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Investments in Unconsolidated Affiliates | 12 Months Ended
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Dec. 31, 2012
Investments in Unconsolidated Affiliates [Abstract] |
Investments in Unconsolidated Affiliates | Note 9. Investments in Unconsolidated Affiliates The following table presents our investments in unconsolidated affiliates by business segment at the dates indicated. Unless noted otherwise, we account for these investments using the equity method.
|  | Ownership Interest at December 31, 2012 |  |  | December 31, |
|  |  |  | 2012 |  |  | 2011 |
NGL Pipelines & Services: |  |  |  |  |  |  |  |  |
Venice Energy Service Company, L.L.C. ("VESCO") |  | 13.1% |  |  | $ | 29.6 |  |  | $ | 35.5 |
K/D/S Promix, L.L.C. ("Promix") |  | 50% |  |  |  | 46.9 |  |  |  | 40.7 |
Baton Rouge Fractionators LLC ("BRF") |  | 32.2% |  |  |  | 20.2 |  |  |  | 21.0 |
Skelly-Belvieu Pipeline Company, L.L.C. ("Skelly-Belvieu") |  | 50% |  |  |  | 38.2 |  |  |  | 35.0 |
Texas Express Pipeline LLC ("Texas Express") |  | 35% |  |  |  | 144.4 |  |  |  | 13.9 |
Texas Express Gathering LLC ("TEG") |  | 45% |  |  |  | 20.9 |  |  |  | -- |
Front Range Pipeline LLC ("Front Range") |  | 33.3% |  |  |  | 24.4 |  |  |  | -- |
Onshore Natural Gas Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |
Evangeline (1) |  | -- |  |  |  | -- |  |  |  | 4.4 |
White River Hub, LLC ("White River Hub") |  | 50% |  |  |  | 24.9 |  |  |  | 25.7 |
Onshore Crude Oil Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |
Seaway Crude Pipeline Company LLC ("Seaway") |  | 50% |  |  |  | 341.4 |  |  |  | 170.7 |
Eagle Ford Pipeline LLC ("Eagle Ford Crude Oil Pipeline") |  | 50% |  |  |  | 152.4 |  |  |  | -- |
Offshore Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |
Poseidon Oil Pipeline Company, L.L.C. ("Poseidon") |  | 36% |  |  |  | 47.3 |  |  |  | 55.4 |
Cameron Highway Oil Pipeline Company ("Cameron Highway") |  | 50% |  |  |  | 220.0 |  |  |  | 222.8 |
Deepwater Gateway, L.L.C. ("Deepwater Gateway") |  | 50% |  |  |  | 90.0 |  |  |  | 94.6 |
Neptune Pipeline Company, L.L.C. ("Neptune") |  | 25.7% |  |  |  | 46.8 |  |  |  | 51.1 |
Southeast Keathley Canyon Pipeline Company L.L.C. ("SEKCO") |  | 50% |  |  |  | 74.9 |  |  |  | 1.0 |
Petrochemical & Refined Products Services: |  |  |  |  |  |  |  |  |  |  |
Baton Rouge Propylene Concentrator, LLC ("BRPC") |  | 30% |  |  |  | 8.5 |  |  |  | 9.5 |
Centennial Pipeline LLC ("Centennial") |  | 50% |  |  |  | 60.8 |  |  |  | 51.8 |
Other (2) |  | Various |  |  |  | 3.0 |  |  |  | 3.4 |
Other Investments: |  |  |  |  |  |  |  |  |  |  |
Energy Transfer Equity (3) |  | -- |  |  |  | -- |  |  |  | 1,023.1 |
Total |  |  |  |  | $ | 1,394.6 |  |  | $ | 1,859.6 |
(1) In June 2012, we acquired the remaining ownership interests in Evangeline Gas Pipeline Company, L.P. and Evangeline Gas Corp. (collectively "Evangeline") and they became wholly owned subsidiaries of ours. (2) Other unconsolidated affiliates include a 50% interest in a propylene pipeline extending from Mont Belvieu, Texas to La Porte, Texas and a 25% interest in a company that provides logistics communications solutions between petroleum pipelines and their customers. (3) See "Other Investments" within this Note 9 for information regarding the sale of our ownership interests in Energy Transfer Equity. |
NGL Pipelines & Services The principal business activity of each investee included in our NGL Pipelines & Services segment is described as follows:
§ | VESCO owns a natural gas processing facility and related assets located in south Louisiana.
