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Derivatives and Risk Management Activities (Tables) | 3 Months Ended
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Mar. 31, 2016
Derivatives and Risk Management Activities |
Impact of derivative activities recognized in earnings | A summary of the impact of our derivative activities recognized in earnings is as follows (in millions):
|  | Three Months Ended March 31, 2016 |  |  | Three Months Ended March 31, 2015 |
Location of Gain/(Loss) |  | Derivatives in Hedging Relationships |  | Derivatives Not Designated as a Hedge |  | Total |  |  | Derivatives in Hedging Relationships |  | Derivatives Not Designated as a Hedge |  | Total |
Commodity Derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |
Supply and Logistics segment revenues |  | $ | 1 |  | $ | 31 |  | $ | 32 |  |  | $ | 7 |  | $ | (34 | ) | $ | (27 | )
Transportation segment revenues |  | — |  | 2 |  | 2 |  |  | — |  | 2 |  | 2 |
Field operating costs |  | — |  | (2 | ) | (2 | ) |  | — |  | (4 | ) | (4 | )
Interest Rate Derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  | (2 | ) | — |  | (2 | ) |  | (1 | ) | — |  | (1 | )
Foreign Currency Derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |
Supply and Logistics segment revenues |  | — |  | 6 |  | 6 |  |  | — |  | (17 | ) | (17 | )
Total Gain/(Loss) on Derivatives Recognized in Net Income |  | $ | (1 | ) | $ | 37 |  | $ | 36 |  |  | $ | 6 |  | $ | (53 | ) | $ | (47 | )
Summary of derivative assets and liabilities on Condensed Consolidated Balance Sheets on a gross basis | The following table summarizes the derivative assets and liabilities on our Condensed Consolidated Balance Sheet on a gross basis as of March 31, 2016 (in millions):
|  | Asset Derivatives |  | Liability Derivatives |
|  | Balance Sheet |  | Fair |  | Balance Sheet |  | Fair |
|  | Location |  | Value |  | Location |  | Value |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity derivatives |  | Other current assets |  | $ | 3 |  |  | Other current assets |  | $ | (2 | )
Interest rate derivatives |  |  |  |  |  |  | Other current liabilities |  | (41 | )
|  |  |  |  |  |  | Other long-term liabilities and deferred credits |  | (97 | )
Total derivatives designated as hedging instruments |  |  |  | $ | 3 |  |  |  |  | $ | (140 | )
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity derivatives |  | Other current assets |  | $ | 170 |  |  | Other current assets |  | $ | (78 | )
|  | Other current liabilities |  | 1 |  |  | Other current liabilities |  | (13 | )
|  | Other long-term liabilities and deferred credits |  | 2 |  |  | Other long-term liabilities and deferred credits |  | (3 | )
Foreign currency derivatives |  | Other current assets |  | 5 |  |  |  |  |  |
Preferred Distribution Rate Reset Option |  |  |  |  |  |  | Other long-term liabilities and deferred credits |  | (60 | )
Total derivatives not designated as hedging instruments |  |  |  | $ | 178 |  |  |  |  | $ | (154 | )
Total derivatives |  |  |  | $ | 181 |  |  |  |  | $ | (294 | )
The following table summarizes the derivative assets and liabilities on our Condensed Consolidated Balance Sheet on a gross basis as of December 31, 2015 (in millions):
|  | Asset Derivatives |  | Liability Derivatives |
|  | Balance Sheet |  | Fair |  | Balance Sheet |  | Fair |
|  | Location |  | Value |  | Location |  | Value |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity derivatives |  | Other current assets |  | $ | 4 |  |  | Other current assets |  | $ | (2 | )
Interest rate derivatives |  | Other long-term assets, net |  | 1 |  |  | Other current liabilities |  | (17 | )
|  |  |  |  |  |  | Other long-term liabilities and deferred credits |  | (33 | )
Total derivatives designated as hedging instruments |  |  |  | $ | 5 |  |  |  |  | $ | (52 | )
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Commodity derivatives |  | Other current assets |  | $ | 265 |  |  | Other current assets |  | $ | (35 | )
|  | Other long-term assets, net |  | 10 |  |  | Other long-term assets, net |  | (1 | )
|  |  |  |  |  |  | Other current liabilities |  | (13 | )
|  |  |  |  |  |  | Other long-term liabilities and deferred credits |  | (1 | )
Foreign currency derivatives |  |  |  |  |  |  | Other current liabilities |  | (8 | )
Total derivatives not designated as hedging instruments |  |  |  | $ | 275 |  |  |  |  | $ | (58 | )
Total derivatives |  |  |  | $ | 280 |  |  |  |  | $ | (110 | )
Schedule of derivative financial assets and liabilities that are subject to offsetting, including enforceable master netting arrangements | The following table presents information about derivative financial assets and liabilities that are subject to offsetting, including enforceable master netting arrangements (in millions):
