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Revenues | 12 Months Ended
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Dec. 31, 2018
Revenues [Abstract] |
Revenues [Text Block] | Note 9. Revenues We classify our revenues into sales of products and midstream services. Product sales relate primarily to our various marketing activities whereas midstream services represent our other integrated businesses (i.e., processing, fractionation, transportation, storage and terminaling). The following table presents our revenues by business segment, and further by revenue type, for the years indicated:
|  | For the Year Ended December 31, |
|  | 2018 (1) |  |  | 2017 (2) |  |  | 2016 (2) |
NGL Pipelines & Services: |  |  |  |  |  |  |  |  |
Sales of NGLs and related products |  | $ | 12,920.9 |  |  | $ | 10,521.3 |  |  | $ | 8,380.5 |
Segment midstream services: |  |  |  |  |  |  |  |  |  |  |  |
Natural gas processing and fractionation |  |  | 1,341.0 |  |  |  | 719.1 |  |  |  | 714.6 |
Transportation |  |  | 1,007.0 |  |  |  | 891.7 |  |  |  | 885.6 |
Storage and terminals |  |  | 380.0 |  |  |  | 335.9 |  |  |  | 261.8 |
Total segment midstream services |  |  | 2,728.0 |  |  |  | 1,946.7 |  |  |  | 1,862.0 |
Total NGL Pipelines & Services |  |  | 15,648.9 |  |  |  | 12,468.0 |  |  |  | 10,242.5 |
Crude Oil Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |
Sales of crude oil |  |  | 10,001.2 |  |  |  | 7,365.2 |  |  |  | 5,802.5 |
Segment midstream services: |  |  |  |  |  |  |  |  |  |  |  |
Transportation |  |  | 676.5 |  |  |  | 473.9 |  |  |  | 411.1 |
Storage and terminals |  |  | 364.9 |  |  |  | 317.7 |  |  |  | 301.4 |
Total segment midstream services |  |  | 1,041.4 |  |  |  | 791.6 |  |  |  | 712.5 |
Total Crude Oil Pipelines & Services |  |  | 11,042.6 |  |  |  | 8,156.8 |  |  |  | 6,515.0 |
Natural Gas Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |
Sales of natural gas |  |  | 2,411.7 |  |  |  | 2,238.5 |  |  |  | 1,591.9 |
Segment midstream services: |  |  |  |  |  |  |  |  |  |  |  |
Transportation |  |  | 1,042.7 |  |  |  | 907.1 |  |  |  | 951.1 |
Total segment midstream services |  |  | 1,042.7 |  |  |  | 907.1 |  |  |  | 951.1 |
Total Natural Gas Pipelines & Services |  |  | 3,454.4 |  |  |  | 3,145.6 |  |  |  | 2,543.0 |
Petrochemical & Refined Products Services: |  |  |  |  |  |  |  |  |  |  |  |
Sales of petrochemicals and refined products |  |  | 5,535.4 |  |  |  | 4,696.3 |  |  |  | 2,921.9 |
Segment midstream services: |  |  |  |  |  |  |  |  |  |  |  |
Fractionation and isomerization |  |  | 188.3 |  |  |  | 156.3 |  |  |  | 142.6 |
Transportation, including marine logistics |  |  | 481.8 |  |  |  | 430.7 |  |  |  | 456.2 |
Storage and terminals |  |  | 182.8 |  |  |  | 187.8 |  |  |  | 201.1 |
Total segment midstream services |  |  | 852.9 |  |  |  | 774.8 |  |  |  | 799.9 |
Total Petrochemical & Refined Products Services |  |  | 6,388.3 |  |  |  | 5,471.1 |  |  |  | 3,721.8 |
Total consolidated revenues |  | $ | 36,534.2 |  |  | $ | 29,241.5 |  |  | $ | 23,022.3 |
(1) Revenues are accounted for under ASC 606 upon implementation at January 1, 2018. (2) Revenues are accounted for under ASC 605 for historical periods prior to January 1, 2018. |
Substantially all of our revenues are derived from contracts with customers as defined within ASC 606. In total, product sales and midstream services accounted for 84% and 16%, respectively, of our consolidated revenues for the year ended December 31, 2018. During the year ended December 31, 2017, product sales and midstream services accounted for 85% and 15%, respectively, of our consolidated revenues. During the year ended December 31, 2016, product sales and midstream services accounted for 81% and 19%, respectively, of our consolidated revenues. Apart from the following information regarding natural gas processing, we did not have any significant changes in connection with the adoption of ASC 606.
