Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

USE OF ESTIMATES

- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosure of contingencies. Management makes significant estimates including: (

1

) allowance for doubtful accounts receivable; (

2

) estimated useful lives of assets, which impacts depreciation; (

3

) estimated cash flows and fair values inherent in impairment tests; (

4

) accruals related to revenues and expenses; (

5

) the estimated fair value of financial instruments; and (

6

) liability and contingency accruals. Although management believes these estimates are reasonable, actual results could differ from these estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

CASH AND CASH EQUIVALENTS

- Cash and cash equivalents includes cash and all investments with original maturities of

three

months or less which are readily convertible into known amounts of cash.

Accounts Receivable [Policy Text Block]

ACCOUNTS RECEIVABLE

- The majority of the Partnership’s accounts receivable relates to its crude oil pipeline services segment, specifically the crude oil marketing business. Accounts receivable included in the consolidated balance sheets are reflected net of the allowance for doubtful accounts of less than

$0.1

million at both

December 31, 2018

and

2019

.

The Partnership reviews all outstanding accounts receivable balances on a monthly basis and records a reserve for amounts that the Partnership expects will

not

be fully recovered. Although the Partnership considers its allowance for doubtful trade accounts receivable to be adequate, there is

no

assurance that actual amounts will

not

vary significantly from estimated amounts.

Property, Plant and Equipment, Policy [Policy Text Block]

PROPERTY, PLANT AND EQUIPMENT

- Property, plant and equipment are recorded at cost. Expenditures for maintenance and repairs that do

not

add capacity or extend the useful life of an asset are expensed as incurred. The carrying values of the assets are based on estimates, assumptions and judgments relative to useful lives and salvage values. As assets are disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in operating income in the consolidated statements of operations.

Depreciation is calculated using the straight-line method based on estimated useful lives of the assets. These estimates are based on various factors, including age (in the case of acquired assets), manufacturing specifications, technological advances and historical data concerning useful lives of similar assets. Uncertainties that impact these estimates include changes in laws and regulations relating to restoration and abandonment requirements, economic conditions and supply and demand in the area. When assets are put into service, management makes estimates with respect to useful lives and salvage values that it believes are reasonable. However, subsequent events could cause management to change its estimates, thus impacting the future calculation of depreciation.

The Partnership has contractual obligations to perform dismantlement and removal activities in the event that some of its liquid asphalt terminalling assets are abandoned (see Note

15

).  Such obligations are recognized in the period incurred if reasonably estimable.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

IMPAIRMENT OF LONG-LIVED ASSETS

AND OTHER INTANGIBLE ASSETS

- Long-lived assets with recorded values that are

not

expected to be recovered through future cash flows are written down to estimated fair value. A long-lived asset is tested for impairment when events or circumstances indicate that its carrying value

may

not

be recoverable. The carrying value of a long-lived asset is

not

recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment loss equal to the amount by which the carrying value exceeds the fair value of the asset is recognized. Fair value is generally determined from estimated discounted future net cash flows.

During the year ended

December 31, 2019,

the Partnership recognized fixed asset impairment expenses of approximately

$0.3

 million related to the flood damage at certain asphalt facilities.  The Partnership recognized

$2.2

 million in impairment charges during the year ended

December 31, 2019, 

due to changes in estimates and accrued interest related to Ergon’s investment in Cimarron Pipeline, for which it also recognized a

$10.0

million impairment during the year ended

December 31, 2018. 

See Note

12

 for more information.  During the year ended

December 31, 2018, 

the Partnership also recognized fixed asset impairment expenses of approximately

$40.7

million related to a markdown of our pipeline system to estimated fair value,

$1.7

million related to the market value of its pipeline linefill assets and

$0.4

million related to the value of obsolete trucking stations in Oklahoma and Colorado.

Acquired customer relationships are capitalized and amortized over useful lives ranging from

5

to

20

years using the straight-line method of amortization. An impairment loss is recognized for definite-lived intangibles if the carrying amount of an intangible asset is

not

recoverable and its carrying amount exceeds its fair value. During the year ended

December 31, 2018, 

the Partnership recognized intangible asset impairment charges of

$0.2

million related to a customer contract asset in the crude oil pipeline services business. Intangible asset impairment charges are included in the line item “Asset impairment expense” on the consolidated statements of operations.

The substantial or extended decline in crude oil commodity prices could result in impairments of the Partnership’s assets in the future.

Equity Method Investments [Policy Text Block]

EQUITY METHOD INVESTMENTS

- The Partnership’s approximate

30%

ownership investment in Advantage Pipeline, L.L.C. (“Advantage Pipeline”), over which the Partnership had significant influence but

not

control, was accounted for by the equity method. The Partnership did

not

consolidate any part of the assets or liabilities of its equity method investee. On

April 3, 2017,

Advantage Pipeline was acquired by a joint venture formed by affiliates of Plains All American Pipeline, L.P. and Noble Midstream Partners LP. The Partnership’s share of net income or loss is reflected as

one

line item on the Partnership’s consolidated statements of operations entitled “Equity earnings in unconsolidated affiliate” and increased or decreased, as applicable, the carrying value of the Partnership’s investment in the unconsolidated affiliate on the consolidated balance sheets. Distributions to the Partnership reduced the carrying value of its investment and are reflected in the Partnership’s consolidated statements of cash flows in the line item “Distributions from unconsolidated affiliate.” In turn, contributions increased the carrying value of the Partnership’s investment and were reflected in the Partnership’s consolidated statements of cash flows in investing activities. See Note

5

 for additional information.

