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Intangible Assets and Goodwill | 12 Months Ended
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Dec. 31, 2021
Intangible Assets and Goodwill [Abstract] |
Intangible Assets and Goodwill | Note 6. Intangible Assets and Goodwill Identifiable Intangible Assets The following table summarizes our intangible assets by business segment at the dates indicated:
|  | December 31, 2021 |  |  | December 31, 2020 |
|  | Gross Value |  |  | Accumulated Amortization |  |  | Carrying Value |  |  | Gross Value |  |  | Accumulated Amortization |  |  | Carrying Value |
NGL Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationship intangibles |  | $ | 447.8 |  |  | $ | (234.5 | ) |  | $ | 213.3 |  |  | $ | 447.8 |  |  | $ | (221.3 | ) |  | $ | 226.5 |
Contract-based intangibles |  |  | 166.0 |  |  |  | (62.1 | ) |  |  | 103.9 |  |  |  | 162.6 |  |  |  | (55.0 | ) |  |  | 107.6 |
Segment total |  |  | 613.8 |  |  |  | (296.6 | ) |  |  | 317.2 |  |  |  | 610.4 |  |  |  | (276.3 | ) |  |  | 334.1 |
Crude Oil Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationship intangibles |  |  | 2,195.0 |  |  |  | (355.5 | ) |  |  | 1,839.5 |  |  |  | 2,195.0 |  |  |  | (291.6 | ) |  |  | 1,903.4 |
Contract-based intangibles |  |  | 283.1 |  |  |  | (262.6 | ) |  |  | 20.5 |  |  |  | 283.1 |  |  |  | (249.9 | ) |  |  | 33.2 |
Segment total |  |  | 2,478.1 |  |  |  | (618.1 | ) |  |  | 1,860.0 |  |  |  | 2,478.1 |  |  |  | (541.5 | ) |  |  | 1,936.6 |
Natural Gas Pipelines & Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationship intangibles |  |  | 1,350.3 |  |  |  | (550.3 | ) |  |  | 800.0 |  |  |  | 1,350.3 |  |  |  | (512.2 | ) |  |  | 838.1 |
Contract-based intangibles |  |  | 231.1 |  |  |  | (182.4 | ) |  |  | 48.7 |  |  |  | 470.7 |  |  |  | (403.8 | ) |  |  | 66.9 |
Segment total |  |  | 1,581.4 |  |  |  | (732.7 | ) |  |  | 848.7 |  |  |  | 1,821.0 |  |  |  | (916.0 | ) |  |  | 905.0 |
Petrochemical & Refined Products Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationship intangibles |  |  | 181.4 |  |  |  | (75.6 | ) |  |  | 105.8 |  |  |  | 181.4 |  |  |  | (68.3 | ) |  |  | 113.1 |
Contract-based intangibles |  |  | 44.9 |  |  |  | (26.0 | ) |  |  | 18.9 |  |  |  | 44.9 |  |  |  | (24.6 | ) |  |  | 20.3 |
Segment total |  |  | 226.3 |  |  |  | (101.6 | ) |  |  | 124.7 |  |  |  | 226.3 |  |  |  | (92.9 | ) |  |  | 133.4 |
Total intangible assets |  | $ | 4,899.6 |  |  | $ | (1,749.0 | ) |  | $ | 3,150.6 |  |  | $ | 5,135.8 |  |  | $ | (1,826.7 | ) |  | $ | 3,309.1 |
The following table presents the amortization expense of our intangible assets by business segment for the years indicated:
|  | For the Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
NGL Pipelines & Services |  | $ | 24.3 |  |  | $ | 25.2 |  |  | $ | 31.9 |
Crude Oil Pipelines & Services |  |  | 76.6 |  |  |  | 71.5 |  |  |  | 92.7 |
Natural Gas Pipelines & Services |  |  | 43.1 |  |  |  | 38.8 |  |  |  | 41.4 |
Petrochemical & Refined Products Services |  |  | 6.9 |  |  |  | 7.7 |  |  |  | 8.7 |
Total |  | $ | 150.9 |  |  | $ | 143.2 |  |  | $ | 174.7 |
The following table presents our forecast of amortization expense associated with existing intangible assets for the years indicated:
2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 |  |  | 2026 |
$ | 169.3 |  |  | $ | 173.5 |  |  | $ | 177.6 |  |  | $ | 174.1 |  |  | $ | 166.6 |
Customer relationship intangible assets Customer relationship intangible assets represent the estimated economic value assigned to commercial relationships acquired in connection with business combinations. Our customer relationship intangible assets are classified as either (i) basin-specific or (ii) general. Basin-specific customer relationships represent access to customers associated with a defined resource basin (e.g., customers using a natural gas gathering system serving a specific production field) and is analogous to having a franchise in a particular area. General customer relationships are associated with