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Revenues | 3 Months Ended
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Mar. 31, 2018
Revenue from Contract with Customer [Abstract] |
Revenues | Revenues Revenue Recognition On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, Revenue Recognition. There was no material impact to opening retained earnings as of January 1, 2018 due to the adoption of Topic 606. There also was no material impact to revenues, or any other financial statement line items, for the three months ended March 31, 2018 as a result of applying Topic 606. Under Topic 606, we disaggregate our revenues by segment and type of activity. These categories depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. Our business activities are conducted through three operating segments: Supply and Logistics, Transportation and Facilities. See Note 13 for further discussion of our operating segments. Supply and Logistics Segment Revenues from Contracts with Customers. The following table presents our Supply and Logistics segment revenues from contracts with customers disaggregated by segment and type of activity (in millions):
| Three Months Ended March 31, 2018
Supply and Logistics revenues from contracts with customers |
Crude oil transactions | $ | 7,023 |
NGL and other transactions | 1,151 |
Total Supply and Logistics revenues from contracts with customers | $ | 8,174 |
Revenues from sales of crude oil, NGL and natural gas are recognized at the time title to the product sold transfers to the purchaser, which occurs upon delivery of the product to the purchaser or its designee. Sales of crude oil and NGL consist of outright sales contracts. The consideration received under these contracts is variable based on commodity prices. Inventory purchases and sales under buy/sell transactions are treated as inventory exchanges which are excluded from Supply and Logistics segment revenues in our Condensed Consolidated Statements of Operations. Revenues recognized by our Supply and Logistics segment primarily represent margin based activities. Additionally, we may utilize derivatives in connection with the transactions described above. Derivative revenue is not included as a component of revenue from contracts with customers, but is included in other items in revenue. The change in the fair value of derivatives that are not designated or do not qualify for hedge accounting is recognized in revenues each period along with the ineffective portion of the change in fair value of derivatives that are designated as cash flow hedges. For commodity derivatives that are designated as cash flow hedges, derivative gains and losses are deferred in AOCI and recognized in revenues in the periods during which the underlying physical hedged transaction impacts earnings. Transportation Segment Revenues from Contracts with Customers. The following table presents our Transportation segment revenues from contracts with customers disaggregated by segment and type of activity (in millions):
| Three Months Ended March 31, 2018
Transportation revenues from contracts with customers |
Tariff activities: |
Crude oil pipelines | $ | 389 |
NGL pipelines | 27 |
Total tariff activities | 416 |
Trucking | 34 |
Total Transportation revenues from contracts with customers | $ | 450 |
Our Transportation segment operations generally consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems and trucks. Revenues from pipeline tariffs and fees are associated with the transportation of crude oil and NGL at a published tariff. We primarily recognize pipeline tariff and fee revenues over time as services are rendered, based on the volumes transported. As is common in the pipeline transportation industry, our tariffs incorporate a loss allowance factor. We recognize the allowance volumes collected as part of the transaction price and record this non-cash consideration at fair value, measured as of the contract inception date. Facilities Segment Revenues from Contracts with Customers. The following table presents our Facilities segment revenues from contracts with customers disaggregated by segment and type of activity (in millions):
| Three Months Ended March 31, 2018
Facilities revenues from contracts with customers |
Crude oil, NGL and other terminalling and storage | $ | 166 |
NGL and natural gas processing and fractionation | 100 |
Rail load / unload | 16 |
Total Facilities revenues from contracts with customers | $ | 282 |
