Derivatives and Risk Management Activities (Tables)

12 Months Ended

Dec. 31, 2018

Derivatives and Risk Management Activities

Impact of derivative activities recognized in earnings

A summary of the impact of our derivatives recognized in earnings is as follows (in millions):



	Year Ended December 31, 2018
Location of Gain/(Loss)	Commodity Derivatives			Foreign Currency Derivatives			Preferred Distribution Rate Reset Option			Interest Rate Derivatives			Total
Supply and Logistics segment revenues ⁽¹⁾	$	150		$	(23	)	$	—		$	—		$	127
Field operating costs ⁽¹⁾	(2		)	—			—			—			(2		)
Interest expense, net ⁽²⁾	—			—			—			(5		)	(5		)
Other income/(expense), net ⁽¹⁾	—			—			(14		)	—			(14		)
Total Gain/(Loss) on Derivatives Recognized in Net Income	$	148		$	(23	)	$	(14	)	$	(5	)	$	106



	Year Ended December 31, 2017
Location of Gain/(Loss)	Commodity Derivatives			Foreign Currency Derivatives		Preferred Distribution Rate Reset Option		Interest Rate Derivatives			Total
Supply and Logistics segment revenues ⁽¹⁾	$	(188	)	$	8	$	—	$	—		$	(180	)
Field operating costs ⁽¹⁾	(10		)	—		—		—			(10		)
Depreciation and amortization ⁽²⁾	(3		)	—		—		—			(3		)
Interest expense, net ⁽²⁾	—			—		—		(18		)	(18		)
Other income/(expense), net ⁽¹⁾	—			—		13		—			13
Total Gain/(Loss) on Derivatives Recognized in Net Income	$	(201	)	$	8	$	13	$	(18	)	$	(198	)



	Year Ended December 31, 2016
Location of Gain/(Loss)	Commodity Derivatives			Foreign Currency Derivatives			Preferred Distribution Rate Reset Option		Interest Rate Derivatives			Total
Supply and Logistics segment revenues ⁽¹⁾	$	(342	)	$	(3	)	$	—	$	—		$	(345	)
Transportation segment revenues ⁽¹⁾	5			—			—		—			5
Interest expense, net ⁽²⁾	—			—			—		(14		)	(14		)
Other income/(expense), net ⁽¹⁾	—			—			30		—			30
Total Gain/(Loss) on Derivatives Recognized in Net Income	$	(337	)	$	(3	)	$	30	$	(14	)	$	(324	)


⁽¹⁾	Derivatives not designated as a hedge. For the year ended December 31, 2016, Supply and Logistics segment revenues includes a gain of $2 million related to derivatives in hedging relationships.


⁽²⁾	Derivatives in hedging relationships.

Summary of derivative assets and liabilities on Consolidated Balance Sheets on a gross basis

The following table summarizes the derivative assets and liabilities on our Consolidated Balance Sheet on a gross basis as of December 31, 2018 (in millions):



	Derivatives Not Designated As Hedging Instruments
Balance Sheet Location	Commodity Derivatives			Foreign Currency Derivatives			Preferred Distribution Rate Reset Option			Total			Interest Rate Derivatives ⁽¹⁾			Total Derivatives
Derivative Assets
Other current assets	$	441		$	—		$	—		$	441		$	2		$	443
Other long-term assets, net	34			—			—			34			—			34
Other long-term liabilities and deferred credits	3			—			—			3			—			3
Total Derivative Assets	$	478		$	—		$	—		$	478		$	2		$	480

Derivative Liabilities
Other current assets	$	(182	)	$	—		$	—		$	(182	)	$	—		$	(182	)
Other long-term assets, net	(7		)	—			—			(7		)	—			(7		)
Other current liabilities	(10		)	(9		)	—			(19		)	(1		)	(20		)
Other long-term liabilities and deferred credits	(9		)	—			(36		)	(45		)	(8		)	(53		)
Total Derivative Liabilities	$	(208	)	$	(9	)	$	(36	)	$	(253	)	$	(9	)	$	(262	)

The following table summarizes the derivative assets and liabilities on our Consolidated Balance Sheet on a gross basis as of December 31, 2017 (in millions):



	Derivatives Not Designated As Hedging Instruments
Balance Sheet Location	Commodity Derivatives			Foreign Currency Derivatives			Preferred Distribution Rate Reset Option			Total			Interest Rate Derivatives ⁽¹⁾			Total Derivatives
Derivative Assets
Other current assets	$	73		$	6		$	—		$	79		$	—		$	79
Other long-term assets, net	1			—			—			1			—			1
Other current liabilities	5			—			—			5			2			7
Other long-term liabilities and deferred credits	3			—			—			3			—			3
Total Derivative Assets	$	82		$	6		$	—		$	88		$	2		$	90

Derivative Liabilities
Other current assets	$	(227	)	$	(2	)	$	—		$	(229	)	$	—		$	(229	)
Other long-term assets, net	—			—			—			—			—			—
Other current liabilities	(131		)	—			—			(131		)	(27		)	(158		)
Other long-term liabilities and deferred credits	(5		)	—			(22		)	(27		)	(11		)	(38		)
Total Derivative Liabilities	$	(363	)	$	(2	)	$	(22	)	$	(387	)	$	(38	)	$	(425	)


⁽¹⁾	Derivatives in hedging relationships.

