v2.3.0.11
Segment Disclosures (Notes)
 6 Months Ended
Jun. 30, 2011
Segment Disclosures [Abstract]  
Segment Disclosures [Text Block]
SEGMENT DISCLOSURES


Our revenues are derived from two operating segments: Crude Oil Gathering and Terminalling, Transportation and Storage. Our assets consist of a crude oil gathering system in the Bakken Shale/Williston Basin area of North Dakota and Montana, eight refined products terminals in the midwestern and western United States, a crude oil and refined products storage facility and five related short-haul pipelines. Our revenues are generated by existing third-party contracts and from commercial agreements we entered into with Tesoro at the closing of the Offering under which Tesoro pays us fees for gathering, transporting and storing crude oil and transporting, storing and terminalling refined products. The commercial agreements with Tesoro are described in Note C. The tariff rates for intrastate transportation on our High Plains system were adjusted in January 2011 to reflect more uniform mileage-based rates that are comparable to rates for similar pipeline gathering and transportation services in the area. This adjustment has created an overall increase in revenues that we receive for committed and uncommitted intrastate transportation services on our High Plains system. We do not have any foreign operations.


There are differences in the way our Predecessor recorded revenues and the way the Partnership records revenues after completion of the Offering. Our assets have historically been a part of the integrated operations of Tesoro, and our Predecessor generally recognized only the costs and did not record revenue associated with the short-haul pipeline transportation, terminalling, storage or trucking services provided to Tesoro on an intercompany basis. Accordingly, the revenues in our Predecessor's historical condensed combined financial statements relate only to amounts received from third parties for these services and amounts received from Tesoro with respect to transportation regulated by FERC and NDPSC on our High Plains system.


Our operating segments are strategic business units that offer different services and are managed separately because each segment requires different industry knowledge, technology and marketing strategies. We evaluate the performance of each segment based on its respective operating income.


Crude Oil Gathering.  Our crude oil gathering system in North Dakota and Montana, which we refer to as our High Plains system, includes an approximate 23,000 barrels per day (“bpd”) truck-based crude oil gathering operation and approximately 700 miles of common carrier pipeline and related storage assets with current capacity to deliver up to 70,000 bpd to Tesoro's North Dakota refinery. This system gathers and transports crude oil produced in the Williston Basin including production from the Bakken Shale formation. We refer to this area, a significant portion of which is serviced by our High Plains system, as the Bakken Shale/Williston Basin area. Currently, Tesoro's North Dakota refinery is the only destination point on our High Plains system.


Terminalling, Transportation and Storage.  We own and operate eight refined products terminals with aggregate truck and barge delivery capacity of approximately 229,000 bpd. The terminals provide distribution primarily for refined products produced at Tesoro's refineries located in Los Angeles and Martinez, California (the Los Angeles and Golden Eagle refineries, respectively); Salt Lake City, Utah (the Utah refinery); Kenai, Alaska (the Alaska refinery); Anacortes, Washington (the Washington refinery); and Mandan, North Dakota (the North Dakota refinery). We also own and operate assets that exclusively support Tesoro's Utah refinery, including a refined products and crude oil storage facility with total shell capacity of approximately 878,000 barrels and three short-haul crude oil supply pipelines and two short-haul refined product delivery pipelines connected to third-party interstate pipelines.


Segment information is as follows (in thousands):
 
Three Months Ended

June 30,
 
Six Months Ended

June 30,
 
2011 (a)
 
2010
 
2011 (a)
 
2010
REVENUES
 
 
Predecessor
 
 
 
Predecessor
Crude Oil Gathering:
 
 
 
 
 
 
 
Affiliate (b)
$
10,572


 
$
3,987


 
$
16,134


 
$
8,942


Third-party
99


 
34


 
124


 
62


Total Crude Oil Gathering
10,671


 
4,021


 
16,258


 
9,004


Terminalling, Transportation and Storage:


 


 


 


