Derivative Instruments, Hedging Activities and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments, Hedging Activities and Fair Value Measurements [Abstract]

Hedging Instruments Under the FASB's Derivative and Hedging Guidance

We may utilize interest rate swaps, forward starting swaps and similar derivative instruments to manage our exposure to changes in interest rates charged on borrowings under certain consolidated debt agreements. The following table summarizes our portfolio of interest rate swaps at June 30, 2014:

Hedged Transaction	Number and Type of Derivatives Outstanding	Notional Amount		Period of Hedge	Rate Swap	Accounting Treatment
Senior Notes AA	10 fixed-to-floating swaps	$	750.0	1/2011 to 2/2016	3.2% to 1.2%	Fair value hedge
Undesignated swaps	6 floating-to-fixed swaps	$	600.0	5/2010 to 7/2014	0.2% to 2.0%	Mark-to-market

The prices of natural gas, NGLs, crude oil, refined products and petrochemical products are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control. In order to manage such price risks, we enter into commodity derivative instruments such as physical forward contracts, futures contracts, fixed-for-float swaps, basis swaps and option contracts. The following table summarizes our portfolio of commodity derivative instruments outstanding at June 30, 2014 (volume measures as noted):

	Volume (1)		Accounting
Derivative Purpose	Current (2)	Long-Term (2)	Treatment
Derivatives designated as hedging instruments:
Natural gas processing:
Forecasted natural gas purchases for plant thermal reduction (Bcf)	2.2	n/a	Cash flow hedge
Forecasted sales of NGLs (MMBbls) (3)	0.6	n/a	Cash flow hedge
Octane enhancement:
Forecasted purchases of NGLs (MMBbls)	0.1	n/a	Cash flow hedge
Forecasted sales of octane enhancement products (MMBbls)	1.6	n/a	Cash flow hedge
Natural gas marketing:
Natural gas storage inventory management activities (Bcf)	3.3	n/a	Fair value hedge
NGL marketing:
Forecasted purchases of NGLs and related hydrocarbon products (MMBbls)	6.2	n/a	Cash flow hedge
Forecasted sales of NGLs and related hydrocarbon products (MMBbls)	7.6	n/a	Cash flow hedge
Refined products marketing:
Forecasted purchases of refined products (MMBbls)	0.6	n/a	Cash flow hedge
Forecasted sales of refined products (MMBbls)	1.0	n/a	Cash flow hedge
Refined products inventory management activities (MMBbls)	0.2	n/a	Fair value hedge
Crude oil marketing:
Forecasted purchases of crude oil (MMBbls)	3.3	n/a	Cash flow hedge
Forecasted sales of crude oil (MMBbls)	5.0	n/a	Cash flow hedge
Derivatives not designated as hedging instruments:
Natural gas risk management activities (Bcf) (4,5)	73.1	12.6	Mark-to-market
Crude oil risk management activities (MMBbls) (5)	13.2	n/a	Mark-to-market
(1) Volume for derivatives designated as hedging instruments reflects the total amount of volumes hedged whereas volume for derivatives not designated as hedging instruments reflects the absolute value of derivative notional volumes. (2) The maximum term for derivatives designated as cash flow hedges, derivatives designated as fair value hedges and derivatives not designated as hedging instruments is March 2015, August 2014 and October 2016, respectively. (3) Forecasted sales of NGL volumes under natural gas processing exclude 0.6 MMBbls of additional hedges executed under contracts that have been designated as normal sales agreements. (4) Current volumes include 37.7 Bcf of physical derivative instruments that are predominantly priced at a marked-based index plus a premium or minus a discount related to location differences. (5) Reflects the use of derivative instruments to manage risks associated with transportation, processing and storage assets.

