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Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2011
Summary of Significant Accounting Policies  
Components of inventory, linefill, base gas and long-term inventory

 

 

 

December 31, 2011

 

December 31, 2010

 

 

 

Volumes

 

Unit of
Measure

 

Total Value

 

Price/
Unit (1)

 

Volumes

 

Unit of
Measure

 

Total Value

 

Price/
Unit (1)

 

Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

5,361

 

barrels

 

$

483

 

$

90.10

 

14,132

 

barrels

 

$

1,100

 

$

77.84

 

LPG

 

6,885

 

barrels

 

438

 

$

63.62

 

7,395

 

barrels

 

366

 

$

49.49

 

Natural gas (2)

 

16,170

 

Mcf

 

51

 

$

3.15

 

13

 

Mcf

 

—

 

$

3.87

 

Other

 

N/A

 

 

 

6

 

N/A

 

N/A

 

 

 

25

 

N/A

 

Inventory subtotal

 

 

 

 

 

978

 

 

 

 

 

 

 

1,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Linefill and base gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

9,366

 

barrels

 

514

 

$

54.88

 

9,159

 

barrels

 

478

 

$

52.19

 

Natural gas (2)

 

14,105

 

Mcf

 

48

 

$

3.40

 

11,194

 

Mcf

 

37

 

$

3.31

 

LPG

 

31

 

barrels

 

2

 

$

64.52

 

77

 

barrels

 

4

 

$

51.95

 

Linefill and base gas subtotal

 

 

 

 

 

564

 

 

 

 

 

 

 

519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

1,714

 

barrels

 

127

 

$

74.10

 

1,761

 

barrels

 

128

 

$

72.69

 

LPG

 

150

 

barrels

 

8

 

$

53.33

 

505

 

barrels

 

26

 

$

51.49

 

Long-term inventory subtotal

 

 

 

 

 

135

 

 

 

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

$

1,677

 

 

 

 

 

 

 

$

2,164

 

 

 

 

(1)                                     Price per unit of measure represents a weighted average associated with various grades, qualities and locations; accordingly, these prices may not coincide with any published benchmarks for such products.

 

(2)                                     The volumetric ratio of Mcf of natural gas to crude Btu equivalent is 6:1; thus, natural gas volumes can be approximately converted to barrels by dividing by 6.
Components of property, plant and equipment, net

 

 

 

 

Estimated Useful

 

December 31,

 

 

 

Lives (Years)

 

2011

 

2010

 

Crude oil pipelines and facilities

 

10 - 70

 

$

4,467

 

$

4,303

 

Storage and terminal facilities

 

30 - 70

 

3,385

 

2,740

 

Trucking equipment and other

 

3 - 15

 

110

 

106

 

Construction in progress

 

—

 

693

 

304

 

Office property and equipment

 

2 - 50

 

99

 

95

 

Land and other

 

N/A

 

275

 

266

 

 

 

 

 

9,029

 

7,814

 

Accumulated depreciation

 

 

 

(1,289

)

(1,123

)

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

 

$

7,740

 

$

6,691

 
Investments in entities accounted for under the equity method of accounting

 

 

Entity

 

Type of Operation

 

Our Ownership
Interest

 

Settoon Towing, LLC

 

Barge Transportation Services

 

50

%

White Cliffs Pipeline, L.L.C.

 

Crude Oil Pipeline

 

34

%

Frontier Pipeline Company

 

Crude Oil Pipeline

 

22

%

Butte Pipe Line Company

 

Crude Oil Pipeline

 

22

%
Changes in goodwill

 

 

 

 

Transportation

 

Facilities

 

Supply & Logistics

 

Total (1)

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2009

 

$

608

 

$

308

 

$

371

 

$

1,287

 

 

 

 

 

 

 

 

 

 

 

2010 Goodwill Related Activity:

 

 

 

 

 

 

 

 

 

Nexen acquisition

 

18

 

—

 

54

 

72

 

Purchase price accounting adjustments (2)

 

3

 

—

 

—

 

3

 

Foreign currency translation adjustments

 

11

 

—

 

3

 

14

 

Balance at December 31, 2010

 

$

640

 

$

308

 

$

428

 

$

1,376

 

 

 

 

 

 

 

 

 

 

 

2011 Goodwill Related Activity:

 

 

 

 

 

 

 

 

 

Southern Pines acquisition (2)

 

—

 

301

 

—

 

301

 

Gardendale Gathering System acquisition(2)

 

155

 

—

 

—

 

155

 

Foreign currency translation adjustments

 

(5

)

—

 

(1

)

(6

)

Purchase price accounting adjustments and other (2)

 

28

 

—

 

—

 

28

 

Balance at December 31, 2011

 

$

818

 

$

609

 

$

427

 

$

1,854

 

 

(1)                                     As of December 31, 2011, the total carrying amount of goodwill is net of approximately $3 million of accumulated impairment losses.

