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v3.20.1

Leases | 3 Months Ended
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Mar. 31, 2020
Leases [Abstract] |
LEASES | 5. LEASES Lease Costs and Other Supplemental Information Our total lease cost comprises costs that are included in our income statement, as well as costs capitalized as part of an item of property, plant, and equipment or inventory. Total lease cost by class of underlying asset was as follows (in millions):
| Pipelines, Terminals, and Tanks |  | Transportation |  | Feedstock Processing Equipment |  | Energy and Gases |  | Real Estate |  | Other |  | Total
|  | Marine |  | Rail |  |  |  |  |
Three months ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use (ROU) assets | $ | 22 |  |  | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 26 |
Interest on lease liabilities | 21 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 22 |
Operating lease cost | 42 |  |  | 39 |  |  | 15 |  |  | 4 |  |  | 2 |  |  | 6 |  |  | 1 |  |  | 109 |
Variable lease cost | 16 |  |  | 18 |  |  | 1 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 36 |
Short-term lease cost | 4 |  |  | 22 |  |  | — |  |  | 14 |  |  | — |  |  | — |  |  | — |  |  | 40 |
Sublease income | — |  |  | (6 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (6 | )
Total lease cost | $ | 105 |  |  | $ | 73 |  |  | $ | 16 |  |  | $ | 22 |  |  | $ | 4 |  |  | $ | 6 |  |  | $ | 1 |  |  | $ | 227 |
Three months ended March 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of ROU assets | $ | 8 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |
Interest on lease liabilities | 10 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 11 |
Operating lease cost | 47 |  |  | 34 |  |  | 11 |  |  | 7 |  |  | 2 |  |  | 4 |  |  | — |  |  | 105 |
Variable lease cost | 18 |  |  | 10 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 28 |
Short-term lease cost | 3 |  |  | 14 |  |  | — |  |  | 6 |  |  | — |  |  | — |  |  | — |  |  | 23 |
Sublease income | — |  |  | (1 | ) |  | — |  |  | — |  |  | — |  |  | (1 | ) |  | — |  |  | (2 | )
Total lease cost | $ | 86 |  |  | $ | 57 |  |  | $ | 11 |  |  | $ | 14 |  |  | $ | 4 |  |  | $ | 3 |  |  | $ | — |  |  | $ | 175 |
The following table presents additional information related to our operating and finance leases (in millions, except for lease terms and discount rates):
| March 31, 2020 |  | December 31, 2019
| Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
Supplemental balance sheet information |  |  |  |  |  |  |
ROU assets, net reflected in the following balance sheet line items: |  |  |  |  |  |  |
Property, plant, and equipment, net | $ | — |  |  | $ | 2,203 |  |  | $ | — |  |  | $ | 790 |
Deferred charges and other assets, net | 1,297 |  |  | — |  |  | 1,329 |  |  | — |
Total ROU assets, net | $ | 1,297 |  |  | $ | 2,203 |  |  | $ | 1,329 |  |  | $ | 790 |
Current lease liabilities reflected in the following balance sheet line items: |  |  |  |  |  |  |
Current portion of debt and finance lease obligations | $ | — |  |  | $ | 63 |  |  | $ | — |  |  | $ | 41 |
Accrued expenses | 342 |  |  | — |  |  | 331 |  |  | — |
Noncurrent lease liabilities reflected in the following balance sheet line items: |  |  |  |  |  |  |
Debt and finance lease obligations, less current portion | — |  |  | 2,149 |  |  | — |  |  | 750 |
Other long-term liabilities | 928 |  |  | — |  |  | 959 |  |  | — |
Total lease liabilities | $ | 1,270 |  |  | $ | 2,212 |  |  | $ | 1,290 |  |  | $ | 791 |
Other supplemental information |  |  |  |  |  |  |
Weighted-average remaining lease term | 7.5 years |  |  | 22.9 years |  |  | 7.7 years |  |  | 19.7 years |
Weighted-average discount rate | 4.8 | % |  | 4.4 | % |  | 4.9 | % |  | 5.2 | %