Derivative Assets and Liabilities Balance Sheet

The following table provides a balance sheet overview of our derivative assets and liabilities at the dates indicated:

	Asset Derivatives						Liability Derivatives
	June 30, 2014			December 31, 2013			June 30, 2014			December 31, 2013
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate derivatives	Other current assets	$	20.4	Other current assets	$	20.2	Other current liabilities	$	--	Other current liabilities	$	--
Interest rate derivatives	Other assets		6.9	Other assets		12.4	Other liabilities		--	Other liabilities		--
Total interest rate derivatives			27.3			32.6			--			--
Commodity derivatives	Other current assets		35.7	Other current assets		30.9	Other current liabilities		61.9	Other current liabilities		46.5
Commodity derivatives	Other assets		--	Other assets		--	Other liabilities		--	Other liabilities		0.3
Total commodity derivatives			35.7			30.9			61.9			46.8
Total derivatives designated as hedging instruments		$	63.0		$	63.5		$	61.9		$	46.8

Derivatives not designated as hedging instruments
Interest rate derivatives	Other current assets	$	--	Other current assets	$	--	Other current liabilities	$	2.6	Other current liabilities	$	7.8
Interest rate derivatives	Other assets		--	Other assets		--	Other liabilities		--	Other liabilities		--
Total interest rate derivatives			--			--			2.6			7.8
Commodity derivatives	Other current assets		7.5	Other current assets		7.6	Other current liabilities		4.0	Other current liabilities		5.5
Commodity derivatives	Other assets		0.9	Other assets		2.8	Other liabilities		0.3	Other liabilities		2.8
Total commodity derivatives			8.4			10.4			4.3			8.3
Total derivatives not designated as hedging instruments		$	8.4		$	10.4		$	6.9		$	16.1

Offsetting Financial Assets

Certain of our commodity derivative instruments are subject to master netting arrangements or similar agreements. The following tables present our derivative instruments subject to such arrangements at the dates indicated:

	Offsetting of Financial Assets and Derivative Assets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet		Amounts of Assets Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet					Amounts That Would Have Been Presented On Net Basis
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet		Amounts of Assets Presented in the Balance Sheet		Financial Instruments			Cash Collateral Received		Amounts That Would Have Been Presented On Net Basis
	(i)		(ii)		(iii) = (i) – (ii)		(iv)					(v) = (iii) + (iv)
As of June 30, 2014:
Interest rate derivatives	$	27.3	$	--	$	27.3	$	(0.9	)	$	--	$	26.4
Commodity derivatives		44.1		--		44.1		(31.5	)		--		12.6
As of December 31, 2013:
Interest rate derivatives	$	32.6	$	--	$	32.6	$	(2.6	)	$	--	$	30.0
Commodity derivatives		41.3		--		41.3		(41.0	)		--		0.3

Offsetting Financial Liabilities

	Offsetting of Financial Liabilities and Derivative Liabilities
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet		Amounts of Liabilities Presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet						Amounts That Would Have Been Presented On Net Basis
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet		Amounts of Liabilities Presented in the Balance Sheet		Financial Instruments			Cash Collateral Paid			Amounts That Would Have Been Presented On Net Basis
	(i)		(ii)		(iii) = (i) – (ii)		(iv)						(v) = (iii) + (iv)
As of June 30, 2014:
Interest rate derivatives	$	2.6	$	--	$	2.6	$	(0.9	)	$	--		$	1.7
Commodity derivatives		66.2		--		66.2		(31.5	)		(22.4	)		12.3
As of December 31, 2013:
Interest rate derivatives	$	7.8	$	--	$	7.8	$	(2.6	)	$	--		$	5.2
Commodity derivatives		55.1		--		55.1		(41.0	)		( 9.3	)		4.8

Derivative Instruments Effects on Statements of Operations

The following tables present the effect of our derivative instruments designated as fair value hedges on our Unaudited Condensed Statements of Consolidated Operations for the periods indicated:

Derivatives in Fair Value Hedging Relationships	Location	Gain (Loss) Recognized in Income on Derivative
		For the Three Months						For the Six Months
		Ended June 30,						Ended June 30,
		2014			2013			2014			2013
Interest rate derivatives	Interest expense	$	(2.5	)	$	(6.6	)	$	(5.4	)	$	(10.1	)
Commodity derivatives	Revenue		1.3			6.9			0.9			6.2
Total		$	(1.2	)	$	0.3		$	(4.5	)	$	(3.9	)

Derivatives in Fair Value Hedging Relationships	Location	Gain (Loss) Recognized in Income on Hedged Item
		For the Three Months						For the Six Months
		Ended June 30,						Ended June 30,
		2014			2013			2014			2013
Interest rate derivatives	Interest expense	$	2.5		$	6.5		$	5.4		$	9.9
Commodity derivatives	Revenue		(1.0	)		(4.9	)		(2.4	)		(11.6	)
Total		$	1.5		$	1.6		$	3.0		$	(1.7	)

