Impairments and Losses on Divestitures

During the years ended December 31, 2017, 2016, and 2015, we recorded impairments of certain equity investments, long-lived assets, and intangible assets, and net losses on divestitures totaling $172 million, $1,013 million, and $2,125 million, respectively. During 2015 and 2016, and to a lesser degree in 2017, a sustained lower commodity price environment, and negative outlook for certain long-term transportation contracts, led us to cancel certain construction projects, divest of certain assets, write-down certain assets and investments to fair value. In addition, an interim goodwill impairment test was performed during the fourth quarter of 2015 resulting in a partial impairment of goodwill in our Natural Gas Pipelines Non-Regulated reporting unit of approximately $1,150 million. See Note 8 “Goodwill” for further information.

These impairments were driven by market conditions that existed at the time and required management to estimate the fair value of these assets. The estimates of fair value are based on Level 3 valuation estimates using industry standard income approach valuation methodologies which include assumptions primarily involving management’s significant judgments and estimates with respect to general economic conditions and the related demand for products handled or transported by our assets as well as assumptions regarding commodity prices, future cash flows based on rate and volume assumptions, terminal values and discount rates. In certain cases, management’s decisions to dispose of certain assets may trigger an impairment. We typically use discounted cash flow analyses to determine the fair value of our assets. We may probability weight various forecasted cash flow scenarios utilized in the analysis as we consider the possible outcomes. We use discount rates representing our estimate of the risk-adjusted discount rates that would be used by market participants specific to the particular asset.

We may identify additional triggering events requiring future evaluations of the recoverability of the carrying value of our long-lived assets, investments and goodwill. Because certain of our assets, including some equity investments and oil and gas producing properties, have been written down to fair value, any deterioration in fair value relative to our carrying value increases the likelihood of further impairments. Such non-cash impairments could have a significant effect on our results of operations, which would be recognized in the period in which the carrying value is determined to be not fully recoverable.

We recognized the following non-cash pre-tax impairment charges and losses (gains) on divestitures of assets (in millions):



	Year Ended December 31,
	2017			2016			2015
Natural Gas Pipelines
Impairment of goodwill	$	—		$	—		$	1,150
Impairments of long-lived assets(a)	30			106			79
Losses on divestitures of long-lived assets(b)	—			94			43
Impairments of equity investments(c)	150			606			26
Impairments at equity investees(d)	10			7			—
CO₂
Impairments of long-lived assets(e)	(1		)	20			606
Gains on divestitures of long-lived assets	—			(1		)	—
Impairments at equity investee(d)	(4		)	9			26
Terminals
Impairments of long-lived assets(f)	3			19			188
(Gains) losses on divestitures of long-lived assets(g)	(18		)	80			3
Losses on impairments and divestitures of equity investments, net	—			16			4
Products Pipelines
Impairments of long-lived assets(h)	—			66			—
Losses (gains) on divestitures of long-lived assets	—			10			1
Gain on divestiture of equity investment	—			(12		)	—

Other losses (gains) on divestitures of long-lived assets	2			(7		)	(1		)
Pre-tax losses on impairments and divestitures, net	$	172		$	1,013		$	2,125

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(a) 2017 amount represents the impairment of our Colden storage facility, of which $3 million is included in “Costs of sales” on our accompanying consolidated statement of income. 2016 amount represents the project write-off of our portion of the Northeast Energy Direct (NED) Market project. 2015 amount represents $47 million and $32 million of project write-offs in our non-regulated midstream and regulated natural gas pipelines assets, respectively.

(b) 2016 amount primarily relates to our sale of a 50% interest in SNG.

(c) 2017 amount represents the impairment of our investment in FEP. 2016 amount includes a $350 million impairment of our investment in MEP and a $250 million impairment of our investment in Ruby. 2015 amount is primarily related to an impairment of an investment in a gathering and processing asset in Oklahoma.

(d) Amounts represent losses on impairments recorded by equity investees and are included in “Earnings from equity investments” on our accompanying consolidated statements of income.

(e) 2015 amount includes (i) $399 million related to oil and gas properties and (ii) $207 million related to the certain CO₂ source and transportation project write-offs.

(f) 2015 amount is primarily related to certain terminals with significant coal operations, including a $175 million impairment of a terminal facility reflecting the impact of an agreement to adjust certain payment terms under a contract with a coal customer in February 2016.

(g) 2017 amount includes a $23 million gain related to the sale of a 40% membership interest in the Deeprock Development joint venture. 2016 amount primarily relates to the sale of 20 bulk terminals that handle mostly coal and steel products, predominately located along the inland river system.

(h) 2016 amount represents project write-offs associated with the canceled Palmetto project.