Supplemental cash flow information related to our operating and finance leases is presented in Note 13. Significant Lease Commencement We have a 50 percent membership interest in MVP Terminalling, LLC (MVP), an unconsolidated joint venture formed in September 2017 with a subsidiary of Magellan Midstream Partners LP, to construct, own, and operate the Magellan Valero Pasadena marine terminal (MVP Terminal) located adjacent to the Houston Ship Channel in Pasadena, Texas. Concurrent with the formation of MVP, we entered into a terminaling agreement with MVP to utilize the MVP Terminal upon completion of the initial two phases of construction, which occurred in the first quarter of 2020. During the three months ended March 31, 2020, we recognized a finance lease ROU asset and related liability of approximately $1.4 billion in connection with this agreement. The terminaling agreement has an initial term of 12 years with two five-year automatic renewals, and year-to-year renewals thereafter. Maturity Analysis The remaining minimum lease payments due under our long-term leases were as follows (in millions):
| March 31, 2020 |  | December 31, 2019
| Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
2020 (a) | $ | 302 |  |  | $ | 123 |  |  | $ | 376 |  |  | $ | 88 |
2021 | 273 |  |  | 164 |  |  | 250 |  |  | 86 |
2022 | 205 |  |  | 165 |  |  | 194 |  |  | 87 |
2023 | 170 |  |  | 171 |  |  | 160 |  |  | 91 |
2024 | 133 |  |  | 162 |  |  | 125 |  |  | 82 |
Thereafter | 489 |  |  | 2,895 |  |  | 498 |  |  | 1,011 |
Total undiscounted lease payments | 1,572 |  |  | 3,680 |  |  | 1,603 |  |  | 1,445 |
Less: Amount associated with discounting | 302 |  |  | 1,468 |  |  | 313 |  |  | 654 |
Total lease liabilities | $ | 1,270 |  |  | $ | 2,212 |  |  | $ | 1,290 |  |  | $ | 791 |
____________________ (a) The amounts as of March 31, 2020 are for the remaining nine months of 2020.
LEASES | 5. LEASES Lease Costs and Other Supplemental Information Our total lease cost comprises costs that are included in our income statement, as well as costs capitalized as part of an item of property, plant, and equipment or inventory. Total lease cost by class of underlying asset was as follows (in millions):
| Pipelines, Terminals, and Tanks |  | Transportation |  | Feedstock Processing Equipment |  | Energy and Gases |  | Real Estate |  | Other |  | Total
|  | Marine |  | Rail |  |  |  |  |
Three months ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use (ROU) assets | $ | 22 |  |  | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 26 |
Interest on lease liabilities | 21 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 22 |
Operating lease cost | 42 |  |  | 39 |  |  | 15 |  |  | 4 |  |  | 2 |  |  | 6 |  |  | 1 |  |  | 109 |
Variable lease cost | 16 |  |  | 18 |  |  | 1 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 36 |
Short-term lease cost | 4 |  |  | 22 |  |  | — |  |  | 14 |  |  | — |  |  | — |  |  | — |  |  | 40 |
Sublease income | — |  |  | (6 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (6 | )
Total lease cost | $ | 105 |  |  | $ | 73 |  |  | $ | 16 |  |  | $ | 22 |  |  | $ | 4 |  |  | $ | 6 |  |  | $ | 1 |  |  | $ | 227 |
Three months ended March 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of ROU assets | $ | 8 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |
Interest on lease liabilities | 10 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 11 |
Operating lease cost | 47 |  |  | 34 |  |  | 11 |  |  | 7 |  |  | 2 |  |  | 4 |  |  | — |  |  | 105 |
Variable lease cost | 18 |  |  | 10 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 28 |
Short-term lease cost | 3 |  |  | 14 |  |  | — |  |  | 6 |  |  | — |  |  | — |  |  | — |  |  | 23 |