§ | Natural gas processing utilizes service contracts that are either fee-based, commodity-based or a combination of the two. Our commodity-based contracts include keepwhole, margin-band, percent-of-liquids, percent-of-proceeds and contracts featuring a combination of commodity and fee-based terms. When a cash fee for natural gas processing services is stipulated by a contract, we record revenue as a producer’s natural gas has been processed.
Under ASC 605, our natural gas processing business did not recognize revenue in connection with non-cash consideration (the “equity NGL volumes”) it received under percent-of-liquids and similar arrangements. We recognized revenue when the associated NGLs were delivered and sold to downstream customers under NGL marketing product sales contracts. Under ASC 606, our natural gas processing business recognizes the value of the equity NGL volumes it receives from customers as a form of midstream service revenue. The value assigned to this non-cash consideration and related inventory is based on the market value of the equity NGLs we are entitled to when the services are performed. We also recognize revenue, along with a corresponding cost of sales, when the NGLs are delivered and sold to downstream customers under NGL marketing product sales contracts. The additional service revenue recognized for the non-cash consideration increased our total revenues by approximately 2% for the year ended December 31, 2018 when compared to the amount of revenues we would have recognized under ASC 605 for the year. Due to the rapid turnover of our inventories of NGL products each month, there was no significant change in our gross operating margin from natural gas processing and related NGL marketing activities as a result of the changes required by ASC 606. The following information describes the nature of our significant revenue streams by segment and type: NGL Pipelines & Services Sales of NGLs and related products NGL marketing activities generate revenues from merchant activities such as spot and term sales of NGLs and related products that we take title to through our natural gas processing activities (i.e., our equity NGL production) and open market and long-term contract purchases. Revenue from these sales contracts is recognized when the NGLs are sold and delivered to customers at market-based prices. Midstream services Natural gas processing utilizes 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, margin-band, percent-of-liquids, percent-of-proceeds and contracts featuring a combination of commodity and fee-based terms. We recognize revenues related to the equity NGLs we receive under commodity-based contracts (once the processing service has been performed and we are entitled to such volumes) at market value. NGL pipeline transportation contracts and tariffs typically generate revenue based on a fixed fee per gallon of liquids multiplied by the volume transported and delivered (or capacity reserved). Transportation fees charged to shippers are based on either tariffs regulated by governmental agencies or contractual arrangements. Under certain agreements customers are required to ship a minimum volume with a provision that allows the shipper to make-up any volume shortfalls over an agreed-upon period (referred to as “make-up rights”). Revenue pursuant to such agreements is initially deferred and subsequently recognized at the earlier of when the deficiency volume is shipped, when the likelihood of the shipper’s ability to meet the minimum volume commitment becomes remote, or when the pipeline is otherwise released from its performance obligation. NGL fractionation primarily generates revenue under fee-based arrangements. These fees are contractually subject to adjustment for changes in certain fractionation expenses (e.g., natural gas fuel costs) and are recognized in the period services are provided. NGL and related product storage contracts generate revenue from capacity reservations where we collect a fee for reserving storage capacity for customers in our underground storage wells and above-ground storage tanks. Under these agreements, revenue is recognized on a straight-line basis over the reservation period. 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. NGL import and export terminaling activities generate revenue in the period services are provided. Customers are typically billed a fee per unit of volume loaded or unloaded. Crude Oil Pipelines & Services Sales of crude oil Crude oil marketing activities generate revenues from the sale and delivery of crude oil purchased either directly from producers or on the open market. Revenue from these sales contracts is recognized when crude oil is sold and delivered to customers at market-based prices. Midstream services Crude oil transportation contracts and tariffs generate revenue based upon a fixed fee per barrel multiplied by the volume transported and delivered (or capacity reserved). Transportation fees charged to shippers are based on either tariffs regulated by governmental agencies or contractual arrangements. Under certain agreements, customers are required to ship a minimum volume over an agreed-upon period, with make-up rights. Revenue pursuant to such agreements is initially deferred and subsequently recognized at the earlier of when the deficiency volume is shipped, when the likelihood of the shipper’s ability to meet the minimum volume commitment becomes remote, or when the pipeline is otherwise released from its performance obligation. Crude