Inventory, Linefill and Base Gas and Long-term Inventory

9 Months Ended

Sep. 30, 2020

Inventory, Linefill and Base Gas and Long-term Inventory

Inventory, Linefill and Base Gas and Long-term Inventory

Inventory, Linefill and Base Gas and Long-term Inventory

Inventory, linefill and base gas and long-term inventory consisted of the following (barrels and natural gas volumes in thousands and carrying value in millions):

	September 30, 2020						December 31, 2019
	Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)		Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)
Inventory
Crude oil	15,332	barrels	$	449	$	29.29	8,613	barrels	$	450	$	52.25
NGL	16,144	barrels	226		$	14.00	7,574	barrels	142		$	18.75
Other	N/A		8		N/A		N/A		12		N/A
Inventory subtotal			683						604
Linefill and base gas
Crude oil	14,496	barrels	813		$	56.08	14,316	barrels	826		$	57.70
NGL	1,642	barrels	43		$	26.19	1,701	barrels	47		$	27.63
Natural gas	25,576	Mcf	110		$	4.30	24,976	Mcf	108		$	4.32
Linefill and base gas subtotal			966						981
Long-term inventory
Crude oil	2,773	barrels	102		$	36.78	2,598	barrels	152		$	58.51
NGL	1,354	barrels	18		$	13.29	1,707	barrels	30		$	17.57
Long-term inventory subtotal			120						182
Total			$	1,769					$	1,767

(1)Price per unit of measure is comprised of a weighted average associated with various grades, qualities and locations. Accordingly, these prices may not coincide with any published benchmarks for such products.

At the end of each reporting period, we assess the carrying value of our inventory and make any adjustments necessary to reduce the carrying value to the applicable net realizable value. Any resulting adjustments are a component of “Purchases and related costs” on our accompanying Condensed Consolidated Statements of Operations. We recorded a charge of $233 million primarily during the first quarter of 2020 related to the write-down of our crude oil and NGL inventory, of which $40 million was associated with our long-term inventory, due to declines in prices. A portion of this inventory valuation adjustment was offset by the recognition of gains on derivative instruments being utilized to hedge future sales of our crude oil and NGL inventory. Such gains were recorded to “Supply and Logistics segment revenues” in our accompanying Consolidated Statement of Operations. See Note 10 for discussion of our derivative and risk management activities.