Derivative Instruments Effects on Statements of Comprehensive Income

The following tables present the effect of our derivative instruments designated as cash flow hedges on our Unaudited Condensed Statements of Consolidated Operations and Unaudited Condensed Statements of Consolidated Comprehensive Income for the periods indicated:

Derivatives in Cash Flow Hedging Relationships	Change in Value Recognized in Other Comprehensive Income (Loss) on Derivative (Effective Portion)
	For the Three Months					For the Six Months
	Ended June 30,					Ended June 30,
	2014			2013		2014			2013
Interest rate derivatives	$	--		$	--	$	--		$	6.7
Commodity derivatives – Revenue (1)		(32.9	)		34.1		(43.6	)		(13.5	)
Commodity derivatives – Operating costs and expenses (1)		0.1			--		1.6			--
Total	$	(32.8	)	$	34.1	$	(42.0	)	$	(6.8	)

(1) The fair value of these derivative instruments will be reclassified to their respective locations on the Unaudited Condensed Statement of Consolidated Operations upon settlement of the underlying derivative transactions, as appropriate.

Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income/(Loss) to Income (Effective Portion)

Derivatives in Cash Flow Hedging Relationships	Location	Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) to Income (Effective Portion)
		For the Three Months						For the Six Months
		Ended June 30,						Ended June 30,
		2014			2013			2014			2013
Interest rate derivatives	Interest expense	$	(8.0	)	$	(7.8	)	$	(15.9	)	$	(13.7	)
Commodity derivatives	Revenue		(15.4	)		7.2			(32.3	)		(0.5	)
Commodity derivatives	Operating costs and expenses		0.5			--			1.4			0.4
Total		$	(22.9	)	$	(0.6	)	$	(46.8	)	$	(13.8	)

Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion)

Derivatives in Cash Flow Hedging Relationships	Location	Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)
		For the Three Months						For the Six Months
		Ended June 30,						Ended June 30,
		2014			2013			2014			2013
Commodity derivatives	Revenue	$	0.1		$	(0.1	)	$	(0.1	)	$	(0.1	)
Commodity derivatives	Operating costs and expenses		(0.1	)		--			0.1			--
Total		$	--		$	(0.1	)	$	--		$	(0.1	)

Gain/(Loss) Recognized in Income on Derivative

The following table presents the effect of our derivative instruments not designated as hedging instruments on our Unaudited Condensed Statements of Consolidated Operations for the periods indicated:

Derivatives Not Designated as Hedging Instruments	Location	Gain (Loss) Recognized in Income on Derivative
		For the Three Months						For the Six Months
		Ended June 30,						Ended June 30,
		2014			2013			2014			2013
Interest rate derivatives	Interest expense	$	--		$	(0.2	)	$	(0.1	)	$	(0.1	)
Commodity derivatives	Revenue		(6.6	)		14.2			(27.6	)		8.9
Total		$	(6.6	)	$	14.0		$	(27.7	)	$	8.8

Fair Value Measurements of Financial Assets and Liabilities Measured on a Recurring Basis

The following tables set forth, by level within the fair value hierarchy, the carrying values of our financial assets and liabilities at June 30, 2014 and December 31, 2013. These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of such inputs requires judgment.

	June 30, 2014 Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant		Carrying
	Identical Assets		Observable		Unobservable		Value
	and Liabilities		Inputs		Inputs		at June 30,
	(Level 1)		(Level 2)		(Level 3)		2014
Financial assets:
Interest rate derivatives	$	--	$	27.3	$	--	$	27.3
Commodity derivatives		18.0		22.0		4.1		44.1
Total	$	18.0	$	49.3	$	4.1	$	71.4

Financial liabilities:
Interest rate derivatives	$	--	$	2.6	$	--	$	2.6
Commodity derivatives		32.1		32.6		1.5		66.2
Total	$	32.1	$	35.2	$	1.5	$	68.8

	December 31, 2013 Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant		Carrying
	Identical Assets		Observable		Unobservable		Value
	and Liabilities		Inputs		Inputs		at December 31,
	(Level 1)		(Level 2)		(Level 3)		2013
Financial assets:
Interest rate derivatives	$	--	$	32.6	$	--	$	32.6
Commodity derivatives		17.2		20.2		3.9		41.3
Total	$	17.2	$	52.8	$	3.9	$	73.9