Debt, Policy [Policy Text Block]

DEBT ISSUANCE COSTS

- Costs incurred in connection with the issuance of long-term debt related to the Partnership’s credit agreement are capitalized and amortized using the straight-line method over the term of the related debt. Use of the straight-line method does

not

differ materially from the “effective interest” method of amortization.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

GOODWILL

- Goodwill represents the excess of the cost of acquisitions over the amounts assigned to assets acquired and liabilities assumed. Goodwill is

not

amortized but is tested annually in

December

for impairment or when events and circumstances warrant an interim evaluation. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. The Partnership has

four

reporting units comprised of its (i) asphalt terminalling services, (ii) crude oil terminalling services, (iii) crude oil pipeline services and (iv) crude oil trucking services. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is

not

considered to be impaired. The impairment test is generally based on the estimated discounted future net cash flows of the respective reporting unit, utilizing discount rates and other factors in determining the fair value of the reporting unit.  Inputs in the Partnership’s estimated discounted future net cash flows include existing and estimated future asset utilization, estimated growth rates in future cash flows and estimated terminal values (these are all considered Level

3

inputs).

Changes in the carrying amount of goodwill are summarized below for the periods indicated (in thousands):

	Asphalt
	Terminalling Services
Balance, December 31, 2017	$	3,870
Acquisition		2,858
Balance, December 31, 2018	$	6,728

There were

no

changes to the carrying amount of goodwill in

2019

. Impairment testing indicated there was

no

impairment of goodwill in

2018

or in

2019

.

Environmental Costs, Policy [Policy Text Block]

ENVIRONMENTAL MATTERS

- Liabilities for loss contingencies, including environmental remediation costs, arising from claims, assessments, litigation, fines, penalties and other sources are charged to expense when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. The Partnership had loss contingencies related to environmental matters of

$0.2

 million and

$0.1

 million as of

December 31, 2018

and

2019

, respectively.

Revenue [Policy Text Block]

REVENUE RECOGNITION

- The Partnership recognizes service and product sales revenue in accordance with ASC

606.

  On

January 1, 2019,

the Partnership adopted the new accounting standard

ASC

842

- Leases

and all related amendments (“new lease standard”) using the modified retrospective method. Results for reporting periods beginning on

January 1, 2019,

are presented under the new lease standard, while prior period amounts are

not

adjusted and continue to be reported in accordance with the Partnership’s historic accounting under

ASC

840

- Leases

. See Note

4

for detailed discussion regarding the Partnership’s revenue recognition policies.

Income Tax, Policy [Policy Text Block]

INCOME AND OTHER TAXES

- For federal and most state income tax purposes, the majority of income, gains, losses, deductions and tax credits generated by the Partnership flow through to the unitholders of the Partnership and are subject to income tax at the individual partner level. The Partnership is subject to the Texas state franchise (margin) tax, and the earnings associated with the Partnership’s taxable subsidiary are subject to federal and state income taxes. The Partnership has estimated its liability related to these taxes to be 

$0.2

million and 

$0.1

million for the years ended

December 31, 2018

and

2019,

respectively. This liability is reflected on the Partnership’s consolidated statements of operations as “Provision for income taxes.” See Note

20

 for a discussion of certain risks related to the Partnership’s ability to be treated as a partnership for federal income tax purposes.

Share-based Payment Arrangement [Policy Text Block]

STOCK-BASED COMPENSATION

- The Partnership’s general partner adopted the Blueknight Energy Partners G.P. L.L.C. Long-Term Incentive Plan (the “LTIP”), under which

4.1

million units are reserved for issuance, subject to adjustment for certain events. The compensation committee of the Board administers the LTIP.  Although other types of awards are contemplated under the LTIP, awards issued to date include “phantom” units, which convey the right to receive common units upon vesting, and “restricted” units, which are grants of common units restricted until the time of vesting. Certain of the phantom unit awards also include distribution equivalent rights (“DERs”). A DER entitles the grantee to a cash payment equal to the cash distribution paid on an outstanding common unit prior to the vesting date of the underlying award. Cash distributions paid on DERs are accounted for as partnership distributions. Recipients of restricted units are entitled to receive cash distributions paid on common units during the vesting period.

The Partnership classifies unit award grants as either equity or liability awards. All award grants made under the LTIP from its inception through

December 31, 2019

, have been classified as equity awards. Fair value for award grants classified as equity is determined on the grant date of the award and this value is recognized as compensation expense ratably over the requisite service period of unit award grants, which generally is the vesting period. Fair value for equity awards is calculated as the closing price of the Partnership’s common units representing limited partner interests in the Partnership (“common units”) on the grant date and is reduced by the present value of estimated cash distributions to be paid on common units during the vesting period to the extent a unit award does

not

include DERs. Compensation expense related to unit-based payments is included in operating and general and administrative expenses on the Partnership’s consolidated statements of operations.

Fair Value of Financial Instruments, Policy [Policy Text Block]

FAIR VALUE OF FINANCIAL INSTRUMENTS 

- The Partnership measures all financial instruments, including derivatives embedded in other contracts, at fair value and recognizes them in the consolidated balance sheets as an asset or a liability, depending on its rights and obligations under the applicable contract.  The changes in the fair value of financial instruments are recognized currently in earnings in the consolidated statements of operations.