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.

Acquisition Agreements

Refer to Note 3–Acquisitions and Divestiture for a description of applicable agreements.

Omnibus Agreement

On November 3, 2014, we entered into an Omnibus Agreement with SPLC and our general partner concerning our payment of an annual general and administrative services fee to SPLC as well as our reimbursement of certain costs incurred by SPLC on our behalf. This agreement addresses the following matters:


•	our payment of an annual general and administrative fee of $8.5 million 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


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

Under the Omnibus Agreement, SPLC indemnified us against certain enumerated risks. Of those two indemnity obligations, one remains. First, SPLC agreed to be responsible for unknown environmental liabilities arising out of the ownership and operation of our initial assets prior to the closing of the IPO, to the extent identified before November 3, 2017. SPLC's indemnification of us against these environmental liabilities and certain other liabilities was subject to an aggregate limit of $15.0 million, of which $10.7 million remained unclaimed.

Second, SPLC agreed to indemnify us against tax liabilities relating to our initial assets that are identified prior to the date that is 60 days after the expiration of the statute of limitations applicable to such liabilities. This obligation has no threshold or cap. We in turn agreed to indemnify SPLC against events and conditions associated with the ownership or operation of our initial assets (other than any liabilities against which SPLC is specifically required to indemnify us as described above).

During 2017 and 2016, neither we nor SPLC made any claims for indemnification under the Omnibus Agreement.

Tax Sharing Agreement

We have entered into a tax sharing agreement with Shell. Pursuant to this agreement, we have agreed to reimburse Shell for state and local income and franchise taxes attributable to any activity of our operating subsidiaries, and reported on Shell’s state or local income or franchise tax returns filed on a combined or unitary basis. Reimbursements under this agreement equal the amount of tax our applicable operating subsidiaries would be required to pay with respect to such activity, if such subsidiaries were to file a combined or unitary tax return separate from Shell. Shell will compute and invoice us for the tax reimbursement amount within 15 days of Shell filing its combined or unitary tax return on which such activity is included. We may be required to make prepayments toward the tax reimbursement amount to the extent that Shell is required to make estimated tax payments during the relevant tax year. The tax sharing agreement currently in place is effective for all taxable periods ending on or after December 31, 2017. The current agreement replaced a similar tax sharing agreement between Zydeco and Shell, which was effective for all tax periods ending before December 31, 2017.

Other Agreements

In connection with the IPO and our acquisitions from Shell, we have entered into several customary agreements with SPLC and Shell. These agreements include pipeline operating agreements, reimbursement agreements and services agreements.

Pecten Contribution Agreement

Maintenance expense and capital expenditures for certain projects associated with the Lockport Terminal have been incurred. These projects improve the existing drainage system to eliminate the crossing of storm water between the Lockport Terminal and adjacent properties. In addition, these projects include inspections and tank repairs of a storage tank. Under the Pecten Contribution Agreement entered into in connection with the November 2015 Acquisition, SPLC has agreed to reimburse us for the maintenance expense and capital expenditures related to these projects. During 2017, we recognized no reimbursement as other contributions from Parent, and in 2016 we recognized $1.6 million for these reimbursements as other contributions from Parent.

Operating Agreements

In connection with the formation of Pecten on October 1, 2015, Pecten entered into an operating and administrative management agreement with SPLC. Pursuant to this agreement, SPLC performs physical operations and maintenance services for Lockport and Auger and provides general and administrative services for Pecten. Pecten is required to reimburse SPLC for costs and expenses incurred in connection with such services. Also pursuant to the agreement, SPLC and Pecten agree to standard indemnifications as operator and asset owner, respectively.

In connection with the May 2017 Acquisition, on May 10, 2017, SPLC entered into an operating and administrative management agreement with Sand Dollar. Sand Dollar is allocated and required to reimburse SPLC for certain costs in connection with the services provided pursuant to the agreement. Also pursuant to the agreement, SPLC and Sand Dollar agree to standard indemnifications as operator and asset owner, respectively.