Financial liabilities:
Interest rate derivatives	$	--	$	7.8	$	--	$	7.8
Commodity derivatives		30.8		23.6		0.7		55.1
Total	$	30.8	$	31.4	$	0.7	$	62.9

Reconciliation of Changes in the Fair Value of Level 3 Financial Assets and Liabilities

The following table sets forth a reconciliation of changes in the fair values of our recurring Level 3 financial assets and liabilities on a combined basis for the periods indicated:

		For the Six Months
		Ended June 30,
	Location	2014			2013
Financial asset (liability) balance, net, January 1		$	3.2		$	(1.5	)
Total gains (losses) included in:
Net income (1)	Revenue		4.6			(0.6	)
Settlements	Revenue		(0.1	)		1.5
Financial asset (liability) balance, net, March 31			7.7			(0.6	)
Total gains (losses) included in:
Net income (1)	Revenue		(3.3	)		(0.2	)
Settlements	Revenue		(1.8	)		0.6
Financial asset (liability) balance, net, June 30 (2)		$	2.6		$	(0.2	)

(1) There were $5.0 million and $0.5 million of unrealized losses included in these amounts for the three and six months ended June 30, 2014, respectively. There were unrealized gains of $0.4 million and $1.3 million included in these amounts for the three and six months ended June 30, 2013, respectively. (2) There were no transfers into or out of Level 3 during the three or six months ended June 30, 2014 and 2013.

Fair Value Measurements, Valuation Techniques

The following table provides quantitative information about our recurring Level 3 fair value measurements at June 30, 2014:

	Fair Value
	Financial Assets		Financial Liabilities		Valuation Techniques	Unobservable Input	Range
Commodity derivatives – Crude oil	$	4.1	$	1.5	Discounted cash flow	Forward commodity prices	$94.16-$106.21/barrel

Noncash Impairment Charges by Segment

The following table summarizes our non-cash impairment charges by segment during each of the periods indicated:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2014		2013		2014		2013
NGL Pipelines & Services	$	2.8	$	8.7	$	5.4	$	9.7
Onshore Natural Gas Pipelines & Services		0.1		--		0.3		--
Onshore Crude Oil Pipelines & Services		0.8		16.6		1.8		16.6
Petrochemical & Refined Products Services		--		1.8		5.0		11.8
Total	$	3.7	$	27.1	$	12.5	$	38.1

Nonrecurring Fair Value Measurements

Our non-cash asset impairment charges for the six months ended June 30, 2014 primarily relate to the abandonment of assets classified as property, plant and equipment. The following table summarizes our non-recurring fair value measurements for the six months ended June 30, 2014:

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
	Carrying		Markets for		Other		Significant		Total
	Value at		Identical		Observable		Unobservable		Non-Cash
	June 30,		Assets		Inputs		Inputs		Impairment
	2014		(Level 1)		(Level 2)		(Level 3)		Loss
Impairment of long-lived assets disposed of other than by sale	$	--	$	--	$	--	$	--	$	7.5
Impairment of long-lived assets to be disposed of by sale		0.1		--		--		0.1		5.0
Total									$	12.5

During the six months ended June 30, 2013, we recorded $38.1 million of non-cash asset impairment charges primarily due to the abandonment of assets classified as property, plant and equipment. Of this amount, $16.6 million relates to the abandonment of certain crude oil pipeline segments in Texas and Oklahoma, $10.0 million relates to the abandonment of certain refined products terminal and storage assets located in southeast Texas, and $6.3 million relates to the abandonment of an NGL storage cavern in Arizona. The following table summarizes our non-recurring fair value measurements for the six months ended June 30, 2013:

			Fair Value Measurements Using
			Quoted Prices
			in Active		Significant
	Carrying		Markets for		Other		Significant		Total
	Value at		Identical		Observable		Unobservable		Non-Cash
	June 30,		Assets		Inputs		Inputs		Impairment
	2013		(Level 1)		(Level 2)		(Level 3)		Loss
Impairment of long-lived assets disposed of other than by sale	$	--	$	--	$	--	$	--	$	29.8
Impairment of long-lived assets held and used		6.3		--		--		6.3		4.2
Impairment of long-lived assets to be disposed of by sale		34.6		33.8		--		0.8		4.1
Total									$	38.1