Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table presents the Partnership’s derivative instruments that were not designated as hedging instruments for accounting purposes.

	June 30, 2020		December 31, 2019
	Gross Notional Volume
	Purchases	Sales	Purchases	Sales
Natural gas— TBtu (1)
Financial fixed futures/swaps	6	26	10	19
Financial basis futures/swaps	5	39	11	30
Financial swaptions (2)	—	9	—	2
Physical purchases/sales	—	3	—	6
Crude oil (for condensate)— MBbl (3)
Financial futures/swaps	—	540	—	990
Financial swaptions (2)	—	150	—	225
Natural gas liquids— MBbl (4)
Financial futures/swaps	1,830	1,840	2,490	2,415
Financial options	—	60	—	—

____________________

(1)As of June 30, 2020, 88.1% of the natural gas contracts had durations of one year or less and 11.9% had durations of more than one year and less than two years. As of December 31, 2019, 86.6% of the natural gas contracts had durations of one year or less and 13.4% had durations of more than one year and less than two years.

(2)The notional volume contains a combined derivative instrument consisting of a fixed price swap and a sold option, which gives the counterparties the right, but not the obligation, to increase the notional volume hedged under the fixed price swap until the option expiration date. The notional volume represents the volume prior to option exercise.

(3)As of June 30, 2020, 91.3% of the crude oil (for condensate) contracts had durations of one year or less and 8.7% had durations of more than one year and less than two years. As of December 31, 2019, 72.8% of the crude oil (for condensate) contracts had durations of one year or less and 27.2% had durations of more than one year and less than two years.

(4)As of June 30, 2020, 97.5% of the natural gas liquids contracts had durations of one year or less and 2.5% had durations of more than one year and less than two years. As of December 31, 2019, 72.2% of the natural gas liquids contracts had durations of one year or less and 27.8% had durations of more than one year and less than two years.

The following table presents the Partnership’s derivative instruments that were designated as hedging instruments for accounting purposes.

	June 30, 2020		December 31, 2019
	Gross Notional Value
	(In millions)
Interest rate swaps	$	300	$	300

^{[1],[2],[3],[4]}

Schedule of Derivative Assets at Fair Value

The following table presents the fair value of the derivative instruments that are included in the Partnership’s Condensed Consolidated Balance Sheets that were not designated as hedging instruments for accounting purposes.

		June 30, 2020				December 31, 2019
		Fair Value
Instrument	Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
		(In millions)
Natural gas
Financial futures/swaps	Other Current	$	7	$	7	$	7	$	5
Financial swaptions	Other Current	1		2		—		—
Physical purchases/sales	Other Current	2		—		5		—
Financial futures/swaps	Other	—		—		—		1
Financial swaptions	Other	1		1		—		—
Crude oil (for condensate)
Financial futures/swaps	Other Current	2		14		1		19
Financial swaptions	Other Current	3		—		—		—
Financial futures/swaps	Other	—		2		—		8
Natural gas liquids
Financial futures/swaps	Other Current	20		3		25		3
Financial futures/swaps	Other	2		—		11		2
Total gross commodity derivatives (1)		$	38	$	29	$	49	$	38

_____________________

(1)See Note 11 for a reconciliation of the Partnership’s commodity derivatives fair value to the Partnership’s Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.

The following table presents the fair value of the derivative instruments that are included in the Partnership’s Condensed Consolidated Balance Sheets that were designated as hedging instruments for accounting purposes.

		June 30, 2020				December 31, 2019
		Fair Value
Instrument	Balance Sheet Location	Assets		Liabilities		Assets		Liabilities
		(In millions)
Interest rate swaps	Other Current	$	—	$	6	$	—	$	1
Interest rate swaps	Other	—		3		—		2
Total gross interest rate derivatives (1)		$	—	$	9	$	—	$	3

_____________________

(1)All interest rate derivative instruments that were designated as cash flow hedges are considered Level 2 as of June 30, 2020 and December 31, 2019.

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table presents the effect of derivative instruments on the Partnership’s Condensed Consolidated Statements of Income.

	Amounts Recognized in Income
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(In millions)
Natural gas
Financial futures/swaps gains (losses)	$	(1)	$	9	$	3	$	8
Financial swaptions losses	(1)		—		(2)		—
Physical purchases/sales gains	—		1		1		—
Crude oil (for condensate)
Financial futures/swaps gains (losses)	(7)		(10)		12		(21)
Financial swaptions gains (losses)	(2)		—		2		—
Natural gas liquids
Financial futures/swaps gains (losses)	6		16		(1)		19
Total	$	(5)	$	16	$	15	$	6

The following table presents the effect of derivative instruments that were designated as hedging instruments on the Partnership’s Condensed Consolidated Statements of Income.

	Amounts Recognized in Income
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(In millions)
Interest rate swaps losses	$	(1)	$	—	$	(1)	$	—
Total	$	(1)	$	—	$	(1)	$	—

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location

The following table presents the components of gain (loss) on derivative activity in the Partnership’s Condensed Consolidated Statements of Income.

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(In millions)
Change in fair value of commodity derivatives	$	(12)	$	11	$	(2)	$	(1)
Realized gain on commodity derivatives	7		5		17		7
Gain (loss) on commodity derivative activity	$	(5)	$	16	$	15	$	6

[1] As of June 30, 2020, 88.1% of the natural gas contracts had durations of one year or less and 11.9% had durations of more than one year and less than two years. As of December 31, 2019, 86.6% of the natural gas contracts had durations of one year or less and 13.4% had durations of more than one year and less than two years.

[2] As of June 30, 2020, 91.3% of the crude oil (for condensate) contracts had durations of one year or less and 8.7% had durations of more than one year and less than two years. As of December 31, 2019, 72.8% of the crude oil (for condensate) contracts had durations of one year or less and 27.2% had durations of more than one year and less than two years.

[3] As of June 30, 2020, 97.5% of the natural gas liquids contracts had durations of one year or less and 2.5% had durations of more than one year and less than two years. As of December 31, 2019, 72.2% of the natural gas liquids contracts had durations of one year or less and 27.8% had durations of more than one year and less than two years.

[4] The notional volume contains a combined derivative instrument consisting of a fixed price swap and a sold option, which gives the counterparties the right, but not the obligation, to increase the notional volume hedged under the fixed price swap until the option expiration date. The notional volume represents the volume prior to option exercise.