Schedule of net broker receivable (payable)

The following table provides the components of our net broker receivable/(payable):



	December 31, 2018			December 31, 2017
Initial margin	$	95		$	48
Variation margin posted/(returned)	(91		)	164
Letters of credit	(84		)	—
Net broker receivable/(payable)	$	(80	)	$	212

Schedule of derivative financial assets 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):



	December 31, 2018						December 31, 2017
	Derivative Asset Positions			Derivative Liability Positions			Derivative Asset Positions			Derivative Liability Positions
Netting Adjustments:
Gross position - asset/(liability)	$	480		$	(262	)	$	90		$	(425	)
Netting adjustment	(192		)	192			(239		)	239
Cash collateral paid/(received)	(80		)	—			212			—
Net position - asset/(liability)	$	208		$	(70	)	$	63		$	(186	)

Balance Sheet Location After Netting Adjustments:
Other current assets	$	181		$	—		$	62		$	—
Other long-term assets, net	27			—			1			—
Other current liabilities	—			(20		)	—			(151		)
Other long-term liabilities and deferred credits	—			(50		)	—			(35		)
	$	208		$	(70	)	$	63		$	(186	)

Schedule of derivative financial 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):



	December 31, 2018						December 31, 2017
	Derivative Asset Positions			Derivative Liability Positions			Derivative Asset Positions			Derivative Liability Positions
Netting Adjustments:
Gross position - asset/(liability)	$	480		$	(262	)	$	90		$	(425	)
Netting adjustment	(192		)	192			(239		)	239
Cash collateral paid/(received)	(80		)	—			212			—
Net position - asset/(liability)	$	208		$	(70	)	$	63		$	(186	)

Balance Sheet Location After Netting Adjustments:
Other current assets	$	181		$	—		$	62		$	—
Other long-term assets, net	27			—			1			—
Other current liabilities	—			(20		)	—			(151		)
Other long-term liabilities and deferred credits	—			(50		)	—			(35		)
	$	208		$	(70	)	$	63		$	(186	)

Net deferred gain/(loss) recognized in AOCI for derivatives

The following table summarizes the net unrealized gain/(loss) recognized in AOCI for derivatives (in millions):



	Year Ended December 31,
	2018		2017			2016
Interest rate derivatives, net	$	38	$	(16	)	$	(33	)

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 December 31, 2018											Fair Value as of December 31, 2017
Recurring Fair Value Measures ⁽¹⁾	Level 1		Level 2			Level 3			Total			Level 1		Level 2			Level 3			Total
Commodity derivatives	$	171	$	87		$	12		$	270		$	5	$	(278	)	$	(8	)	$	(281	)
Interest rate derivatives	—		(7		)	—			(7		)	—		(36		)	—			(36		)
Foreign currency derivatives	—		(9		)	—			(9		)	—		4			—			4
Preferred Distribution Rate Reset Option	—		—			(36		)	(36		)	—		—			(22		)	(22		)
Total net derivative asset/(liability)	$	171	$	71		$	(24	)	$	218		$	5	$	(310	)	$	(30	)	$	(335	)


⁽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):



	Year Ended December 31,
	2018			2017
Beginning Balance	$	(30	)	$	(36	)
Net gains/(losses) for the period included in earnings	(13		)	12
Settlements	7			4
Derivatives entered into during the period	12			(10		)
Ending Balance	$	(24	)	$	(30	)

Change in unrealized gains/(losses) included in earnings relating to Level 3 derivatives still held at the end of the period	$	(1	)	$	5

Interest Rate Swaps

Derivatives and Risk Management Activities

Schedule of terms of forward starting interest rate derivatives

The following table summarizes the terms of our outstanding interest rate derivatives as of December 31, 2018 (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

6/14/2019

2.83

Cash flow hedge

Anticipated interest payments

8 forward starting swaps

(30-year)

200

6/15/2020

3.06

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 December 31, 2018 (in millions):



		USD		CAD		Average Exchange Rate USD to CAD
Forward exchange contracts that exchange CAD for USD:
	2019	$	3	$	4	$1.00 - $1.34

Forward exchange contracts that exchange USD for CAD:
	2019	$	218	$	284	$1.00 - $1.31