|  | March 31, 2016 |  | December 31, 2015 |
|  | Derivative |  | Derivative |  | Derivative |  | Derivative |
|  | Asset Positions |  | Liability Positions |  | Asset Positions |  | Liability Positions |
Netting Adjustments: |  |  |  |  |  |  |  |  |  |
Gross position - asset/(liability) |  | $ | 181 |  | $ | (294 | ) |  | $ | 280 |  | $ | (110 | )
Netting adjustment |  | (83 | ) | 83 |  |  | (38 | ) | 38 |
Cash collateral received |  | (17 | ) | — |  |  | (156 | ) | — |
Net position - asset/(liability) |  | $ | 81 |  | $ | (211 | ) |  | $ | 86 |  | $ | (72 | )
Balance Sheet Location After Netting Adjustments: |  |  |  |  |  |  |  |  |  |
Other current assets |  | $ | 81 |  | $ | — |  |  | $ | 76 |  | $ | — |
Other long-term assets, net |  | — |  | — |  |  | 10 |  | — |
Other current liabilities |  | — |  | (53 | ) |  | — |  | (38 | )
Other long-term liabilities and deferred credits |  | — |  | (158 | ) |  | — |  | (34 | )
|  | $ | 81 |  | $ | (211 | ) |  | $ | 86 |  | $ | (72 | )
Net deferred gain/(loss) recognized in AOCI for derivatives | The following table summarizes the net deferred gain/(loss) recognized in AOCI for derivatives (in millions):
|  | Three Months Ended |
|  | March 31, |
|  | 2016 |  | 2015 |
Commodity derivatives, net |  | $ | — |  | $ | 3 |
Interest rate derivatives, net |  | (90 | ) | (75 | )
Total |  | $ | (90 | ) | $ | (72 | )
Schedule of derivative financial assets and liabilities accounted for at fair value on a recurring basis, by level within the fair value hierarchy | The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis (in millions):
|  | Fair Value as of March 31, 2016 |  | Fair Value as of December 31, 2015 |
Recurring Fair Value Measures (1) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |
Commodity derivatives |  | $ | 62 |  | $ | 17 |  | $ | 1 |  | $ | 80 |  |  | $ | 126 |  | $ | 90 |  | $ | 11 |  | $ | 227 |
Interest rate derivatives |  | — |  | (138 | ) | — |  | (138 | ) |  | — |  | (49 | ) | — |  | (49 | )
Foreign currency derivatives |  | — |  | 5 |  | — |  | 5 |  |  | — |  | (8 | ) | — |  | (8 | )
Preferred Distribution Rate Reset Option |  | — |  | — |  | (60 | ) | (60 | ) |  | — |  | — |  | — |  | — |
Total net derivative asset/(liability) |  | $ | 62 |  | $ | (116 | ) | $ | (59 | ) | $ | (113 | ) |  | $ | 126 |  | $ | 33 |  | $ | 11 |  | $ | 170 |
| (1) |  | Derivative assets and liabilities are presented above on a net basis but do not include related cash margin deposits.
Reconciliation of changes in fair value of derivatives classified as Level 3 | The following table provides a reconciliation of changes in fair value of the beginning and ending balances for our derivatives classified as Level 3 (in millions):
|  | Three Months Ended |
|  | March 31, |
|  | 2016 |  | 2015 |
Beginning Balance |  | $ | 11 |  | $ | 15 |
Losses for the period included in earnings |  | (1 | ) | — |
Settlements |  | (9 | ) | (12 | )
Derivatives entered into during the period |  | (60 | ) | 2 |
Ending Balance |  | $ | (59 | ) | $ | 5 |
Change in unrealized gains/(losses) included in earnings relating to Level 3 derivatives still held at the end of the period |  | $ | (1 | ) | $ | 2 |
Interest Rate Swaps |
Derivatives and Risk Management Activities |
Schedule of terms of forward starting interest rate swaps | The following table summarizes the terms of our forward starting interest rate swaps as of March 31, 2016 (notional amounts in millions):
Hedged Transaction |  | Number and Types of Derivatives Employed |  | Notional Amount |  | Expected Termination Date |  | Average Rate Locked |  | Accounting Treatment |
Anticipated interest payments |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/15/2016 |  | 3.06 | % | Cash flow hedge |
Anticipated interest payments |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/15/2017 |  | 3.14 | % | Cash flow hedge |
Anticipated interest payments |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/15/2018 |  | 3.20 | % | Cash flow hedge |
Anticipated interest payments |  | 8 forward starting swaps (30-year) |  | $ | 200 |  | 6/14/2019 |  | 2.83 | % | Cash flow hedge |
Foreign Currency Derivatives |
Derivatives and Risk Management Activities |
Summary of open forward exchange contracts | The following table summarizes our open forward exchange contracts as of March 31, 2016 (in millions):
|  |  |  | USD |  | CAD |  | Average Exchange Rate USD to CAD |
Forward exchange contracts that exchange CAD for USD: |  |  |  |  |  |  |  |  |
|  | 2016 |  | $ | 147 |  | $ | 191 |  | $1.00 - $1.30 |
Forward exchange contracts that exchange USD for CAD: |  |  |  |  |  |  |  |  |
|  | 2016 |  | $ | 228 |  | $ | 302 |  | $1.00 - $1.33 |

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