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Property, Plant and Equipment | 9 Months Ended
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Sep. 30, 2015
Property, Plant and Equipment [Abstract] |
Property, Plant and Equipment | Note 6. Property, Plant and Equipment The historical costs of our property, plant and equipment and related accumulated depreciation balances were as follows at the dates indicated:
|  | Estimated Useful Life in Years |  |  | September 30, 2015 |  |  | December 31, 2014 |
Plants, pipelines and facilities (1) |  | 3-45 (6) |  |  | $ | 31,686.3 |  |  | $ | 30,834.9 |
Underground and other storage facilities (2) |  | 5-40 (7) |  |  |  | 2,847.7 |  |  |  | 2,584.2 |
Platforms and facilities (3) |  | 20-31 |  |  |  | -- |  |  |  | 659.7 |
Transportation equipment (4) |  | 3-10 |  |  |  | 164.8 |  |  |  | 154.2 |
Marine vessels (5) |  | 15-30 |  |  |  | 787.5 |  |  |  | 796.4 |
Land |  |  |  |  |  |  | 261.3 |  |  |  | 262.6 |
Construction in progress |  |  |  |  |  |  | 3,777.2 |  |  |  | 2,754.7 |
Total historical cost of property, plant and equipment |  |  |  |  |  |  | 39,524.8 |  |  |  | 38,046.7 |
Less accumulated depreciation |  |  |  |  |  |  | 8,310.7 |  |  |  | 8,165.1 |
Total property, plant and equipment, net |  |  |  |  |  | $ | 31,214.1 |  |  | $ | 29,881.6 |
(1) Plants, pipelines and facilities include processing plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; office furniture and equipment; buildings; laboratory and shop equipment and related assets. |
(2) Underground and other storage facilities include underground product storage caverns; above ground storage tanks; water wells and related assets. |
(3) Platforms and facilities included offshore platforms and related facilities and other associated assets located in the Gulf of Mexico prior to the sale of our Offshore Business (see below). |
(4) Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations. |
(5) Marine vessels include tow boats, barges and related equipment used in our marine transportation business. |
(6) In general, the estimated useful lives of major assets within this category are: processing plants, 20-35 years; pipelines and related equipment, 5-45 years; terminal facilities, 10-35 years; office furniture and equipment, 3-20 years; buildings, 20-40 years; and laboratory and shop equipment, 5-35 years. |
(7) In general, the estimated useful lives of assets within this category are: underground storage facilities, 5-35 years; storage tanks, 10-40 years; and water wells, 5-35 years. |
The following table summarizes our depreciation expense and capitalized interest amounts for the periods indicated:
|  | For the Three Months Ended September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Depreciation expense (1) |  | $ | 286.2 |  |  | $ | 283.2 |  |  | $ | 870.1 |  |  | $ | 822.1 |
Capitalized interest (2) |  |  | 40.3 |  |  |  | 17.2 |  |  |  | 105.6 |  |  |  | 53.4 |
(1) Depreciation expense is a component of “Costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations. |
(2) We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life as a component of depreciation expense. When capitalized interest is recorded, it reduces interest expense from what it would be otherwise. |
Sale of Offshore Business On July 24, 2015, we consummated a sale to Genesis of our Offshore Business, which primarily consisted of our Offshore Pipelines & Services business segment, for approximately $1.53 billion in cash. Our Offshore Business served drilling and development regions, including deepwater production fields, in the northern Gulf of Mexico offshore Texas, Louisiana, Mississippi and Alabama. As of December 31, 2014, our Offshore Business included approximately 2,350 miles of offshore natural gas and crude oil pipelines and six offshore hub platforms. Our results of operations reflect ownership of the Offshore Business through July 24, 2015. We viewed our Offshore Business as an extension of our midstream energy services network. As such, the sale of these assets did not represent a strategic shift in our consolidated operations, and their sale does not have a major effect on our financial results. At December 31, 2014 and June 30, 2015, segment assets for our Offshore Pipelines & Services segment represented 4.3% and 4.1%, respectively, of consolidated total segment assets. Likewise, gross operating margin from this business segment represented only 3.1% and 3.4% of our consolidated total gross operating margin for the year ended December 31, 2014 and six months ended June 