Fixed Assets, Mineral Leaseholds, and Asset Retirement Obligations

9 Months Ended

Sep. 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:


	September 30, 2020		December 31, 2019
Crude oil pipelines and natural gas pipelines and related assets	$	2,880,802	$	2,891,489
Alkali facilities, machinery, and equipment	614,403		591,547
Onshore facilities, machinery, and equipment	264,763		640,376
Transportation equipment	19,336		19,864
Marine vessels	993,346		979,171
Land, buildings and improvements	217,770		238,451
Office equipment, furniture and fixtures	21,993		22,645
Construction in progress	155,099		115,162
Other	41,891		41,891
Fixed assets, at cost	5,209,403		5,540,596
Less: Accumulated depreciation	(1,295,654)		(1,246,121)
Net fixed assets	$	3,913,749	$	4,294,475

Mineral Leaseholds

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


	September 30, 2020		December 31, 2019
Mineral leaseholds	$	566,019	$	566,019
Less: Accumulated depletion	(12,602)		(10,194)
Mineral leaseholds, net of accumulated depletion	$	553,417	$	555,825

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Depreciation expense	$	62,499	$	77,228	$	206,830	$	222,106
Depletion expense	604		1,204		2,408		3,488

Impairment Expense

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 became uneconomic for producers and the current demand and outlook for our rail logistics assets 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 approximately $277 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 approximately $272 million of net fixed assets and approximately $5 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.

In addition to this, we recognized impairment expense of $3.3 million during the third quarter of 2020 primarily associated with the full write-down of a non-core gas platform in our offshore transportation segment due to it not having a future use for our operations.

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	6,809
Changes in estimate	609


Settlements	(11,547)

ARO liability balance, September 30, 2020	$	170,952

Of the ARO balances disclosed above, $11.2 million and $26.6 million is included as current in "Accrued liabilities" on our Unaudited Condensed Consolidated Balance Sheet as of September 30, 2020 and December 31, 2019, respectively. The remainder of the ARO liability as of September 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	$	2,619
	2021	$	9,493
	2022	$	9,513
	2023	$	10,183
	2024	$	10,900

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