18. Commitments and Contingencies

Legal

The Partnership is subject to a variety of risks and disputes, and is a party to various legal proceedings in the normal course of its business. The Partnership maintains insurance policies in amounts and with coverage and deductibles that it believes are reasonable and prudent. However, the Partnership cannot assure that the insurance companies will promptly honor their policy obligations or that the coverage or levels of insurance will be adequate to protect the Partnership from all material expenses related to future claims for property loss or business interruption to the Partnership, or for third-party claims of personal injury and property damage, or that the coverages or levels of insurance it currently has will be available in the future at economical prices. While it is not possible to predict the outcome of the legal actions with certainty, management is of the opinion that appropriate provisions and accruals for potential losses associated with all legal actions have been made in the consolidated financial statements and that none of these actions, either individually or in the aggregate, will have a material adverse effect on the Partnership's financial condition, liquidity or results of operation.

Contract Contingencies

Certain natural gas processing and gathering arrangements require the Partnership to construct new natural gas processing plants, natural gas gathering pipelines and NGL pipelines and contain certain fees and charges if specified construction milestones are not achieved for reasons other than force majeure. In certain cases, certain producers may have the right to cancel the processing arrangements if there are significant delays that are not due to force majeure. As of December 31, 2013, management does not believe there are any indications that the Partnership will not be able to meet the construction milestones or that force majeure does not apply.

Lease and Other Contractual Obligations

The Partnership has various non-cancellable operating lease agreements and a long-term propane storage agreement expiring at various times through fiscal year 2040. Annual expense under these agreements was $25.8 million, $20.8 million and $15.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. The minimum future payments under these agreements as of December 31, 2013 are as follows (in thousands):

Year ending December 31,

2014	$	20,557
2015		17,014
2016		15,144
2017		14,534
2018		11,405
2019 and thereafter		62,552


	$	141,206

SMR Transaction

On September 1, 2009, the Partnership entered into a product supply agreement creating a long-term contractual obligation for the payment of processing fees in exchange for the entire product processed by the SMR (see Note 6 for further discussion of this agreement and the related SMR Transaction). The product received under this agreement is sold to a refinery customer pursuant to a corresponding long-term agreement. The minimum amounts payable annually under the product supply agreement, excluding the potential impact of inflation adjustments per the agreement, are as follows (in thousands):

Year ending December 31,

2014	$	17,412
2015		17,412
2016		17,412
2017		17,412
2018		17,412
2019 and thereafter		195,205


Total minimum payments		282,265
Less: Services element		(107,974	)
Less: Interest		(84,699	)


Total SMR liability		89,592
Less: Current portion of SMR Liability		(2,479	)


Long-term portion of SMR Liability	$	87,113