Related Party Transactions

Related party transactions include transactions with SPLC and Shell, including those entities in which Shell has an ownership interest but does not have control.

Commercial Agreements

For a discussion of the following related party commercial agreements, see Note 4—Related Party Transactions in our 2015 Annual Report.

Omnibus Agreement

Pursuant to the omnibus agreement we entered into on November 3, 2014 with SPLC (the “Omnibus Agreement”):


•	we are required to pay an annual general and administrative fee for the provision of certain services by SPLC;


•	our obligation to reimburse SPLC for certain direct or allocated costs and expenses incurred by SPLC on our behalf;


•	our obligation to reimburse SPLC for all expenses incurred by SPLC as a result of us becoming and continuing as a publicly traded entity; we will reimburse our general partner for these expenses to the extent the fees relating to such services are not included in the general and administrative fee; and


•	Shell grants a license to us with respect to the use of certain Shell trademarks and trade names.

Expenses related to our obligations under the Omnibus Agreement during the three months ended March 31, 2016 and 2015 are reflected in related party general and administrative expenses disclosed below.

Under the Omnibus Agreement, certain of our costs are indemnified by SPLC. The legal and environmental indemnifications are subject to individual $0.5 million deductibles, while we have an aggregate limit of $15.0 million. During the three months ended March 31, 2016 and 2015, we did not make any claims for indemnification.

Zydeco

In connection with our initial public offering (“IPO”) of common units, and the formation of Zydeco, we entered into various agreements with SPLC and Shell. For a discussion of these agreements, see Note 4—Related Party Transactions in our 2015 Annual Report.

Noncontrolling Interest

Noncontrolling interest consists of SPLC's 37.5% retained ownership in Zydeco as of March 31, 2016 and December 31, 2015. During the three months ended March 31, 2016 and 2015, SPLC owned a 37.5% and 57.0% noncontrolling interest in Zydeco, respectively.

Other Related Party Balances

Other related party balances consist of the following:



	March 31, 2016		December 31, 2015
Accounts receivable	$	8.1	$	9.8
Prepaid expenses	1.9		2.8
Accounts payable ⁽¹⁾	8.5		9.3
Deferred revenue	2.0		3.6
Accrued liabilities	2.8		3.6
Debt payable ⁽²⁾	47.7		457.6
Lease liability	23.7		22.8

⁽¹⁾ Accounts payable reflects amounts owed to SPLC for reimbursement of third-party expenses incurred by SPLC for our benefit.

⁽²⁾Debt payable reflects borrowings outstanding after taking into account unamortized debt issuance costs of $0.5 million and $0.6 million as of March 31, 2016 and December 31, 2015, respectively.

Related Party Revolving Credit Facilities

We have entered into two revolving credit facilities with Shell Treasury Centre (West) Inc. (“STCW”): the Five-Year Revolver and the 364-Day Revolver. Zydeco entered into a senior unsecured revolving credit facility with STCW. For definitions and additional information regarding these credit facilities, see Note 7—Related Party Debt.

Related Party Revenues and Expenses

We provide crude oil transportation and storage services to related parties under long-term contracts. We entered into these contracts in the normal course of our business and the services are based on the same terms as those provided to third parties. Our transportation services revenue from related parties was $23.3 million and $17.6 million for the three months ended March 31, 2016 and 2015, respectively. Revenues related to storage services from related parties were $2.1 million and $1.8 million for the three months ended March 31, 2016 and 2015, respectively.

During the three months ended March 31, 2016, Zydeco, Mars, Bengal, Poseidon and Colonial paid cash distributions to us of $49.7 million, of which $20.6 million related to Zydeco.

For a discussion of services performed by SPLC and Shell on our behalf, see Note 1—Description of Business and Basis of Presentation—Basis of Presentation. During the three months ended March 31, 2016 and 2015, we were allocated $1.3 million and $1.2 million, respectively, of indirect general corporate expenses incurred by SPLC and Shell which are included within general and administrative expenses in the condensed consolidated statements of income.

Beginning July 1, 2014, Zydeco entered into an operating and management agreement with SPLC (the “Zydeco Management Agreement”) under which SPLC provides general management and administrative services to us. Zydeco no longer receives allocated corporate expenses from SPLC or Shell. Zydeco will continue to receive direct and allocated field and regional expenses, including payroll expenses not covered under the Zydeco Management Agreement.

In addition, beginning October 1, 2015, Pecten entered into an operating and management agreement under which we receive direct and allocated field and regional expenses from SPLC (the “Pecten Management Agreement”). Under the Zydeco Management Agreement and the Pecten Management Agreement, these expenses are primarily allocated to us on the basis of headcount, labor or other measure. These expense allocations have been determined on a basis that both SPLC and we consider to be a reasonable reflection of the utilization of services provided or the benefit received by us during the periods presented. For a discussion of these agreements and other agreements between Pecten and SPLC, see Note 4—Related Party Transactions in our 2015 Annual Report.

The majority of our insurance coverage is provided by Shell with the remaining coverage by third-party insurers. The related party portion of insurance expense for the three months ended March 31, 2016 and 2015 was $0.9 million and $0.8 million, respectively.

The following table shows related party expenses, including personnel costs described above, incurred by Shell and SPLC on our behalf that are reflected in the accompanying condensed consolidated statements of income for the indicated periods:



	Three months ended March 31,
	2016		2015
Operations and maintenance - related parties	$	5.4	$	5.2
General and administrative - related parties ⁽¹⁾	5.7		5.6

⁽¹⁾ For the three months ended March 31, 2016 and 2015, we incurred $1.9 million and $1.8 million, respectively, under the Zydeco Management Agreement, and $2.1 million for both periods under the Omnibus Agreement for the general and administrative fee.

Pension and Retirement Savings Plans

Employees who directly or indirectly support our operations participate in the pension, postretirement health and life insurance, and defined contribution benefit plans sponsored by Shell, which include other Shell subsidiaries. Our share of pension and postretirement health and life insurance costs, as well as our share of defined contribution benefit plan costs for the three months ended March 31, 2016 and 2015 were immaterial to the condensed consolidated financial statements. Pension and defined contribution benefit plan expenses are included in either general and administrative expenses or operations and maintenance expenses in the accompanying condensed consolidated statements of income, depending on the nature of the employee’s role in our operations.

Equity and Cost Method Investments

We have equity method investments in Mars, Bengal and Poseidon, as well as a cost investment in Colonial. SPLC also owns interests in some of these entities. In some cases we may make capital contributions or other payments to these entities. No such capital contributions were made for the three months ended March 31, 2016 and 2015. See Note 4—Equity Method Investments for additional details.