§ | Promix owns an NGL fractionation facility and related storage and pipeline assets located in south Louisiana.
§ | BRF owns an NGL fractionation facility located in south Louisiana.
§ | Skelly-Belvieu owns a pipeline that transports mixed NGLs from Skellytown, Texas to Mont Belvieu, Texas. The Skelly-Belvieu Pipeline receives NGLs through a pipeline interconnect with our Mid-America Pipeline System in Skellytown, Texas.
§ | Texas Express was formed in September 2011 to construct a new NGL pipeline (the "Texas Express Pipeline") that will originate in Skellytown, Texas and extend approximately 580 miles to our NGL fractionation and storage facilities in Mont Belvieu, Texas. The Texas Express Pipeline is expected to begin service in the second quarter of 2013.
§ | TEG was formed in April 2012 to construct two NGL gathering systems that will connect to the Texas Express Pipeline. Enbridge Inc. will construct and operate the systems, which are expected to begin service in the second quarter of 2013.
§ | Front Range was formed in April 2012 to construct a new NGL pipeline that will originate in the Denver-Julesburg Basin in Weld County, Colorado and extend 435 miles to Skellytown, Texas. We will construct and operate the pipeline, which is expected to begin service in the fourth quarter of 2013.
Onshore Natural Gas Pipelines & Services White River Hub owns a natural gas hub located in northwest Colorado. Onshore Crude Oil Pipelines & Services The principal business activity of each investee included in our Onshore Crude Oil Pipelines & Services segment is described as follows:
§ | Seaway owns a pipeline that connects the Cushing, Oklahoma hub with markets in Southeast Texas. In November 2011, we and Enbridge Holdings (Seaway) L.L.C., our joint venture partner in Seaway, initiated a project to reverse the direction of crude oil flows to enable the pipeline to transport oil from the Cushing hub to U.S. Gulf Coast refineries. In June 2012, the initial phase of this reversal project was completed and Seaway made its first delivery of crude oil to the Texas Gulf Coast from Cushing. The second phase of the reversal project, which entailed construction of additional pump stations and other modifications, was completed in January 2013 and is expected to increase the pipeline's throughput capacity.
§ | Eagle Ford Pipeline LLC was formed in August 2012 to provide crude oil pipeline services to producers in South Texas. The joint venture will include a 140-mile crude oil and condensate line extending from Gardendale, Texas in LaSalle County to Three Rivers, Texas in Live Oak County and continuing on to Corpus Christi, Texas, and a newly constructed 35-mile pipeline segment from Three Rivers to our Lyssy, Texas station in Wilson County. The pipeline system, which is currently under construction, will include operational storage across the system and a marine terminal facility. Segments of the new pipeline system are expected to be placed into service in the first quarter of 2013, with the balance of the system expected to be placed into service in the third quarter of 2013. Plains All American Pipeline, L.P., our joint venture partner in this investment, will serve as operator of the pipeline system.
Offshore Pipelines & Services The principal business activity of each investee included in our Offshore Pipelines & Services segment is described as follows:
§ | Poseidon owns a crude oil pipeline that transports crude oil production from the outer continental shelf and deepwater areas of the Gulf of Mexico offshore Louisiana to onshore facilities in south Louisiana.
§ | Cameron Highway owns a crude oil pipeline that transports crude oil production from deepwater areas of the Gulf of Mexico, primarily the Green Canyon area, for delivery to refineries and terminals in southeast Texas.
§ | Deepwater Gateway owns an offshore platform that processes crude oil and natural gas from production fields located in the South Green Canyon area of the Gulf of Mexico.
§ | Neptune owns the Manta Ray Offshore Gathering System and Nautilus System, both of which are natural gas pipeline systems located in the Gulf of Mexico.
§ | SEKCO was formed in December 2011 to construct a 149-mile crude oil gathering pipeline serving the Lucius oil and gas field located in the southern Keathley Canyon area of the deepwater central Gulf of Mexico. The SEKCO Oil Pipeline is expected to begin service by mid-2014.