Our Facilities segment operations generally consist of fee-based activities associated with providing storage, terminalling and throughput services primarily for crude oil, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. Revenues generated in this segment include (i) fees that are generated from storage capacity agreements, (ii) terminal throughput fees that are generated when we receive liquids from one connecting source and deliver the applicable product to another connecting carrier, (iii) fees from NGL fractionation and isomerization services, (iv) fees from natural gas and condensate processing services, (v) fees associated with natural gas park and loan activities, interruptible storage services and wheeling and balancing services (“natural gas storage related activities”) and (vi) loading and unloading fees at our rail terminals. We generate revenue through a combination of month-to-month and multi-year agreements and processing arrangements. Storage fees are typically recognized in revenue ratably over the term of the contract regardless of the actual storage capacity utilized as our performance obligation is to make available storage capacity for a period of time. Terminal fees (including throughput and rail fees) are recognized as the liquids enter or exit the terminal and are received from or delivered to the connecting carrier or third-party terminal, as applicable. Fees from NGL fractionation and isomerization services and gas processing services are recognized in the period when the services are performed. Natural gas storage related activities fees are recognized in the period the natural gas moves across our header system. We recognize rail loading and unloading fees when the volumes are delivered or received. Reconciliation to Total Revenues of Reportable Segments. Topic 606 requires us to provide information about the relationship between the disaggregated revenues presented above and segment revenues. These disclosures only include information regarding revenues associated with consolidated entities, and revenues from entities accounted for by the equity method are not included in the disclosures. The following table presents the reconciliation of our revenues from contracts with customers (as described above for each segment) to segment revenues and total revenues as disclosed in our Condensed Consolidated Statement of Operations (in millions):
Three Months Ended March 31, 2018 |  | Transportation |  | Facilities |  | Supply and Logistics |  | Total
Revenues from contracts with customers |  | $ | 450 |  |  | $ | 282 |  |  | $ | 8,174 |  |  | $ | 8,906 |
Other items in revenues |  | 4 |  |  | 10 |  |  | (62 | ) |  | (48 | )
Total revenues of reportable segments |  | $ | 454 |  |  | $ | 292 |  |  | $ | 8,112 |  |  | $ | 8,858 |
Intersegment revenues |  |  |  |  |  |  |  | (460 | )
Total revenues |  |  |  |  |  |  |  | $ | 8,398 |
Minimum Volume Commitments. We have certain agreements that require counterparties to transport or throughput a minimum volume over an agreed upon period. These contracts are within the scope of Topic 606. In addition, we have certain buy/sell agreements that require customers to deliver a minimum volume over an agreed upon period that are within the scope of ASC Topic 845, Nonmonetary Transactions, (“Topic 845”). Some of these agreements include make-up rights if the minimum volume is not met. We record a receivable from the counterparty in the period that services are provided or when the transaction occurs, including amounts for deficiency obligations from counterparties associated with minimum volume commitments. If a counterparty has a make-up right associated with a deficiency, we defer the revenue attributable to the counterparty’s make-up right as a contract liability and subsequently recognize the revenue at the earlier of when the deficiency volume is delivered or shipped, when the make-up right expires or when it is determined that the counterparty’s ability to utilize the make-up right is remote. At March 31, 2018 and December 31, 2017, counterparty deficiencies associated with agreements (under Topic 606 and Topic 845) that include minimum volume commitments totaled $59 million and $57 million, respectively, of which $44 million and $37 million, respectively, was recorded as a contract liability, which we refer to as deferred revenue. The remaining balance of $15 million and $20 million at March 31, 2018 and December 31, 2017, respectively, was related to deficiencies for which the counterparties had not met their contractual minimum commitments and were not reflected in our Condensed Consolidated Financial Statements as we had not yet billed or collected such amounts. Contract Balances. Our contract balances primarily consist of trade accounts receivable and liabilities. Our liabilities primarily consist of deferred revenues and advance cash payments. We invoice customers in the month following that in which products or services were provided and generally require payment within 30 days of the invoice date. See Note 5 for further discussion of trade accounts receivable and advance cash payments. Included in these deferred revenues are amounts recognized under minimum volume commitments, as discussed above. The following is a reconciliation of trade accounts receivable from revenues from contracts with customers to total Trade accounts receivable and other receivables, net as presented on our Condensed Consolidated Balance Sheet (in millions):
| March 31, 2018 |  | December 31, 2017
Trade accounts receivable arising from revenues from contracts with customers | $ | 2,783 |  |  | $ | 2,584 |
Other trade accounts receivables and other receivables (1) | 3,674 |  |  | 3,709 |
Impact due to contractual rights of offset with counterparties | (3,434 | ) |  | (3,264 | )
Trade accounts receivable and other receivables, net | $ | 3,023 |  |  | $ | 3,029 |
(1) | The balance is comprised primarily of accounts receivable associated with buy/sell arrangements that are not within the scope of Topic 606.