30, 2015, respectively. The sale of this non-strategic business allowed us to redeploy capital to other business opportunities that we believe will generate a higher rate of return for us in the future (e.g., our recent acquisition of EFS Midstream (see Note 8)). Also, proceeds from the closing of this sale will reduce our need to issue additional equity and debt to support our ongoing capital spending program. We recorded a non-cash asset impairment charge at June 30, 2015 of approximately $54.8 million, which reflects the excess of the carrying value of net assets of the Offshore Business at June 30, 2015 over their comparable estimated fair value based on the transaction price. The carrying value of the net assets of the Offshore Business at June 30, 2015 totaled approximately $1.59 billion, which included current assets of $26.9 million, property plant and equipment of $1.14 billion, investments in unconsolidated affiliates of $482.4 million, intangible assets of $37.1 million and goodwill of $82.0 million. Total liabilities were $116.4 million and noncontrolling interests were $62.2 million at that date. The fair value of the Offshore Business based on the transaction price was approximately $1.53 billion. Upon closing of the transaction, we recorded a loss on the sale of $12.6 million based on the difference between the proceeds received and the carrying value of the net assets at July 24, 2015. Operating costs and expenses for the nine months ended September 30, 2015 include $40.1 million of depreciation expense associated with the Offshore Business. Likewise, for the three and nine months ended September 30, 2014, we recognized $21.5 million and $62.3 million, respectively, of depreciation expense associated with these assets. Asset Retirement Obligations We record asset retirement obligations (“AROs”) in connection with legal requirements to perform specified retirement activities under contractual arrangements and/or governmental regulations. Our contractual AROs primarily result from right-of-way agreements associated with our pipeline operations and real estate leases associated with our plant sites. In addition, we record AROs in connection with governmental regulations associated with the abandonment or retirement of above-ground brine storage pits and certain marine vessels. We also record AROs in connection with regulatory requirements associated with the renovation or demolition of certain assets containing hazardous substances such as asbestos. We typically fund our AROs using cash flow from operations. Property, plant and equipment at September 30, 2015 and December 31, 2014 includes $17.8 million and $31.3 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset. The following table presents information regarding our AROs since December 31, 2014:
ARO liability balance, December 31, 2014 |  | $ | 98.3 |
Liabilities incurred |  |  | 2.7 |
Liabilities settled |  |  | (5.9 | )
Revisions in estimated cash flows |  |  | 49.0 |
Accretion expense |  |  | 4.2 |
AROs related to Offshore Business sold in July 2015 |  |  | (91.1 | )
ARO liability balance, September 30, 2015 |  | $ | 57.2 |
Revisions to estimated cash flows include a $39.5 million adjustment made in the second quarter of 2015 related to the Matagorda Gathering System, which was a component of the Offshore Business. In June 2015, we were notified by the U.S. Army Corps of Engineers (the “CoE”) to fully remove two pipeline segments included in this system that we had originally requested to abandon in-place. As a result, we adjusted the ARO liabilities for those pipeline segments under CoE jurisdiction to account for the estimated cost of removal. All ARO liabilities related to our Offshore Business (including those of the Matagorda Gathering System) were removed from our Unaudited Condensed Consolidated Balance Sheet upon the sale of the Offshore Business on July 24, 2015. Certain of our unconsolidated affiliates have AROs recorded at September 30, 2015 and December 31, 2014 relating to contractual agreements and regulatory requirements. These amounts are immaterial to our consolidated financial statements.

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- Definition The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.13-14) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51717284&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=51719941&loc=d3e2921-110230 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6391035&loc=d3e2868-110229 + Details
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