Impairment of Long-Lived Assets

9 Months Ended

Sep. 30, 2020

Asset Impairment Charges [Abstract]

Asset Impairment Charges [Text Block]

4.    Impairment of Long-Lived Assets

During the third quarter of 2020, we identified impairment triggers relating to our Houston refinery’s asset group as a result of significant negative impacts to the Refining segment forecasted cash flows. We expect that prolonged reduction of travel and associated transportation fuels consumption resulting from the pandemic has created length in global fuel markets that will pressure refining profitability for an extended period of time. In addition, the refinery is expected to continue to be adversely affected by lower discounts for the heavy crude oil feedstocks that we utilize.

Due to these trends, we assessed the Houston refinery for impairment and determined that the asset group carrying value exceeded its undiscounted estimated pre-tax cash flows. We estimated the fair value of the Houston refinery’s long-lived assets to be $560 million, which was less than the carrying value. As a result, we recognized a non-cash impairment charge in the third quarter of 2020 of $582 million. The fair value measurement for the asset group is a Level 3.