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Revenue Recognition | 12 Months Ended
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Dec. 31, 2016
Revenue Recognition [Abstract] |
Revenue Recognition | Note 3. Revenue Recognition In general, we recognize revenue from our customers when all of the following criteria are met: (i) persuasive evidence of an exchange arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the buyer’s price is fixed or determinable and (iv) collectibility is reasonably assured. Amounts billed in advance of the period in which the service is rendered or product delivered are recorded as deferred revenue. The following information summarizes our revenue recognition policies by business segment. See Note 10 for general information regarding our business 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 merchant activities such as term and spot sales of NGLs, which we take title to through our natural gas processing activities (i.e., our equity NGL production) 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 the underlying contracts are market-based and may include pricing differentials for factors such as location, timing or NGL product quality. NGL sales contracts associated with our export facilities may also include take-or-pay provisions. Revenues from NGL pipeline transportation contracts and tariffs are generally based upon a fixed fee per gallon (subject to escalation, if applicable) of liquids transported multiplied by the volume delivered. Transportation fees charged to shippers are based on either tariffs regulated by governmental agencies, including the Federal Energy Regulatory Commission (“FERC”), or contractual arrangements. Typically, pipeline transportation revenue is recognized when volumes are transported and delivered. However, under certain NGL pipeline transportation agreements (e.g., those associated with committed shippers on our Texas Express Pipeline, Front Range Pipeline, ATEX and Aegis Ethane Pipeline) customers are required to ship a minimum volume over an agreed-upon period. These arrangements typically entail the shipper paying a transportation fee based on a minimum volume commitment, with a provision that allows the shipper to make-up any volume shortfalls over the agreed-upon period (referred to as shipper “make-up rights”). Revenue pursuant to such agreements, including that associated with make-up rights, is initially deferred and subsequently recognized at the earlier of when the deficiency volume is shipped, when the shipper’s ability to meet the minimum volume commitment has expired (typically a one year contractual period), or when the pipeline is otherwise released from its transportation service performance obligation. We collect storage revenue under our NGL and related product storage contracts primarily from capacity reservation agreements, where we collect a fee for reserving storage capacity for 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 on a straight-line basis over the specified reservation period. When a customer exceeds its reserved capacity, we charge that customer 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. 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. At our Norco facility in Louisiana, we perform fractionation services for certain customers under 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 NGL import and LPG export terminaling activities is recorded in the period services are provided. Customers are typically billed a fee per unit of volume loaded or unloaded. Crude Oil Pipelines & Services Revenues from crude oil transportation contracts and tariffs are generally based upon a fixed fee per barrel (subject to escalation, if applicable) transported multiplied by the volume delivered. Transportation fees charged to shippers are based on either tariffs regulated by governmental agencies, including the FERC, or contractual arrangements. Typically, revenue associated with these arrangements is recognized when volumes are transported and delivered; however, under certain of our crude oil pipeline transportation agreements, customers are required to ship a minimum volume over an agreed-upon period, with make-up rights. Revenue pursuant to such agreements, including that associated with make-up rights, is initially deferred and subsequently recognized at the earlier of when the deficiency volume is shipped, when the shipper’s ability to meet the minimum volume commitment has expired (typically a one year contractual period), or when the pipeline is otherwise released from its transportation service performance obligation. Revenue from our condensate gathering, processing and stabilization services as well as gathering, treating and compression services is recognized based upon the higher of actual volumes handled or minimum volume commitments multiplied by predominantly fixed fees charged for the underlying services. With respect to those agreements having minimum volume commitments, the producer pays a deficiency fee when its volumes do not meet contractually defined minimum volume thresholds (there are no make-up rights in connection with these agreements). Under certain of the contracts, if actual volumes handled during a period exceed the respective minimum volume commitment, the excess volume serves to reduce future minimum volume commitments (for periods up to two years in the future), thus reducing any potential deficiency fees that the producer may pay in the future. Under our crude oil terminaling agreements, we charge customers for crude oil storage based on storage capacity reservation agreements, where we collect a fee for reserving storage capacity for customers at our terminals. Under these agreements, revenue is recognized on a straight-line basis 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 the underlying contracts are market-based and may include pricing differentials for factors such as delivery location, timing or crude oil quality. Natural Gas Pipelines & Services Our 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. Transportation fees charged to shippers are based on either tariffs regulated by governmental agencies, including the FERC, or contractual arrangements. Certain of our natural gas pipelines offer firm capacity reservation services whereby the shipper pays a contractual fee based on the level of throughput capacity reserved (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 revenue contracts, there are typically two components: (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 to local gas distribution companies and other customers of natural gas purchased from producers, regional natural gas processing plants and the open market. Revenue from these sales contracts is recognized when natural gas is delivered to customers. In general, sales prices referenced in the underlying contracts are market-based and may include pricing differentials for factors such as delivery location. Petrochemical & Refined Products Services Our propylene fractionation, butane isomerization and deisobutanizer facilities generate revenue through fee-based arrangements, which typically include a base-processing fee subject to adjustment for changes in power, fuel and labor costs, all of which are the primary costs of propylene fractionation and butane isomerization. Our butane isomerization and deisobutanizer operations also generate revenue from the sale and delivery of by-products. Revenue resulting from such agreements is recognized in the period the services are provided. Revenues from our petrochemical pipeline transportation contracts are primarily based upon a fixed fee per volume transported (typically measured in gallons or pounds and subject to escalation, if applicable) multiplied by the volume delivered. 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 factors such as delivery location. 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. Pipelines transporting refined products generate revenues through contracts and tariffs as customers are billed a fixed fee per barrel (subject to escalation, if applicable) 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 capacity reservation agreements where we collect a fee for reserving a defined storage capacity for customers at our facilities. Under these contracts, revenue is recognized on a straight-line basis 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, LPG 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. Offshore Pipelines & Services In July 2015, we sold our Offshore Business to Genesis. See Note 5 for additional information related to the sale of our Offshore Business. Revenue from offshore pipelines was generally based upon a fixed fee per unit of volume gathered or transported multiplied by the volume delivered. Transportation fees were based either on contractual arrangements or tariffs regulated by the FERC. Revenue associated with these fee-based contracts and tariffs was recognized when volumes were delivered. Revenues from offshore platform services generally consisted of demand fees and commodity charges. Revenues from offshore platform services were recognized in the period the services were provided. Demand fees represented charges to customers served by offshore platforms regardless of the volume the customer actually delivered to the platform. Revenue from commodity charges was 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 included both demand fees and commodity charges, but demand fees generally expired after a contractually fixed period of time.

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