Affiliate (b)
8,306


 
—


 
8,306


 
—


Third-party
789


 
901


 
1,472


 
1,814


Total Terminalling, Transportation and Storage
9,095


 
901


 
9,778


 
1,814


Total Segment Revenues
$
19,766


 
$
4,922


 
$
26,036


 
$
10,818


 


 


 


 


OPERATING AND MAINTENANCE EXPENSES


 


 


 


Crude Oil Gathering
$
5,161


 
$
5,310


 
$
9,876


 
$
10,205


Terminalling, Transportation and Storage
2,980


 
2,771


 
6,973


 
5,919


Total Segment Operating and Maintenance Expenses
$
8,141


 
$
8,081


 
$
16,849


 
$
16,124


 


 


 


 


DEPRECIATION AND AMORTIZATION EXPENSE
 


 


 


Crude Oil Gathering
$
785


 
$
772


 
$
1,570


 
$
1,539


Terminalling, Transportation and Storage
1,235


 
1,357


 
2,467


 
2,440


Total Segment Depreciation and Amortization Expense
$
2,020


 
$
2,129


 
$
4,037


 
$
3,979


 


 


 


 


GENERAL AND ADMINISTRATIVE EXPENSES
 


 


 


Crude Oil Gathering
$
281


 
$
143


 
$
435


 
$
279


Terminalling, Transportation and Storage
436


 
93


 
492


 
182


Total Segment General and Administrative Expenses
$
717


 
$
236


 
$
927


 
$
461


 


 


 


 


(GAIN) LOSS ON ASSET DISPOSALS
 
 
 
 
 
 
 
Crude Oil Gathering
$
(10
)
 
$
60


 
$
(10
)
 
$
61


Terminalling, Transportation and Storage
11


 
367


 
11


 
375


Total Segment Loss on Asset Disposals
$
1


 
$
427


 
$
1


 
$
436


 
 
 
 
 
 
 
 
SEGMENT OPERATING INCOME (LOSS)


 


 


 


Crude Oil Gathering
$
4,454


 
$
(2,264
)
 
$
4,387


 
$
(3,080
)
Terminalling, Transportation and Storage
4,433


 
(3,687
)
 
(165
)
 
(7,102
)
Total Segment Operating Income (Loss)
$
8,887


 
$
(5,951
)
 
$
4,222


 
$
(10,182
)
 


 


 


 


Unallocated general and administrative expenses
$
(1,339
)
 
$
(480
)
 
$
(2,488
)
 
$
(1,030
)
Interest and financing costs, net
(461
)
 
—


 
(461
)
 
—


NET INCOME (LOSS)
$
7,087


 
$
(6,431
)
 
$
1,273


 
$
(11,212
)
____________ 
 
 
(a) The information presented includes the results of operations of our Predecessor for periods presented through April 25, 2011 and of TLLP for the period beginning April 26, 2011, the date TLLP commenced operations.
(b) Historically, no affiliate revenue was recognized by our Predecessor in the Terminalling, Transportation and Storage segment. Our FERC regulated pipelines in the Crude Oil Gathering segment were our source of affiliate revenues.


Capital expenditures by operating segment were as follows (in thousands):
 
Three Months Ended

June 30,
 
Six Months Ended

June 30,
 
2011 (a)
 
2010
 
2011 (a)
 
2010
Capital Expenditures
 
 
Predecessor
 
 
 
Predecessor
Crude Oil Gathering
$
2


 
$
51


 
$
5


 
$
51


Terminalling, Transportation and Storage
1,252


 
446


 
1,765


 
900


Total Capital Expenditures
$
1,254


 
$
497


 
$
1,770


 
$
951




Total identifiable assets by operating segment were as follows (in thousands):
 
June 30,

2011
 
December 31,

2010
Identifiable Assets
 
 
Predecessor
Crude Oil Gathering
$
67,701


 
$
68,902


Terminalling, Transportation and Storage
74,330


 
66,675


 Other
12,726


 
—


Total Identifiable Assets
$
154,757


 
$
135,577