oil storage contracts generate revenue from capacity reservations 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 reservation period. In addition, customers are billed a fee per unit of volume loaded or unloaded at our terminals. Revenue is recognized as the service is provided. Natural Gas Pipelines & Services Sales of natural gas Natural gas marketing activities generate revenue from the sale and delivery of natural gas purchased from producers, regional natural gas processing plants and on the open market. Revenue from these sales contracts is recognized when natural gas is sold and delivered to customers at market-based prices. Midstream services Natural gas transportation contracts generate revenues based on 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 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. Revenues are recognized when the volumes are transported and delivered to customers or in the period we provide firm capacity services for the shipper. Petrochemical & Refined Products Services Sales of petrochemicals and refined products Our petrochemical marketing activities include the purchase and fractionation of refinery grade propylene obtained on the open market and generate revenues from the sale and delivery of polymer grade propylene to customers at market-based prices. Revenues from our PDH facility are dependent on the level of minimum volume commitments by customers and the associated contractual fees paid by them for polymer grade propylene during a given period. Revenue from the production and sale of octane additives and high purity isobutylene is dependent on the volume of such commodities sold and delivered to customers at market-based prices. Revenue from refined products marketing is dependent on the volume of such commodities purchased on the open market and sold and delivered to customers at market-based prices. Midstream services Propylene fractionation and butane isomerization facilities generate revenue through fee-based toll arrangements with customers, with such arrangements typically including a base-processing fee subject to adjustment for changes in power, fuel and labor costs. Revenue resulting from such agreements is recognized in the period the services are provided. Petrochemical and refined products transportation contracts generate revenue based upon a fixed fee per volume multiplied by the volume transported and delivered. Transportation fees charged to shippers are based on either tariffs regulated by governmental agencies or contractual arrangements. Marine transportation contracts generate revenue based on set day rates or a set fee per cargo movement recognized over the transit time of individual tows. Additionally, we record revenue for the costs of fuel and other operating costs that are directly reimbursed by our marine customers. Refined products storage contracts generate revenue from capacity reservations 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 reservation period. In addition, customers are billed a fee per unit of volume loaded or unloaded at our terminals. Revenue is recognized as the service is provided. Unbilled Revenue and Deferred Revenue The following table provides information regarding our contract assets and contract liabilities at December 31, 2018:
Contract Asset | Location |  | Balance |
Unbilled revenue (current amount) | Prepaid and other current assets |  | $ | 13.3 |
Total |  |  | $ | 13.3 |
Contract Liability | Location |  | Balance |
Deferred revenue (current amount) | Other current liabilities |  | $ | 80.9 |
Deferred revenue (noncurrent) | Other long-term liabilities |  |  | 210.3 |
Total |  |  | $ | 291.2 |
The following table presents significant changes in our unbilled revenue and deferred revenue balances during the year ended December 31, 2018:
|  | Unbilled Revenue |  |  | Deferred Revenue |
Balance at January 1, 2018 (upon adoption of ASC 606) |  | $ | -- |  |  | $ | 224.7 |
Amount included in opening balance transferred to other accounts during period (1) |  |  | -- |  |  |  | (90.8 | )
Amount recorded during period |  |  | 321.7 |  |  |  | 432.5 |
Amounts recorded during period transferred to other accounts (1) |  |  | (310.6 | ) |  |  | (274.8 | )
Amount recorded in connection with business combination |  |  | 2.2 |  |  |  | -- |
Other changes |  |  | -- |  |  |  | (0.4 | )
Balance at December 31, 2018 |  | $ | 13.3 |  |  | $ | 291.2 |
(1)Unbilled revenues are transferred to accounts receivable once we have an unconditional right to consideration from the customer. Deferred revenues are recognized as revenue upon satisfaction of our performance obligation to the customer. |
Remaining Performance Obligations The following table presents estimated fixed consideration from contracts with customers that contain minimum volume commitments, deficiency and similar fees and the term of the contracts exceeds one year. These amounts represent the revenues we expect to recognize in future periods from these contracts at December 31, 2018. For a significant portion of our revenue, we bill customers a contractual rate for the services provided multiplied by the amount of volume handled in a given period. We have the right to invoice the customer in the amount that corresponds directly with the value of our performance completed to date. Therefore, we are not required to disclose information about the variable consideration of remaining performance obligations as we recognize revenue equal to the amount that we have the right to invoice.
