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Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair Values—Recurring
The following tables present assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 by fair value hierarchy level. We have elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty, including any related cash collateral as shown below; however, fair value amounts by hierarchy level are presented on a gross basis in the following tables.
September 30, 2024
Fair Value Hierarchy
(Millions of dollars)Level 1Level 2Level 3
Netting and Collateral(a)
Net Carrying Value on Balance Sheet(b)
Collateral Pledged Not Offset
Assets:
Commodity contracts$302 $1 $— $(282)$21 $36 
Liabilities:
Commodity contracts$295 $— $— $(295)$— $— 
Embedded derivatives in commodity contracts— — 69 — 69 — 
December 31, 2023
Fair Value Hierarchy
(Millions of dollars)Level 1Level 2Level 3
Netting and Collateral(a)
Net Carrying Value on Balance Sheet(b)
Collateral Pledged Not Offset
Assets:
Commodity contracts$244 $— $— $(220)$24 $73 
Liabilities:
Commodity contracts$249 $— $— $(249)$— $— 
Embedded derivatives in commodity contracts— — 61 — 61 — 
(a)Represents the impact of netting assets, liabilities and cash collateral when a legal right of offset exists. As of September 30, 2024, cash collateral of $13 million was netted with mark-to-market derivative liabilities. As of December 31, 2023, cash collateral of $29 million was netted with mark-to-market derivative liabilities.
(b)We have no derivative contracts which are subject to master netting arrangements reflected gross on the balance sheet.
Level 2 instruments include over-the-counter fixed swaps to mitigate the price risks from MPLX’s sale of propane under certain percent-of-proceeds and keep-whole arrangements. The swap valuations are based on observable inputs in the form of forward prices based on Mount Belvieu propane forward spot prices and contain no significant unobservable inputs.
Level 3 instruments relate to an embedded derivative liability for a natural gas purchase commitment embedded in a keep‑whole processing agreement. The fair value calculation for these Level 3 instruments at September 30, 2024 used significant unobservable inputs including: (1) NGL prices interpolated and extrapolated due to inactive markets ranging from $0.67 to $1.45 per gallon with a weighted average of $0.85 per gallon and (2) a 100 percent probability of renewal for the five-year term of the natural gas purchase commitment and related keep-whole processing agreement. Increases or decreases in the fractionation spread result in an increase or decrease in the fair value of the embedded derivative liability.
The following is a reconciliation of the beginning and ending balances recorded for net liabilities classified as Level 3 in the fair value hierarchy.
Three Months Ended 
September 30,		Nine Months Ended 
September 30,
(Millions of dollars)2024202320242023
Beginning balance$69 $53 $61 $61 
Unrealized and realized loss included in net income(a)
3 10 18 7 
Settlements of derivative instruments(3)(3)(10)(8)
Ending balance$69 $60 $69 $60 
The amount of total loss for the period included in earnings attributable to the change in unrealized loss relating to liabilities still held at the end of period(a):
$3 $9 $15 $6 
(a)    The loss is included in cost of revenues on the consolidated statements of income.
Fair Values – Non-recurring
Non-recurring fair value measurements and disclosures in 2024 relate to acquisitions and other transactions as discussed in Note 13.
Fair Values – Reported
We believe the carrying value of our other financial instruments, including cash and cash equivalents, receivables, accounts payable and certain accrued liabilities, approximate fair value. Our fair value assessment incorporates a variety of considerations, including the short-term duration of the instruments and the expected insignificance of bad debt expense, which includes an evaluation of counterparty credit risk. The borrowings under our revolving credit facilities, which include variable interest rates, approximate fair value. The fair value of our long-term debt is based on prices from recent trade activity and is categorized in level 3 of the fair value hierarchy. The carrying and fair values of our debt were approximately $27.9 billion and $26.9 billion at September 30, 2024, respectively, and approximately $27.0 billion and $25.5 billion at December 31, 2023, respectively. These carrying and fair values of our debt exclude the unamortized issuance costs, which are netted against our total debt.