Petrochemical & Refined Products Services The principal business activity of each significant investee included in our Petrochemical & Refined Products Services segment is described as follows:
§ | BRPC owns a propylene fractionation facility located in south Louisiana.
§ | Centennial owns an interstate refined products pipeline extending from the upper Texas Gulf Coast to central Illinois that effectively loops our TE Products Pipeline, which provides us with incremental transportation capacity into Mid-continent markets.
Other Investments Liquidation of Investment in Energy Transfer Equity The Other Investments segment included our noncontrolling limited partner ownership interest in Energy Transfer Equity, which was accounted for using the equity method until January 18, 2012. Since our ownership interest in Energy Transfer Equity exceeded 3% of its total ownership interests throughout 2011, we accounted for our investment in Energy Transfer Equity using the equity method and included gains from the partial sale of this investment in operating income. During 2011, we sold a total of 9,672,576 Energy Transfer Equity common units for net cash proceeds of $375.2 million and recorded gains of $27.2 million on the sales. At December 31, 2011, we owned 29,303,514 common units of Energy Transfer Equity representing 13.1% of its limited partner interests outstanding. On January 18, 2012, we sold 22,762,636 of these common units in a private transaction, which generated cash proceeds of $825.1 million. As a result of this transaction, our ownership interest in Energy Transfer Equity was reduced below 3%, and we discontinued using the equity method to account for this investment and began accounting for it as an investment in available-for-sale equity securities. The remaining 6,540,878 units were sold systematically through April 27, 2012 and generated additional total cash proceeds of $270.2 million. In the aggregate, the liquidation of this investment during 2012 resulted in $68.8 million of gains that are presented as a component of other income. All activities included in the Other Investments business segment ceased on January 18, 2012, which was the date we discontinued using the equity method to account for our investment in Energy Transfer Equity. See Note 14 for information regarding our current business segments. Equity Earnings and Excess Cost The following table presents our equity in income (loss) of unconsolidated affiliates by business segment for the periods presented:
|  | For Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
NGL Pipelines & Services |  | $ | 15.9 |  |  | $ | 21.8 |  |  | $ | 17.7 |
Onshore Natural Gas Pipelines & Services |  |  | 4.4 |  |  |  | 5.5 |  |  |  | 4.6 |
Onshore Crude Oil Pipelines & Services |  |  | 32.6 |  |  |  | (4.1 | ) |  |  | 6.7 |
Offshore Pipelines & Services |  |  | 26.9 |  |  |  | 27.1 |  |  |  | 44.8 |
Petrochemical & Refined Products Services (1) |  |  | (17.9 | ) |  |  | (18.7 | ) |  |  | (9.0 | )
Other Investments (2) |  |  | 2.4 |  |  |  | 14.8 |  |  |  | (2.8 | )
Total |  | $ | 64.3 |  |  | $ | 46.4 |  |  | $ | 62.0 |
(1) Losses are primarily attributable to our investment in Centennial. As a result of a trend in declining earnings, we estimated the fair value of this equity-method investment during each of the last three fiscal years. Our estimates, based on a combination of the market and income approaches, indicate that the fair value of this investment remains substantially in excess of its carrying value. (2) With respect to the year ended December 31, 2012, the amount presented reflects our equity in the income of Energy Transfer Equity from January 1, 2012 to January 18, 2012. |
On occasion, the price we pay to acquire an ownership interest in a company exceeds the underlying carrying value of the capital accounts we acquire. Such excess cost amounts are included within the carrying values of our investments in Promix, Skelly-Belvieu, Seaway, Neptune, Poseidon, Cameron Highway, Centennial and La Porte at December 31, 2012. These excess cost amounts are attributable to the fair value of the underlying tangible assets of these entities exceeding their respective book carrying values at the time of our acquisition of ownership interests in these entities. We amortize such excess cost amounts as a reduction to equity earnings in a manner similar to depreciation. The following table presents the unamortized excess cost amounts by business segment at the dates indicated:
|  | December 31, |
|  | 2012 |  |  | 2011 |
NGL Pipelines & Services |  | $ | 28.9 |  |  | $ | 24.7 |
Onshore Crude Oil Pipelines & Services |  |  | 18.5 |  |  |  | 19.2 |
Offshore Pipelines & Services |  |  | 13.6 |  |  |  | 14.8 |
Petrochemical & Refined Products Services |  |  | 2.7 |  |  |  | 2.9 |
Other Investments (1) |  |  | -- |  |  |  | 1,119.0 |
Total |  | $ | 63.7 |  |  | $ | 1,180.6 |
(1) On January 18, 2012, we discontinued using the equity method to account for our investment in Energy Transfer Equity common units and began accounting for this investment as an available-for-sale security. As a result, we no longer had any excess cost amounts associated with this investment. These excess cost amounts were attributable to various factors, including fixed assets, incentive distribution rights, amortizable intangible assets and equity method goodwill. |
The following table presents our amortization of excess cost amounts by business segment for the periods presented:
|  | For Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
NGL Pipelines & Services |  | $ | 1.0 |  |  | $ | 1.0 |  |  | $ | 0.9 |
Onshore Crude Oil Pipelines & Services |  |  | 0.7 |  |  |  | 0.7 |  |  |  | 0.7 |
Offshore Pipelines & Service |  |  | 1.2 |  |  |  | 1.2 |  |  |  | 1.3 |
Petrochemical & Refined Products Services |  |  | 0.2 |  |  |  | 0.1 |  |  |  | 1.0 |
Other Investments (1) |  |  | 0.3 |  |  |  | 31.5 |  |  |  | 36.3 |
Total |  | $ | 3.4 |  |  | $ | 34.5 |  |  | $ | 40.2 |
(1) Reflects amortization of excess cost amounts related to our investment in Energy Transfer Equity through January 18, 2012, which is the date we ceased using the equity method to account for this investment. |
The following table presents forecasted amortization of excess cost amounts for the years indicated.
2013 |  |  | 2014 |  |  | 2015 |  |  | 2016 |  |  | 2017 |
$ | 3.3 |  |  | $ | 3.3 |  |  | $ | 3.3 |  |  | $ | 3.3 |  |  | $ | 3.3 |
Summarized Combined Financial Information of Unconsolidated Affiliates Combined balance sheet information for the last two years and results of operations data for the last three years for our unconsolidated affiliates, including Energy Transfer Equity and Evangeline for periods prior to January 1, 2012, are summarized in the following table (all data presented on a 100% basis):
|  | At December 31, |  |  |  |
|  | 2012 |  |  | 2011 |  |  |  |
BALANCE SHEET DATA: |  |  |  |  |  |  |  |  |
Current assets |  | $ | 254.7 |  |  | $ | 1,680.3 |  |  |  |
Property, plant and equipment, net |  |  | 2,911.3 |  |  |  | 16,413.5 |  |  |  |
Other assets |  |  | 3.2 |  |  |  | 4,893.7 |  |  |  |
Total assets |  | $ | 3,169.2 |  |  | $ | 22,987.5 |  |  |  |
Current liabilities |  | $ | 276.3 |  |  | $ | 1,955.7 |  |  |  |
Other liabilities |  |  | 272.1 |  |  |  | 11,897.1 |  |  |  |
Combined equity |  |  | 2,620.8 |  |  |  | 9,134.7 |  |  |  |
Total liabilities and combined equity |  | $ | 3,169.2 |  |  | $ | 22,987.5 |  |  |  |
|  | For Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
INCOME STATEMENT DATA: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  | $ | 670.1 |  |  | $ | 9,119.9 |  |  | $ | 7,437.0 |
Operating income |  |  | 213.7 |  |  |  | 1,393.4 |  |  |  | 1,241.8 |
Net income |  |  | 174.9 |  |  |  | 458.1 |  |  |  | 386.8 |
Other The credit agreements of Poseidon and Centennial restrict their ability to pay cash dividends if a default or event of default (as defined in each credit agreement) has occurred and is continuing at the time such payments are scheduled to be paid. These businesses were in compliance with the terms of their credit agreements at December 31, 2012.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32787-111569 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 18 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32847-111569 + Details
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