Fixed Assets, Mineral Leaseholds, and Asset Retirement Obligations

6 Months Ended

Jun. 30, 2020

Fixed Assets And Asset Retirement Obligations [Abstract]

Fixed Assets, Mineral Leaseholds, and Asset Retirement Obligations

Fixed Assets

Fixed assets, net consisted of the following:


	June 30, 2020		December 31, 2019
Crude oil pipelines and natural gas pipelines and related assets	$	2,883,553	$	2,891,489
Alkali facilities, machinery, and equipment	600,325		591,547
Onshore facilities, machinery, and equipment	264,208		640,376
Transportation equipment	18,728		19,864
Marine vessels	991,623		979,171
Land, buildings and improvements	217,719		238,451
Office equipment, furniture and fixtures	22,001		22,645
Construction in progress	148,865		115,162
Other	41,891		41,891
Fixed assets, at cost	5,188,913		5,540,596
Less: Accumulated depreciation	(1,238,006)		(1,246,121)
Net fixed assets	$	3,950,907	$	4,294,475

Mineral Leaseholds

Our Mineral Leaseholds, relating to our Alkali Business, consist of the following:


	June 30, 2020		December 31, 2019
Mineral leaseholds	$	566,019	$	566,019
Less: Accumulated depletion	(11,998)		(10,194)
Mineral leaseholds, net of accumulated depletion	$	554,021	$	555,825

Our depreciation and depletion expense for the periods presented was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Depreciation expense	$	75,089	$	73,206	$	144,331	$	144,878
Depletion expense	841		965		1,804		2,284

During the second quarter of 2020, due to the challenging economic environment from the decline in commodity prices (including the collapse in the differential of Western Canadian Select to the Gulf Coast) and Covid-19, crude-by-rail transportation has become uneconomic for producers and the current demand and outlook for our rail logistics assets has declined. Due to this, we identified a triggering event that required us to perform an impairment test.

For our recoverability test, we utilized management's estimates, including current contractual commitments, for our future cash inflows, and our costs and expenses were determined based on the estimated fixed and variable requirements to operate and maintain the related assets. As our rail logistics asset groups did not pass the initial recoverability assessment, we subsequently performed a fair value calculation using a discounted cash flow model under the income approach. As a result of this test, we recognized impairment expense of $277.5 million associated with the rail logistics assets in our onshore facilities and transportation segment, as the carrying value of our assets exceeded the estimated realizable value, including $272.7 million of net fixed assets and $4.8 million of right of use assets, net on the Unaudited Condensed Consolidated Balance Sheet.

The fair value estimates used in the long-lived asset test were primarily based on level 3 inputs of the fair value hierarchy.

Asset Retirement Obligations

We record asset retirement obligations ("AROs") in connection with legal requirements to perform specified retirement activities under contractual arrangements and/or governmental regulations.

The following table presents information regarding our AROs since December 31, 2019:


ARO liability balance, December 31, 2019	$	175,081
Accretion expense	4,510
Changes in estimate	560


Settlements	(9,851)

ARO liability balance, June 30, 2020	$	170,300

Of the ARO balances disclosed above, $11.6 million and $26.6 million is included as current in "Accrued liabilities" on our Unaudited Condensed Consolidated Balance Sheet as of June 30, 2020 and December 31, 2019, respectively. The remainder of the ARO liability as of June 30, 2020 and December 31, 2019 is included in "Other long-term liabilities" on our Unaudited Condensed Consolidated Balance Sheet.

With respect to our AROs, the following table presents our estimate of accretion expense for the periods indicated:


Remainder of	2020	$	4,868
	2021	$	9,497
	2022	$	9,513
	2023	$	10,183
	2024	$	10,900

Certain of our unconsolidated affiliates have AROs recorded at June 30, 2020 relating to contractual agreements and regulatory requirements. These amounts are immaterial to our Unaudited Condensed Consolidated Financial Statements.