2019 |  |  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | Thereafter |  |  | Total |
$ | 3,530.6 |  |  | $ | 3,187.3 |  |  | $ | 2,641.4 |  |  | $ | 2,145.0 |  |  | $ | 1,798.7 |  |  | $ | 7,289.9 |  |  | $ | 20,592.9 |
Impact of Change in Accounting Policy – ASC 606 Transition Disclosures The following information and tables are provided to summarize the impacts of adopting ASC 606 on our consolidated financial statements for the year ended December 31, 2018. As noted previously, additional service revenue and related inventory is now recognized in connection with the equity NGL volumes (a form of non-cash consideration) we receive under natural gas processing agreements. When the inventory is sold through our NGL marketing activities, we reflect additional cost of sales amounts within our operating costs and expenses. Unbilled revenues have historically been presented as a component of accounts receivable on our consolidated balance sheets. Upon implementation of ASC 606, we reclassified these amounts to “Prepaid and other current assets” since these amounts represent conditional rights to consideration. Once we have an unconditional right to consideration, the amount is transferred to accounts receivable. Historically, amounts received from customers as CIACs related to pipeline construction activities and production well tie-ins have been netted against property, plant and equipment on our consolidated balance sheets and presented as a cash inflow within the investing activities section of our statements of consolidated cash flows. Upon implementation of ASC 606, these amounts are now recognized as a component of midstream service revenue on our statement of operations and are a component of cash provided by operating activities as presented on our statements of consolidated cash flows. Consolidated Balance Sheet Information at December 31, 2018
|  | Impact of change in accounting policy |
|  | Balances without adoption of ASC 606 |  |  | Impact of adoption of ASC 606 |  |  | As Reported |
Assets |  |  |  |  |  |  |  |  |
Accounts receivable – trade, net |  | $ | 3,672.4 |  |  | $ | (13.3 | ) |  | $ | 3,659.1 |
Prepaid and other current assets |  |  | 298.2 |  |  |  | 13.3 |  |  |  | 311.5 |
Property, plant and equipment, net |  |  | 38,639.3 |  |  |  | 98.3 |  |  |  | 38,737.6 |
Liabilities and Equity |  |  |  |  |  |  |  |  |  |  |  |
Other current liabilities |  |  | 404.3 |  |  |  | 0.5 |  |  |  | 404.8 |
Other long-term liabilities |  |  | 664.8 |  |  |  | 86.8 |  |  |  | 751.6 |
Partners' equity |  |  | 23,842.5 |  |  |  | 11.0 |  |  |  | 23,853.5 |
The impact of adoption of ASC 606 includes the reclassification of unbilled revenue amounts of $13.3 million from accounts receivable to other current assets. Consolidated Statement of Operations Information for the Year Ended December 31, 2018
|  | Impact of change in accounting policy |
|  | Balances without adoption of ASC 606 |  |  | Impact of adoption of ASC 606 |  |  | As Reported |
Revenues |  | $ | 35,901.5 |  |  | $ | 632.7 |  |  | $ | 36,534.2 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |
Operating costs and expenses: |  |  | 30,775.6 |  |  |  | 621.7 |  |  |  | 31,397.3 |
The impact of adopting ASC 606 on revenues for the year ended December 31, 2018 includes the recognition of $621.7 million of revenues from non-cash consideration (i.e., equity NGLs) earned when providing natural gas processing services and $11.0 million recognized in connection with CIACs. Operating costs and expenses for the year ended December 31, 2018 includes $621.7 million attributable to cost of sales recognized when the equity NGL products were sold and delivered to customers. Consolidated Statement of Cash Flows Information for the Year Ended December 31, 2018
|  | Impact of change in accounting policy |
|  | Balances without adoption of ASC 606 |  |  | Impact of adoption of ASC 606 |  |  | As Reported |
Operating activities: |  |  |  |  |  |  |  |  |
Net income |  | $ | 4,227.5 |  |  | $ | 11.0 |  |  | $ | 4,238.5 |
Net effect of changes in operating accounts |  |  | (71.1 | ) |  |  | 87.3 |  |  |  | 16.2 |
Investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Contributions in aid of construction costs |  |  | 87.3 |  |  |  | (87.3 | ) |  |  | -- |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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