 

(2)                                     Goodwill is recorded at the acquisition date based on a preliminary purchase price allocation. This preliminary goodwill balance may be adjusted when the purchase price allocation is finalized.  See Note 3 for additional discussion of our acquisitions.
Components of other assets, net of accumulated amortization

 

 

 

 

December 31,

 

 

 

2011

 

2010

 

Debt issue costs

 

$

53

 

$

47

 

Fair value of derivative instruments

 

20

 

20

 

Intangible assets

 

498

 

311

 

Other

 

59

 

58

 

 

 

630

 

436

 

Accumulated amortization

 

(84

)

(54

)

 

 

$

546

 

$

382
Components of intangible assets that have finite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2011

 

December 31, 2010

 

 

 

Estimated Useful

 

 

 

Accumulated

 

 

 

 

 

Accumulated

 

 

 

 

 

Lives (Years)

 

Cost

 

Amortization

 

Net

 

Cost

 

Amortization

 

Net

 

Customer contracts and relationships

 

1-20

 

$

426

 

$

(61

)

$

365

 

$

221

 

$

(34

)

$

187

 

Property tax abatement

 

7-13

 

38

 

(6

)

32

 

23

 

(2

)

21

 

Other agreements

 

30-70

 

26

 

(1

)

25

 

22

 

(1

)

21

 

Emission reduction credits (1)

 

N/A

 

8

 

—

 

8

 

45

 

—

 

45

 

 

 

 

 

$

498

 

$

(68

)

$

430

 

$

311

 

$

(37

)

$

274

 

 

(1)                                     Emission reduction credits are finite-lived and are subject to surrender from the date that they are first utilized. During 2011, approximately $37 million of emission reduction credits were surrendered as part of the permitting process associated with facility construction and were reclassified into construction in progress, which is included within Property and equipment on our Consolidated Balance Sheet.
Estimated amortization expense related to finite-lived intangible assets for the next five years

 

 

2012

 

$

50

 

2013

 

$

47

 

2014

 

$

44

 

2015

 

$

41

 

2016

 

$

36

 
Computation of basic and diluted earnings per limited partner unit

 

 

 

 

Year Ended December 31,

 

 

 

2011

 

2010

 

2009

 

Numerator for basic and diluted earnings per limited partner unit:

 

 

 

 

 

 

 

Net income attributable to Plains

 

$

966

 

$

505

 

$

579

 

Less: General partner’s incentive distribution (1)

 

(221

)

(168

)

(136

)

Less: General partner 2% ownership

 

(15

)

(7

)

(9

)

Net income available to limited partners in accordance with the application of the two-class method for MLPs

 

$

730

 

$

330

 

$

434

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Basic weighted average number of limited partner units outstanding

 

149

 

137

 

130

 

Effect of dilutive securities:

 

 

 

 

 

 

 

Weighted average LTIP units (2)

 

1

 

1

 

1

 

Diluted weighted average number of limited partner units outstanding

 

150

 

138

 

131

 

 

 

 

 

 

 

 

 

Basic net income per limited partner unit

 

$

4.91

 

$

2.41

 

$

3.34

 

 

 

 

 

 

 

 

 

Diluted net income per limited partner unit

 

$

4.88

 

$

2.40

 

$

3.32

 

 

(1)                                     We calculate net income available to limited partners based on the distributions pertaining to the current period’s net income.  After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner and limited partners in accordance with the contractual terms of the partnership agreement.

 

(2)                                     Our LTIP awards (described in Note 10) that contemplate the issuance of common units are considered dilutive unless (i) vesting occurs only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. LTIP awards that are deemed to be dilutive are reduced by a hypothetical unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.