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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Note 10. Property, Plant, and Equipment

		Estimated	Depreciation
		Useful Life (a)	Rates (a)		December 31,
		(Years)	(%)		2012	2011

					(Millions)

Nonregulated:
	Natural gas gathering and processing facilities	5 - 40		$	7,727	$	6,435
	Construction in progress	(b)			1,997		648
	Other	3 - 45			1,103		816
Regulated:
	Natural gas transmission facilities		1.01 - 6.82		9,963		9,593
	Construction in progress		(b)		337		199
	Other		.18 - 33.33		1,419		1,391
Total property, plant, and equipment, at cost					22,546		19,082
Accumulated depreciation and amortization					(7,079)		(6,502)
Property, plant, and equipment - net				$	15,467	$	12,580

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(a) Estimated useful life and depreciation rates are presented as of December 31, 2012. Depreciation rates for regulated assets are prescribed by the FERC.

(b) Construction in progress balances not yet subject to depreciation.

Depreciation and amortization expense for property, plant, and equipment – net was $712 million in 2012, $658 million in 2011, and $611 million in 2010.

Regulated property, plant, and equipment – net includes $825 million and $865 million at December 31, 2012 and 2011, respectively, related to amounts in excess of the original cost of the regulated facilities within our gas pipeline businesses as a result of our prior acquisitions. This amount is being amortized over 40 years using the straight-line amortization method. Current FERC policy does not permit recovery through rates for amounts in excess of original cost of construction.

Asset Retirement Obligations

Our accrued obligations relate to underground storage caverns, offshore platforms, fractionation and compression facilities, gas gathering well connections and pipelines, and gas transmission facilities. At the end of the useful life of each respective asset, we are legally obligated to plug storage caverns and remove any related surface equipment, to restore land and remove surface equipment at gas processing, fractionation and compression facilities, to dismantle offshore platforms, to cap certain gathering pipelines at the wellhead connection and remove any related surface equipment, and to remove certain components of gas transmission facilities from the ground.

The following table presents the significant changes to our asset retirement obligations, of which $511 million and $507 million are included in other noncurrent liabilities with the remaining current portion in accrued liabilities at December 31, 2012 and 2011, respectively.

		December 31,
		2012		2011

		(Millions)
Beginning balance	$	573	$	499
Liabilities incurred		8		4
Liabilities settled		(44)		(46)
Accretion expense		43		39
Revisions(1)		(1)		77
Ending balance	$	579	$	573

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The 2012 revision primarily reflects a decrease in removal cost estimates, which is among several factors considered in the annual review process, including inflation rates, current estimates for removal cost, discount rates, and the estimated remaining life of the assets. The revision in 2011 is primarily due to increases in the inflation rate and estimated removal costs. The 2012 and 2011 revisions also include increases of $13 million and $39 million, respectively, related to changes in the timing and method of abandonment on certain of Transco's natural gas storage caverns that were associated with a leak in 2010.

Pursuant to its 2008 rate case settlement, Transco deposits a portion of its collected rates into an external trust (ARO Trust) that is specifically designated to fund future AROs. Transco was also required to make annual deposits into the trust through 2012. (See Note 15.)

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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