On December 1, 2017, our general partner, SPLC and Triton entered into an operating and administrative management agreement. Our general partner provides certain operational and support services pursuant to the agreement. The necessary personnel are employed by SPLC and are assigned to our general partner. Triton West is allocated certain costs by the general partner in connection with the services provided pursuant to the agreement. Our general partner reimburses SPLC for certain costs related to the assigned personnel. Our general partner, SPLC and Triton West each provide standard indemnifications as operator, employer and asset owner, respectively.

In connection with the December 2017 Acquisition, we were assigned an operating agreement for Odyssey, whereby SPLC performs physical operations and maintenance services and provides general and administrative services for Odyssey. Odyssey is required to reimburse SPLC for costs and expenses incurred in connection with such services. Also pursuant to the agreement, SPLC and Odyssey agree to standard indemnifications as operator and asset owner, respectively.

Noncontrolling Interest

For Zydeco, noncontrolling interest consists of SPLC’s 7.5% retained ownership interest as of both December 31, 2017 and 2016, and 37.5% as of December 31, 2015. For Odyssey, noncontrolling interest consists of GEL Offshore Pipeline LLC's (“GEL”) 29.0% retained ownership interest as of December 31, 2017, 2016 and 2015.

Other Related Party Balances

Other related party balances consist of the following:



	December 31,
	2017		2016
Accounts receivable	$	23.8	$	19.3
Prepaid expenses	11.9		3.3
Accounts payable⁽¹⁾	11.6		5.6
Deferred revenue	13.9		7.9
Accrued liabilities ⁽²⁾	7.2		5.1
Debt payable ⁽³⁾	1,844.0		686.0
Lease liability⁽⁴⁾	24.3		24.9


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


⁽²⁾	As of December 31, 2017 Accrued liabilities reflects $6.6 million accrued interest and $0.6 million other accrued liabilities. As of December 31, 2016 Accrued liabilities reflects $2.6 million accrued interest, $1.6 million fuel accrual, and $0.9 million other accrued liabilities.


⁽³⁾	Debt payable reflects borrowings outstanding after taking into account unamortized debt issuance costs of $2.9 million and $0.9 million as of December 31, 2017 and 2016, respectively.

⁽⁴⁾ As part of the Motiva JV separation effective May 2017, Motiva is no longer a related party. As of December 31, 2017, this is a third-party balance.

Related Party Credit Facilities

We have entered into four credit facilities with Shell Treasury Center (West) Inc. (“STCW”), an affiliate of Shell, the Five Year Revolver due December 2022, the Five Year Revolver due 2019, the Five Year Fixed Facility, and the 364-Day Revolver. The 364-Day Revolver expired as of March 1, 2017, and has not been replaced. Zydeco has also entered into the Zydeco Revolver with STCW. See Note 8 – Related Party Debt for additional information regarding these credit facilities.

Related Party Revenues and Expenses

We provide crude oil transportation, terminaling and storage services to related parties under long-term contracts. We entered into these contracts in the normal course of our business. Our transportation services revenue, storage revenue and lease revenue from related parties for 2017, 2016 and 2015 is disclosed in Note 2- Summary of Significant Accounting Policies - Revenue Recognition.

In 2017, 2016 and 2015, we converted excess allowance oil to cash through sales to affiliates of Shell and included gains/(losses) of $1.3 million, $1.3 million and $(0.1) million, respectively, from such sales in Operations and maintenance expense.

In 2017, 2016 and 2015, our investments paid cash distributions to us of $235.7 million, $186.2 million and $133.5 million, respectively.

Beginning July 1, 2014, Zydeco entered into the Management Agreement with SPLC under which SPLC provides general management and administrative services to us. We no longer receive allocated corporate expenses from SPLC or Shell. We will continue to receive direct and allocated field and regional expenses, including payroll expenses not covered under the 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. Beginning May 10, 2017, Sand Dollar entered into an operating and management agreement under which we receive direct and allocated expenses from SPLC. On December 1, 2017, our general partner, SPLC and Triton entered into an operating and administrative management agreement pursuant to which we receive direct and allocated expenses from our general partner. On December 1, 2017, our general partner, SPLC and Odyssey entered into an operating and administrative management agreement pursuant to which we

receive direct and allocated expenses from our general partner. The expenses under these agreements 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.