Sublease income | — |  |  | (1 | ) |  | — |  |  | — |  |  | — |  |  | (1 | ) |  | — |  |  | (2 | )
Total lease cost | $ | 86 |  |  | $ | 57 |  |  | $ | 11 |  |  | $ | 14 |  |  | $ | 4 |  |  | $ | 3 |  |  | $ | — |  |  | $ | 175 |
The following table presents additional information related to our operating and finance leases (in millions, except for lease terms and discount rates):
| March 31, 2020 |  | December 31, 2019
| Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
Supplemental balance sheet information |  |  |  |  |  |  |
ROU assets, net reflected in the following balance sheet line items: |  |  |  |  |  |  |
Property, plant, and equipment, net | $ | — |  |  | $ | 2,203 |  |  | $ | — |  |  | $ | 790 |
Deferred charges and other assets, net | 1,297 |  |  | — |  |  | 1,329 |  |  | — |
Total ROU assets, net | $ | 1,297 |  |  | $ | 2,203 |  |  | $ | 1,329 |  |  | $ | 790 |
Current lease liabilities reflected in the following balance sheet line items: |  |  |  |  |  |  |
Current portion of debt and finance lease obligations | $ | — |  |  | $ | 63 |  |  | $ | — |  |  | $ | 41 |
Accrued expenses | 342 |  |  | — |  |  | 331 |  |  | — |
Noncurrent lease liabilities reflected in the following balance sheet line items: |  |  |  |  |  |  |
Debt and finance lease obligations, less current portion | — |  |  | 2,149 |  |  | — |  |  | 750 |
Other long-term liabilities | 928 |  |  | — |  |  | 959 |  |  | — |
Total lease liabilities | $ | 1,270 |  |  | $ | 2,212 |  |  | $ | 1,290 |  |  | $ | 791 |
Other supplemental information |  |  |  |  |  |  |
Weighted-average remaining lease term | 7.5 years |  |  | 22.9 years |  |  | 7.7 years |  |  | 19.7 years |
Weighted-average discount rate | 4.8 | % |  | 4.4 | % |  | 4.9 | % |  | 5.2 | %
Supplemental cash flow information related to our operating and finance leases is presented in Note 13. Significant Lease Commencement We have a 50 percent membership interest in MVP Terminalling, LLC (MVP), an unconsolidated joint venture formed in September 2017 with a subsidiary of Magellan Midstream Partners LP, to construct, own, and operate the Magellan Valero Pasadena marine terminal (MVP Terminal) located adjacent to the Houston Ship Channel in Pasadena, Texas. Concurrent with the formation of MVP, we entered into a terminaling agreement with MVP to utilize the MVP Terminal upon completion of the initial two phases of construction, which occurred in the first quarter of 2020. During the three months ended March 31, 2020, we recognized a finance lease ROU asset and related liability of approximately $1.4 billion in connection with this agreement. The terminaling agreement has an initial term of 12 years with two five-year automatic renewals, and year-to-year renewals thereafter. Maturity Analysis The remaining minimum lease payments due under our long-term leases were as follows (in millions):
| March 31, 2020 |  | December 31, 2019
| Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
2020 (a) | $ | 302 |  |  | $ | 123 |  |  | $ | 376 |  |  | $ | 88 |
2021 | 273 |  |  | 164 |  |  | 250 |  |  | 86 |
2022 | 205 |  |  | 165 |  |  | 194 |  |  | 87 |
2023 | 170 |  |  | 171 |  |  | 160 |  |  | 91 |
2024 | 133 |  |  | 162 |  |  | 125 |  |  | 82 |
Thereafter | 489 |  |  | 2,895 |  |  | 498 |  |  | 1,011 |
Total undiscounted lease payments | 1,572 |  |  | 3,680 |  |  | 1,603 |  |  | 1,445 |
Less: Amount associated with discounting | 302 |  |  | 1,468 |  |  | 313 |  |  | 654 |
Total lease liabilities | $ | 1,270 |  |  | $ | 2,212 |  |  | $ | 1,290 |  |  | $ | 791 |
____________________ (a) The amounts as of March 31, 2020 are for the remaining nine months of 2020.

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