XML 52 R13.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Dec. 31, 2019

General

We have entered into long-term leasing arrangements for the right to use various classes of underlying assets as follows:


•	Pipelines, Terminals, and Tanks includes facilities and equipment used in the storage, transportation, production, and sale of refinery feedstock, refined petroleum product, and corn inventories;


•	Marine Transportation includes time charters for ocean-going tankers and coastal vessels;


•	Rail Transportation includes railcars and related storage facilities;


•	Feedstock Processing Equipment includes machinery, equipment, and various facilities used in our refining, ethanol, and renewable diesel operations;


•	Energy and Gases includes facilities and equipment related to industrial gases and power used in our operations;


•	Real Estate includes land and rights-of-way associated with our refineries and pipelines, as well as office facilities; and


•	Other includes equipment primarily used at our corporate offices, such as printers and copiers.

In addition to fixed lease payments, some arrangements contain provisions for variable lease payments. Certain leases for pipelines, terminals, and tanks provide for variable lease payments based on, among other things, throughput volumes in excess of a base amount. Certain marine transportation leases contain provisions for payments that are contingent on usage. Additionally, if the rental increases are not scheduled in the lease, such as an increase based on subsequent changes in the index or rate, those rents are considered variable lease payments. In all instances, variable lease payments are recognized in the period in which the obligation for those payments is incurred.

Lease Costs and Other Supplemental Information

In accordance with Topic 842, our total lease cost comprises costs that are included in our income statement, as well as costs capitalized as part of an item of property, plant, and equipment or inventory. Total lease cost by class of underlying asset was as follows (in millions):



	Year Ended December 31, 2019
	Pipelines, Terminals, and Tanks		Transportation					Feedstock Processing Equipment		Energy and Gases		Real Estate			Other		Total
	Pipelines, Terminals, and Tanks		Marine			Rail		Feedstock Processing Equipment		Energy and Gases		Real Estate			Other		Total
Finance lease cost:
Amortization of ROU assets	$	44	$	—		$	—	$	7	$	3	$	—		$	—	$	54
Interest on lease liabilities	47		—			—		1		2		—			—		50
Operating lease cost	182		145			52		20		9		27			4		439
Variable lease cost	66		35			—		1		—		1			—		103
Short-term lease cost	9		53			—		29		—		—			—		91
Sublease income	—		(27		)	—		—		—		(3		)	—		(30		)
Total lease cost	$	348	$	206		$	52	$	58	$	14	$	25		$	4	$	707

In accordance with Topic 840, “rental expense, net of sublease rental income” was as follows (in millions):



	Year Ended December 31,
	2018		2017
Minimum rental expense	$	515	$	691
Contingent rental expense	19		21
Total rental expense	534		712
Less: Sublease rental income	31		54
Rental expense, net of sublease rental income	$	503	$	658

The following table presents additional information related to our operating and finance leases (in millions, except for lease terms and discount rates):



	December 31, 2019
	Operating Leases			Finance Leases
Supplemental balance sheet information
ROU assets, net reflected in the following balance sheet line items:
Property, plant, and equipment, net	$	—		$	790
Deferred charges and other assets, net	1,329			—
Total ROU assets, net	$	1,329		$	790

Current lease liabilities reflected in the following balance sheet line items:
Current portion of debt and finance lease obligations	$	—		$	41
Accrued expenses	331			—
Noncurrent lease liabilities reflected in the following balance sheet line items:
Debt and finance lease obligations, less current portion	—			750
Other long-term liabilities	959			—
Total lease liabilities	$	1,290		$	791

Other supplemental information
Weighted-average remaining lease term	7.7 years			19.7 years
Weighted-average discount rate	4.9		%	5.2		%

Supplemental cash flow information related to our operating and finance leases is presented in Note 18.

Maturity Analysis

The remaining minimum lease payments due under our long-term leases were as follows (in millions):



	December 31, 2019				December 31, 2018
	Operating Leases		Finance Leases		Operating Leases		Capital Leases
2019	n/a		n/a		$	359	$	69
2020	$	376	$	88	245		65
2021	250		86		178		62
2022	194		87		146		64
2023	160		91		123		65
2024	125		82		n/a		n/a
Thereafter	498		1,011		514		957
Total undiscounted lease payments	1,603		1,445		$	1,565	1,282
Less: Amount associated with discounting	313		654				676
Total lease liabilities	$	1,290	$	791			$	606

Future Lease Commencement

As described and defined in Note 10, we have a terminaling agreement with MVP to utilize certain assets at the MVP Terminal upon completion of construction, which is expected to occur during the first quarter of 2020. We expect to recognize a finance lease ROU asset and related liability of approximately $1.5 billion in 2020 in connection with this agreement.

LEASES