Property, Plant and Equipment

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Note 4. Property, Plant and Equipment

The historical costs of our property, plant and equipment and related accumulated depreciation balances were as follows at the dates indicated:

	Estimated Useful Life in Years			September 30, 2020		December 31, 2019
Plants, pipelines and facilities (1)		3-45	(5)	$	49,050.9	$	47,201.2
Underground and other storage facilities (2)		5-40	(6)		4,133.7		3,965.5
Transportation equipment (3)		3-10			204.1		198.9
Marine vessels (4)		15-30			928.9		905.9
Land					376.7		372.3
Construction in progress					2,468.9		2,641.2
Total					57,163.2		55,285.0
Less accumulated depreciation					14,803.1		13,681.6
Property, plant and equipment, net				$	42,360.1	$	41,603.4

(1)	Plants, pipelines and facilities include processing plants; NGL, natural gas, crude oil and petrochemical and refined products pipelines; terminal loading and unloading facilities; buildings; office furniture and equipment; laboratory and shop equipment and related assets.
(2)	Underground and other storage facilities include underground product storage caverns; above ground storage tanks; water wells and related assets.
(3)	Transportation equipment includes tractor-trailer tank trucks and other vehicles and similar assets used in our operations.
(4)	Marine vessels include tow boats, barges and related equipment used in our marine transportation business.
(5)	In general, the estimated useful lives of major assets within this category are: processing plants, 20-35 years; pipelines and related equipment, 5-45 years; terminal facilities, 10-35 years; buildings, 20-40 years; office furniture and equipment, 3-20 years; and laboratory and shop equipment, 5-35 years.
(6)	In general, the estimated useful lives of assets within this category are: underground storage facilities, 5-35 years; storage tanks, 10-40 years; and water wells, 5-35 years.

The following table summarizes our depreciation expense and capitalized interest amounts for the periods indicated:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
Depreciation expense (1)		$	420.7		$	394.7		$	1,251.6		$	1,164.6
Capitalized interest (2)			34.5			33.9			96.9			102.9

(1)

Depreciation expense is a component of “Costs and expenses” as presented on our Unaudited Condensed Statements of Consolidated Operations.

(2)

We capitalize interest costs incurred on funds used to construct property, plant and equipment while the asset is in its construction phase. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life as a component of depreciation expense. When capitalized interest is recorded, it reduces interest expense from what it would be otherwise.

Asset impairment charges and related matters

We recognized non-cash asset impairment charges of $77.0 million and $90.4 million during the three and nine months ended September 30, 2020, respectively, primarily due to the complete write-off of assets that would no longer be used or constructed. These charges include the $42.0 million of expense we recognized in September 2020 in connection with our cancellation of the Midland-to-ECHO 4 pipeline construction project. We recognized impairment charges of $39.4 million and $51.2 million during the three and nine months ended September 30, 2019, respectively, primarily due to the complete write-off of assets that would no longer be used. These impairment charges are a component of “Operating costs and expenses” on our Unaudited Condensed Statements of Consolidated Operations. We recognized $0.1 million of impairment charges in the three and nine months ended September 30, 2019 that are a component of general and administrative costs.

We are closely monitoring the recoverability of our long-lived assets in light of the adverse economic effects of the coronavirus disease 2019 (“COVID-19”) pandemic. If the adverse economic impacts of the pandemic persist for longer periods than currently expected, these developments could result in the recognition of additional non-cash impairment charges in the future.

In connection with our cancellation of the Midland-to-ECHO 4 pipeline project, we reclassified $311.7 million of pipe and related items that were purchased for the project from construction in progress to long-term spare parts, where they will be held for future use. Long-term spare parts is a component of “Other assets” as presented on our Unaudited Condensed Consolidated Balance Sheet.

Asset Retirement Obligations

Property, plant and equipment at September 30, 2020 and December 31, 2019 includes $70.2 million and $69.6 million, respectively, of asset retirement costs capitalized as an increase in the associated long-lived asset. The following table presents information regarding our asset retirement obligations, or AROs, since December 31, 2019:

ARO liability balance, December 31, 2019	$	132.1
Liabilities incurred		3.5
Liabilities settled		(0.6	)
Revisions in estimated cash flows		2.9
Accretion expense		6.1
ARO liability balance, September 30, 2020	$	144.0