Variable Interest Entities

3 Months Ended

Mar. 31, 2015

Variable Interest Entity Disclosures [Abstract]

Note 3 – Variable Interest Entities

As of March 31, 2015, we consolidate the following variable interest entities (VIEs):

Gulfstar One

WPZ owns a 51 percent interest in Gulfstar One LLC (Gulfstar One), a subsidiary that, due to certain risk-sharing provisions in its customer contracts, is a VIE. WPZ is the primary beneficiary because it has the power to direct the activities that most significantly impact Gulfstar One’s economic performance. WPZ, as construction agent for Gulfstar One, designed, constructed, and installed a proprietary floating-production system, Gulfstar FPS™, and associated pipelines which began providing production handling and gathering services for the Tubular Bells oil and gas discovery in the eastern deepwater Gulf of Mexico in the fourth quarter of 2014. WPZ received certain advance payments from the producer customers. In certain circumstances, the producer customers could be responsible for Gulfstar One’s unrecovered portion of the firm price of building the facilities if the production handling agreement is terminated. Construction of an expansion project is underway that will provide production handling and gathering services for the Gunflint oil and gas discovery in the eastern deepwater Gulf of Mexico. The expansion project is expected to be in service in the first quarter of 2016. The current estimate of the total remaining construction costs for the expansion project is approximately $116 million, which we expect will be funded with revenues received from customers and capital contributions from WPZ and the other equity partner on a proportional basis.

Constitution

WPZ owns a 41 percent interest in Constitution, a subsidiary that, due to shipper fixed-payment commitments under its firm transportation contracts, is a VIE. WPZ is the primary beneficiary because it has the power to direct the activities that most significantly impact Constitution’s economic performance. WPZ, as construction agent for Constitution, is building a pipeline connecting our gathering system in Susquehanna County, Pennsylvania, to the Iroquois Gas Transmission and the Tennessee Gas Pipeline systems. WPZ plans to place the project in service in the second half of 2016 and estimates the total remaining construction costs of the project to be approximately $604 million, which is expected to be funded with capital contributions from WPZ and the other equity partners on a proportional basis.

Cardinal

WPZ owns a 66 percent interest in Cardinal Gas Services, L.L.C (Cardinal), a subsidiary that, due to certain risks shared with customers, is a VIE. WPZ is the primary beneficiary because it has the power to direct the activities that most significantly impact Cardinal’s economic performance. WPZ, as operator for Cardinal, designed, constructed, and installed associated pipelines which provide production handling and gathering services for the Utica region. WPZ has received certain advance payments from the equity partners during the construction process. Future construction activity which is expected to be funded with capital contributions from WPZ and the other equity partners on a proportional basis.

Jackalope

WPZ owns a 50 percent interest in Jackalope Gas Gathering Services, L.L.C (Jackalope), a subsidiary that, due to certain risks shared with customers, is a VIE. WPZ is the primary beneficiary because it has the power to direct the activities that most significantly impact Jackalope’s economic performance. WPZ, as operator for Jackalope, designed, constructed, and installed associated pipelines which provide production handling and gathering services for the Niobrara region. Although still under construction, parts of Jackalope are operating and made limited contributions to operations in 2014 and the first quarter of 2015. WPZ has received certain advance payments from the equity partner during the construction process. Future construction activity which is expected to be funded with capital contributions from WPZ and the other equity partner on a proportional basis.

The following table presents amounts included in our Consolidated Balance Sheet that are for the use or obligation of our consolidated VIEs.



	March 31, 2015			December 31, 2014			Classification
	(Millions)
Assets (liabilities):
Cash and cash equivalents	$	58		$	113		Cash and cash equivalents
Accounts receivable	71			52			Accounts and notes receivable, net – Trade and other
Other current assets	3			3			Other current assets and deferred charges
Property, plant and equipment, net	2,877			2,794			Property, plant and equipment – net
Goodwill	107			103			Goodwill
Other intangible assets, net	1,474			1,493			Other intangible assets, net of accumulated amortization
Other noncurrent assets	3			14			Regulatory assets, deferred charges, and other
Accounts payable	(40		)	(48		)	Accounts payable
Accrued liabilities	(36		)	(36		)	Accrued liabilities
Current deferred revenue	(45		)	(45		)	Accrued liabilities
Noncurrent deferred income taxes	—			(13		)	Deferred income taxes
Asset retirement obligation	(94		)	(94		)	Other noncurrent liabilities
Noncurrent deferred revenue associated with customer advance payments	(389		)	(395		)	Other noncurrent liabilities

- Definition

The complete disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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