The majority of our insurance coverage is provided by a wholly owned subsidiary of Shell with the remaining coverage provided by third-party insurers. The related party portion of insurance expense in 2017, 2016 and 2015 was $8.0 million, $5.9 million and $7.5 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 consolidated statements of income for the indicated periods:



	2017		2016		2015
Operations and maintenance - related parties	$	45.6	$	40.0	$	39.0
General and administrative - related parties	47.7		43.7		42.5

For a discussion of services performed by Shell on our behalf, see Note 1 – Description of the Business and Basis of Presentation – Basis of Presentation. Pursuant to various operating and administrative management agreements, we are allocated indirect operating and general corporate expenses from Shell. During 2017, 2016 and 2015, we were allocated $17.1 million, $15.9 million and $17.1 million, respectively, of operating expenses which are included in operations and maintenance expenses. Additionally, for 2017, 2016 and 2015, we were allocated $26.3 million, $24.0 million and $22.4 million, respectively, of general corporate expenses which are included within general and administrative expenses. Included in these general and administrative expenses are $8.1 million, $7.7 million and $7.4 million, respectively, under the Management Agreement and $8.5 million, $8.5 million and $8.5 million, respectively, under the Omnibus Agreement for the general and administrative fee in 2017, 2016 and 2015.

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 for 2017, 2016 and 2015 was $4.3 million, $5.1 million and $5.4 million, respectively. Our share of defined contribution benefit plan costs for 2017, 2016 and 2015 was $1.7 million, $2.0 million and $2.3 million, respectively. Pension and defined contribution benefit plan expenses are included in either general and administrative expenses or operations and maintenance expenses in the accompanying consolidated statements of income, depending on the nature of the employee’s role in our operations.

Share-based Compensation

Certain SPLC and Shell employees supporting our operations as well as other Shell operations were historically granted awards under the Performance Share Plan (“PSP”), Shell’s incentive compensation program. Share-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of income. These costs for 2017, 2016 and 2015 were immaterial.

Equity and Cost Method Investments

We have equity and cost method investments in entities, including Colonial and Explorer in which SPLC also owns interests. In some cases we may be required to make capital contributions or other payments to these entities. See Note 5 – Equity Method Investments for additional details.

Reimbursements from Our General Partner

The following table reflects reimbursements from our Parent in 2017, 2016 and 2015:



	2017		2016		2015
Cash received ⁽¹⁾	$	15.8	$	2.8	$	11.1
Receivable from Parent ⁽²⁾	0.3		0.2		1.8
Total reimbursements ⁽³⁾	$	16.1	$	3.0	$	12.9

⁽¹⁾These reimbursements are included in Other contributions from Parent in the accompanying consolidated statements of cash flows.

⁽²⁾These reimbursements are included in Other non-cash contributions from Parent in the accompanying consolidated statements of cash flows.

⁽³⁾These reimbursements are included in Other contributions from Parent in the accompanying consolidated statements of (deficit) equity.

In 2017, 2016 and 2015, we filed claims for reimbursement from our Parent of $16.1 million, $3.0 million and $12.9 million, respectively. This reflects our proportionate share of Zydeco directional drill project costs and expenses of $14.4 million, $1.4 million and $2.3 million, respectively. Additionally, in 2017 this includes reimbursement for the Refinery Gas Pipeline gas to butane service connection project of $1.7 million and in 2016 this includes $1.6 million of reimbursement of costs and expenses incurred by Lockport for the storm water improvement and tank repair projects. In 2015, this includes a $4.5 million payment from a joint venture (“JV”) partner to secure a waiver of rights of refusal from SOPUS and us permitting the JV partner to acquire another owner's interest in Poseidon, $2.9 million of environmental indemnification regarding maintenance expense for a Mars underground cavern integrity project, $1.4 million of legal indemnification for expenses and settlement payments related to the Zydeco FERC rate case and $1.8 million of reimbursement of costs and expenses incurred by Lockport for the storm water improvement and tank repair projects.