customers whose hydrocarbon volumes are not attributable to specific resource basins (e.g., customers at a marine terminal that handles volumes originating from multiple sources). The estimated fair value of each customer relationship intangible asset was determined at the time of acquisition using a discounted cash flow analysis, which incorporates various assumptions regarding the acquired business. The assumptions may include Level 3 fair value inputs, including long-range cash flow forecasts that extend for the estimated economic life of the hydrocarbon resource base served by the asset network, anticipated service contract renewals, resource base depletion rates and expected customer attrition rates. The recognition of customer relationships are supported by a variety of factors. In general, midstream infrastructure requires a significant investment, both in terms of initial construction costs and ongoing maintenance, and is generally supported by long-term contracts that establish a customer base. The level of expenditures and regulatory requirements involved in constructing new midstream asset networks can create significant economic barriers to entry that may limit potential competition. Furthermore, efficient, continuous operation of the acquired fixed assets not only supports the commercial relationships existing at the time of the acquisition, but it provides us with opportunities to establish new ones. These factors support the long-term value attributed to our customer relationship intangible assets. With respect to amortization periods, the duration of a basin-specific customer relationship is limited to the estimated economic life of the associated resource basin. The duration of our other customer relationships is typically limited to the term of the underlying service contracts, including assumed renewals. Amortization expense attributable to customer relationships is recorded in a manner that closely resembles the pattern in which we expect to benefit from such relationships. At December 31, 2021, the carrying value of our portfolio of customer relationship intangible assets was $2.96 billion, the principal components of which were as follows:
a |  | Weighted Average Remaining Amortization Period |  | December 31, 2021
Gross Value |  | Accumulated Amortization |  | Carrying Value
Basin-specific customer relationships: |  |  |  |  |  |  |  |  |  |  |
EFS Midstream (acquired 2015) |  | 20.4 years |  | $ | 1,409.8 |  | $ | (222.9) |  | $ | 1,186.9
State Line and Fairplay (acquired 2010) |  | 25.2 years |  |  | 895.0 |  |  | (251.1) |  |  | 643.9
San Juan Gathering (acquired 2004) |  | 17.8 years |  |  | 331.3 |  |  | (253.2) |  |  | 78.1
General customer relationships: |  |  |  |  |  |  |  |  |  |  |
Oiltanking (acquired 2014) |  | 22.0 years |  |  | 1,192.5 |  |  | (203.8) |  |  | 988.7
• The EFS Midstream customer relationships provide us with long-term access to condensate and natural gas producers in the Eagle Ford Shale served by our EFS Midstream System. The EFS Midstream System provides condensate gathering and processing services along with gathering, treating and compression services for associated natural gas.
• | The State Line and Fairplay customer relationships provide us with long-term access to natural gas producers served by our Haynesville and Fairplay Gathering Systems. The Haynesville Gathering System gathers and treats natural gas produced from the Haynesville and Bossier Shale supply basins and the Cotton Valley and Taylor Sand formations in Louisiana and East Texas. The Fairplay Gathering System gathers natural gas produced from the Cotton Valley formation in East Texas.
• | The San Juan Gathering customer relationships provide us with long-term access to natural gas producers in the San Juan Basin served by our San Juan Gathering System.
• | The Oiltanking customer relationships provide us with long-term access to crude oil and refined products storage and terminal customers served at our Houston Ship Channel and Beaumont, Texas terminals.
