Divestitures

12 Months Ended

Dec. 31, 2011

Divestitures

Divestitures

5. Divestitures

• SMR Transaction

        On September 1, 2009, the Partnership completed the sale of the steam methane reformer ("SMR Transaction") the Partnership began constructing at its Javelina gas processing and fractionation facility in Corpus Christi, Texas. Under the terms of the agreement, the Partnership received proceeds of $73.1 million and the purchaser completed the construction of the SMR. The Partnership and the purchaser also executed a related product supply agreement under which the Partnership will receive all of the product produced by the SMR through 2030 in exchange for processing fees and the reimbursement of certain other expenses. The processing fee payments began when the SMR commenced operations in March 2010. The Partnership is deemed to have continuing involvement with the SMR as a result of certain provisions in the related agreements. Therefore, the transaction is treated as a financing arrangement under GAAP. The Partnership has continued to report an asset, and the related depreciation, for the total capitalized costs of constructing the SMR and has recorded a liability equal to the proceeds from the transaction plus the estimated costs incurred by the buyer to complete construction ("SMR Liability"). The Partnership imputes interest on the SMR Liability at 9.35% annually, its incremental borrowing rate at transaction consummation. The accrued interest on the SMR Liability was capitalized until the SMR commenced operations and the Partnership began payment of the processing fee under the product supply agreement. Each processing fee payment has multiple elements: reduction of principal of the SMR Liability, interest expense associated with the SMR Liability, and facility expense related to the operation of the SMR. As of December 31, 2011 and 2010, the following amounts related to the SMR are included in the accompanying Consolidated Balance Sheets (in thousands):

	December 31, 2011		December 31, 2010
ASSETS
Property, plant and equipment, net of accumulated depreciation of $9,658 and $4,390, respectively	$	95,705	$	100,973
LIABILITIES
Accrued liabilities	$	2,058	$	1,875
Other long-term liabilities		91,851		93,909

• Sale of Starfish

        Effective December 31, 2009, the Partnership sold its 50% equity interest in Starfish Pipeline Company, LLC ("Starfish") to Enbridge Offshore (Gas Transmission), L.L.C. for a purchase price of $25.0 million. The Partnership recorded a $6.8 million gain on the sale of its equity interest in Starfish.