorded in the period such services are provided. Customers are typically billed a fee per unit of volume loaded. Onshore Natural Gas Pipelines & Services Our onshore natural gas pipelines typically generate revenues from transportation agreements under which shippers are billed a fee per unit of volume transported multiplied by the volume gathered or delivered. The transportation fees charged under these arrangements are either contractual or regulated by governmental agencies, including the FERC. Certain of our onshore natural gas pipelines offer firm capacity reservation services whereby the shipper pays a contractually stated fee based on the level of throughput capacity reserved in our pipelines whether or not the shipper actually utilizes such capacity. Revenues are recognized when volumes have been delivered to customers or in the period we provide firm capacity reservation services. Under our natural gas storage contracts, there are typically two components of revenues: (i) monthly demand payments, which are associated with a customer's storage capacity reservation and paid regardless of actual usage, and (ii) storage fees per unit of volume stored at our facilities. Revenue from demand payments is recognized during the period the customer reserves capacity. Revenue from storage fees is recognized in the period the services are provided. Our natural gas marketing activities generate revenue from the sale and delivery of natural gas purchased either directly from producers or from others on the open market. Revenue from these sales contracts is recognized when the natural gas is delivered to customers. In general, sales prices referenced in these contracts are market-based and may include pricing differentials for such factors as delivery location. Onshore Crude Oil Pipelines & Services Revenue from crude oil transportation is generally based upon a fixed fee per barrel transported multiplied by the volume delivered. The transportation fees charged under these arrangements are either contractual or regulated by governmental agencies, including the FERC. Revenue associated with these arrangements is recognized when volumes have been delivered. Under our crude oil terminaling agreements, we charge customers for crude oil storage based on the number of days a customer has volumes in storage multiplied by a contractual storage fee. Under these contracts, revenue is recognized ratably over the length of the storage period. With respect to storage capacity reservation agreements, we collect a fee for reserving storage capacity for customers at our terminals. Under these agreements, revenue is recognized ratably over the specified reservation period. In addition, we charge our customers throughput (or "pumpover") fees based on volumes withdrawn from our terminals. Revenue is also generated from fee-based trade documentation services and is recognized as services are completed. Our crude oil marketing activities generate revenues from the sale and delivery of crude oil purchased either directly from producers or from others on the open market. These sales contracts generally settle with the physical delivery of crude oil to customers. In general, the sales prices referenced in these contracts are market-based and may include pricing differentials for such factors as delivery location or crude oil quality and grade. Offshore Pipelines & Services Revenue from our offshore pipelines is generally based upon a fixed fee per unit of volume gathered or transported (typically per million British thermal units ("MMBtu") of natural gas or per barrel of crude oil) multiplied by the volume delivered. The transportation fees charged under these arrangements are either contractual or regulated by governmental agencies, including the FERC. Revenue associated with these fee-based contracts and tariffs is recognized when volumes have been delivered. Revenues from offshore platform services generally consist of demand fees and commodity charges. Revenues from offshore platform services are recognized in the period the services are provided. Demand fees represent charges to customers served by our offshore platforms regardless of the volume the customer actually delivers to the platform. Revenue from commodity charges is based on a fee per unit of volume delivered to the platform multiplied by the total volume of each product delivered. Contracts for platform services often include both demand fees and commodity charges, but demand fees generally expire after a contractually fixed period of time and in some instances may be subject to cancellation by customers. Petrochemical & Refined Products Services Our propylene fractionation and butane isomerization facilities generate revenue through fee-based arrangements, which typically include a base-processing fee subject to adjustment for changes in natural gas, electricity and labor costs, which are the primary costs of propylene fractionation and butane isomerization. Revenue resulting from such agreements is recognized in the period the services are provided. Our petrochemical marketing activities include the purchase and fractionation of refinery grade propylene obtained in the open market and generate revenues from the sale and delivery of products obtained through propylene fractionation. Revenue from these sales contracts is recognized when such products are delivered to customers. In general, we sell our petrochemical products at market-based prices, which may include pricing differentials for such factors as delivery location. Pipelines transporting refined products, such as our TE Products Pipeline, generate revenues through contracts and tariffs as customers are billed a fixed fee per barrel of liquids transported multiplied by the volume delivered. The fees charged under these arrangements are either contractual or regulated by governmental agencies, including the FERC. Revenue associated with these fee-based contracts and tariffs is recognized when volumes have been delivered. Revenue from our refined products storage facilities is based on the number of days a customer has volumes in storage multiplied by a contractual storage fee. Under these contracts, revenue is recognized ratably over the length of the storage period. Revenue from product terminaling activities is recorded in the period such services are provided. Customers are typically billed a fee per unit of volume loaded. Revenue is also generated from the provision of inland and offshore marine transportation of refined products, crude oil, condensate, asphalt, heavy fuel oil, liquefied petroleum gas and other petroleum products via tow boats and tank barges. Under our marine services transportation contracts, revenue is recognized over the transit time of individual tows as determined on an individual contract basis, which is generally less than ten days in duration. Revenue from these contracts is typically based on set day rates or a set fee per cargo movement. The costs of fuel, substantially all of which is a pass through expense, and other specified operational fees and costs are directly reimbursed by the customer under most of these contracts. The results of operations from the distribution of lubrication oils and specialty chemicals and the transportation of products by truck are dependent on the sales price or transportation fees that we charge our customers and the volume sold or transported. Likewise, revenue from the production and sale of octane additives and high purity isobutylene is dependent on the sales price and volume of such commodities sold to customers. Revenue is recognized for sales transactions when the product is delivered.

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