Contract-based intangible assets Contract-based intangible assets represent specific commercial rights we acquired in connection with business combinations. These intangible assets are typically valued using an income approach that incorporate the terms of the agreements. At December 31, 2021, the carrying value of our portfolio of contract-based intangible assets was $192.0 million, the principal components of which were as follows:
a |  | Weighted Average Remaining Amortization Period |  | December 31, 2021
Gross Value |  | Accumulated Amortization |  | Carrying Value
Oiltanking customer contracts |  | 2.5 years |  | $ | 293.3 |  | $ | (275.2) |  | $ | 18.1
Jonah natural gas gathering agreements |  | 20.0 years |  |  | 224.4 |  |  | (179.4) |  |  | 45.0
Delaware Basin natural gas processing contracts |  | 5.0 years |  |  | 82.6 |  |  | (32.3) |  |  | 50.3
• | The Oiltanking customer contracts represent the estimated value we assigned to crude oil storage and terminal agreements we acquired in 2014 associated with our Houston and Beaumont marine terminals. Amortization expense attributable to these contracts is recorded using a straight-line approach over the terms of the underlying contracts.
• | The Jonah natural gas gathering agreements represent the estimated value we assigned to natural gas gathering contracts acquired in 2001 associated with the Jonah Gathering System. Amortization expense attributable to these intangible assets is recorded using a units-of-production method based on gathering volumes.
• | The Delaware Basin natural gas processing contracts represent the estimated value we assigned to natural gas processing contracts we acquired in 2018 in connection with our step acquisition of the remaining 50% member interest in Delaware Basin Gas Processing LLC. Amortization expense attributable to these contracts is recorded using a straight-line approach over the terms of the underlying contracts.
Goodwill Goodwill represents the cost of acquired businesses in excess of the fair value of their net assets at acquisition. Our goodwill balance was $5.45 billion at December 31, 2021 and 2020. We are closely monitoring the recoverability of our long-lived assets, which include goodwill, in light of the COVID-19 pandemic. Based on our most recent goodwill impairment test at December 31, 2021, the estimated fair value of each of our reporting units was substantially in excess of its carrying value (i.e., by at least 10%). The following table presents changes in the carrying amount of goodwill by business segment during the periods indicated:
|  | NGL Pipelines & Services |  |  | Crude Oil Pipelines & Services |  |  | Natural Gas Pipelines & Services |  |  | Petrochemical & Refined Products Services |  |  | Consolidated Total |
Balance at December 31, 2019 |  | $ | 2,651.7 |  |  | $ | 1,841.0 |  |  | $ | 296.3 |  |  | $ | 956.2 |  |  | $ | 5,745.2 |
Impairment of goodwill |  |  | – |  |  |  | – |  |  |  | (296.3 | ) |  |  | – |  |  |  | (296.3 | )
Balance at December 31, 2020 |  |  | 2,651.7 |  |  |  | 1,841.0 |  |  |  | – |  |  |  | 956.2 |  |  |  | 5,448.9 |
Balance at December 31, 2021 |  | $ | 2,651.7 |  |  | $ | 1,841.0 |  |  | $ | – |  |  | $ | 956.2 |  |  | $ | 5,448.9 |
In December 2020, management determined that the carrying value of our natural gas pipelines and services reporting unit exceeded its estimated fair value. This reporting unit, which reflects the operations of our Natural Gas Pipelines & Services business segment, includes our natural gas gathering and transmission pipelines, storage facilities and related marketing activities. The long-term outlook for natural gas production in certain supply basins such as the Rocky Mountains and East Texas is expected to remain lower for longer due to reduced drilling activity. In addition, the decline in pipeline revenues attributable to lower regional natural gas price spreads is expected to adversely impact the future cash flows of our transmission pipelines. These factors, coupled with an increase in the estimated rate of return required for such businesses by market participants, resulted in the fair value of this reporting unit being less than its carrying value at December 31, 2020. The resulting goodwill impairment charge of $296.3 million represents the entire amount of goodwill attributable to this reporting unit and is reflected as a component of operating costs and expenses for the year ended December 31, 2020 as presented on our Statements of Consolidated Operations. We did not record any goodwill impairment charges during the years ended December 31, 2021 or 2019.

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