Our contract liabilities primarily consist of amounts received under minimum volume commitments for which revenues are yet to be recognized and customer pre-payments and deposits. The following table presents the change in the contract liability balance during the three months ended March 31, 2018 (in millions):
| Minimum Volume Commitments |  | Customer Prepayments and Other |  | Total Deferred Revenues
Balance at December 31, 2017 | $ | 8 |  |  | $ | 86 |  |  | $ | 94 |
Amounts recognized as revenue | (5 | ) |  | (70 | ) |  | (75 | )
Additions | 5 |  |  | 95 |  |  | 100 |
Other | — |  |  | (3 | ) |  | (3 | )
Balance at March 31, 2018 | $ | 8 |  |  | $ | 108 |  |  | $ | 116 |
Remaining Performance Obligations. Topic 606 requires a presentation of information about partially and wholly unsatisfied performance obligations under contracts that exist as of the end of the period. The information includes the amount of consideration allocated to those remaining performance obligations and the timing of revenue recognition of those remaining performance obligations. Certain contracts meet the requirements for the presentation as remaining performance obligations. These arrangements include a fixed minimum level of service, typically a set volume of service, and do not contain any variability other than expected timing within a limited range. These contracts are all within the scope of Topic 606. The following table presents the amount of consideration associated with remaining performance obligations for the population of contracts with external customers meeting the presentation requirements as of March 31, 2018 (in millions):
| Remainder of 2018 |  | 2019 |  | 2020 |  | 2021 |  | 2022 |  | 2023 and Thereafter
Pipeline revenues supported by minimum volume commitments (1) | $ | 77 |  |  | $ | 158 |  |  | $ | 225 |  |  | $ | 214 |  |  | $ | 212 |  |  | $ | 682 |
Long-term storage, terminalling and throughput agreements revenues | 327 |  |  | 347 |  |  | 276 |  |  | 212 |  |  | 168 |  |  | 679 |
Total | $ | 404 |  |  | $ | 505 |  |  | $ | 501 |  |  | $ | 426 |  |  | $ | 380 |  |  | $ | 1,361 |
(1) | Includes revenues from certain contracts for which the amount and timing of revenue is subject to the completion of underlying construction projects.
The presentation above does not include (i) expected revenues from legacy shippers not underpinned by minimum volume commitments, including pipelines where there are no or limited alternative pipeline transportation options, (ii) intersegment revenues and (iii) the amount of consideration associated with certain income generating contracts, which include a fixed minimum level of service, that are either not within the scope of Topic 606 or do not meet the requirements for presentation as remaining performance obligations under Topic 606. The following are examples of contracts that are not included in the table above because they are not within the scope of Topic 606 or do not meet the Topic 606 requirements for presentation:
• | Minimum volume commitments related to the assets of equity method investees — contracts include those related to the Eagle Ford, BridgeTex, STACK, Caddo, Saddlehorn, White Cliffs, Cheyenne and Diamond pipeline systems;
• | Acreage dedications — Contracts include those related to the Permian Basin, Eagle Ford, Central, Rocky Mountain and Canada regions;
• | Supply and Logistics contracts within the scope of Topic 845 — including buy/sell arrangements with future committed volumes on certain Permian Basin, Eagle Ford, Central and Canada region systems;
• | All other Supply and Logistics contracts, due to the election of practical expedients related to variable consideration and short-term contracts, as discussed below;
• | Transportation and Facilities contracts that are short-term, as discussed below;
• | Contracts within the scope of ASC Topic 840, Leases; and
• | Contracts within the scope of ASC Topic 815, Derivatives and Hedging.
We have elected practical expedients to exclude the presentation of remaining performance obligations for variable consideration which relates to wholly unsatisfied performance obligations. Certain contracts do not meet the requirements for presentation of remaining performance obligations under Topic 606 due to variability in amount of performance obligation remaining, variability in the timing of recognition or variability in consideration. Acreage dedications do require us to perform future services but do not contain a minimum level of services and are therefore excluded from this presentation. Long-term supply and logistics arrangements contain variable timing, volumes and/or consideration and are excluded from this presentation. The duration of these contracts varies across the periods presented above. Additionally, we have elected practical expedients to exclude contracts with terms of one year or less, which excludes the presentation of remaining performance obligations for short-term transportation, storage and processing services, supply and logistics arrangements, including the non-cancelable period of evergreen arrangements, and any other types of arrangements with terms of one year or less.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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