Leases

12 Months Ended

Dec. 31, 2018

On December 1, 2014, we entered into a terminaling services agreement with a related party in which we were to take possession of certain storage tanks located in Port Neches, Texas, effective December 1, 2015. On October 26, 2015, the terminal services agreement was amended to provide for an interim in-service period for the purposes of commissioning the tanks in which we pay a nominal monthly fee. Our capitalized costs and related capital lease obligation commenced on December 1, 2015. Upon the in-service date of September 1, 2016, our monthly lease payment was increased to $0.4 million. Under this agreement, in the eighteenth month after the in-service date, actual fixed and variable costs could be compared to premised costs. If the actual and premised operating costs differ by more than 5.0%, the lease would be adjusted accordingly and this adjustment will be effective for the remainder of the lease. No adjustment has been made to date. The imputed interest rate on the capital portion of the lease is 15.0%.

Odyssey entered into an operating lease dated May 12, 1999 with a third party for usage of offshore platform space at Main Pass 289C. The agreement will continue to be in effect until the continued operation of the platform is uneconomic.

We are also obligated under various long-term and short-term noncancelable operating leases, primarily related to tank farm land leases. Several of the leases provide for renewal terms. Rental expense included in Operations and maintenance on the consolidated statements of income for 2018, 2017 and 2016 was $0.2 million, $0.3 million and $0.5 million, respectively.

The future minimum lease payments as of December 31, 2018, for the above lease obligations were:


	Total		2019		2020		2021		2022		2023		Remainder
Operating leases for land	$	3.4	$	0.2	$	0.2	$	0.2	$	0.2	$	0.2	$	2.4
Operating lease of platform space	1.9		0.1		0.1		0.1		0.1		0.1		1.4
Capital leases⁽¹⁾	56.6		4.3		4.3		4.3		4.3		4.3		35.1
	$	61.9	$	4.6	$	4.6	$	4.6	$	4.6	$	4.6	$	38.9

⁽¹⁾ Capital leases include Port Neches storage tanks and Garden Banks 128 "A" platform. Port Neches storage tanks includes $30.1 million in interest, $24.3 million in principal and excludes $9.6 million in executory costs.

As of December 31, 2018 and 2017, we had short-term payment obligations relating to capital expenditures totaling $8.3 million and $5.8 million, respectively. These represent unconditional payment obligations to vendors for products and services delivered in connection with capital projects.