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Revenues

12 Months Ended

Dec. 31, 2019

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., gathering, processing, transportation, fractionation, 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,
	2019 (1)		2018 (1)		2017 (2)
NGL Pipelines & Services:
Sales of NGLs and related products	$	10,934.3	$	12,920.9	$	10,521.3
Segment midstream services:
Natural gas processing and fractionation		1,069.9		1,341.0		719.1
Transportation		1,054.3		1,007.0		891.7
Storage and terminals		412.2		380.0		335.9
Total segment midstream services		2,536.4		2,728.0		1,946.7
Total NGL Pipelines & Services		13,470.7		15,648.9		12,468.0
Crude Oil Pipelines & Services:
Sales of crude oil		9,007.8		10,001.2		7,365.2
Segment midstream services:
Transportation		801.8		676.5		473.9
Storage and terminals		477.7		364.9		317.7
Total segment midstream services		1,279.5		1,041.4		791.6
Total Crude Oil Pipelines & Services		10,287.3		11,042.6		8,156.8
Natural Gas Pipelines & Services:
Sales of natural gas		2,075.4		2,411.7		2,238.5
Segment midstream services:
Transportation		1,094.0		1,042.7		907.1
Total segment midstream services		1,094.0		1,042.7		907.1
Total Natural Gas Pipelines & Services		3,169.4		3,454.4		3,145.6
Petrochemical & Refined Products Services:
Sales of petrochemicals and refined products		4,985.2		5,535.4		4,696.3
Segment midstream services:
Fractionation and isomerization		166.6		188.3		156.3
Transportation, including marine logistics		539.4		481.8		430.7
Storage and terminals		170.6		182.8		187.8
Total segment midstream services		876.6		852.9		774.8
Total Petrochemical & Refined Products Services		5,861.8		6,388.3		5,471.1
Total consolidated revenues	$	32,789.2	$	36,534.2	$	29,241.5

(1)	Revenues are accounted for under ASC 606.
(2)	Revenues are accounted for under ASC 605.

Substantially all of our revenues are derived from contracts with customers as defined within 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 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 service 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 midstream service revenues in connection with the equity NGLs we receive under commodity-based contracts (once the processing service has been performed and we are entitled to such volumes). The value assigned to this non-cash consideration and related inventory is based on the market value of the equity NGLs at the time the services are performed. As noted previously, we also recognize product sales revenue, along with a corresponding cost of sales, when these NGLs are delivered and sold to downstream customers under NGL marketing contracts. Prior to the adoption of ASC 606, we did not recognize revenue in connection with the receipt of equity NGL volumes. We only recognized product sales revenue when the associated NGLs were delivered and sold to downstream customers under NGL marketing contracts. Following adoption of ASC 606, the additional midstream service revenue recognized for this non-cash consideration increased our total consolidated revenues by approximately 2% for the year ended December 31, 2018 when compared to the amount of revenues we would have recognized in 2018 if we had applied ASC 605. Furthermore, 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.

NGL pipeline transportation contracts and tariffs generate revenue based on a fixed fee per gallon 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 attributable 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 generates revenue using fee-based arrangements. These fees are contractually subject to adjustment for changes in certain fractionation expenses (e.g., 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 attributable 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 handled at our terminals. Revenue is recognized as the terminaling 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, natural gas processing facilities, 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. Revenues under transportation contracts are recognized when the volumes are transported and delivered to customers. In addition, 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 firm capacity services are provided to the shipper.

Petrochemical & Refined Products Services

Sales of petrochemicals and refined products

Our petrochemical and refined products marketing activities generate revenue from the sale and delivery of products to customers at market-based prices. The products handled by these marketing groups include polymer grade propylene, octane additives, high purity isobutylene and various refined products.

Midstream services

Propylene fractionation units and butane isomerization facilities generate revenue through fee-based tolling arrangements with customers. Revenue 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.

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 handled at our terminals. Revenue is recognized as the terminaling service is provided.

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.

Unbilled Revenue and Deferred Revenue

The following table provides information regarding our contract assets and contract liabilities at the dates indicated:

		December 31,
Contract Asset	Location	2019		2018
Unbilled revenue (current amount)	Prepaid and other current assets	$	17.6	$	13.3
Total		$	17.6	$	13.3

		December 31,
Contract Liability	Location	2019		2018
Deferred revenue (current amount)	Other current liabilities	$	117.9	$	80.9
Deferred revenue (noncurrent)	Other long-term liabilities		197.0		210.3
Total		$	314.9	$	291.2

The following table presents significant changes in our unbilled revenue and deferred revenue balances during the years indicated:

	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
Amount included in opening balance transferred to other accounts during period (1)		(13.3	)		(126.4	)
Amount recorded during period		340.0			539.8
Amounts recorded during period transferred to other accounts (1)		(322.4	)		(384.8	)
Amount recorded in connection with business combination		–			–
Other changes		–			(4.9	)
Balance at December 31, 2019	$	17.6		$	314.9

(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 future consideration from revenue contracts 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 as of December 31, 2019.

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 since we recognize revenue equal to the amount that we have the right to invoice.

Period	Fixed Consideration
One Year Ended December 31, 2020	$	3,654.6
One Year Ended December 31, 2021		3,363.9
One Year Ended December 31, 2022		3,062.7
One Year Ended December 31, 2023		2,857.8
One Year Ended December 31, 2024		2,743.8
Thereafter		14,106.7
Total	$	29,789.5

Major Customer Information

Our largest non-affiliated customer for the years ended December 31, 2019, 2018 and 2017 was Vitol Holding B.V. and its affiliates (collectively, “Vitol”), which accounted for approximately 10.1%, 7.8% and 11.2%, respectively, of our consolidated revenues. Vitol is a global energy and commodity trading company.