Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

Leases

Adoption of ASC Topic 842 “Leases”

On January 1, 2019, we adopted the lease standard by applying the modified retrospective approach to all leases on January 1, 2019. We elected the package of practical expedients upon transition that permits us to not reassess (1) whether any contracts entered into prior to adoption are or contain leases, (2) the lease classification of existing leases and (3) initial direct costs for any leases that existed prior to adoption. We also elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. Generally, we account for term-based land easements where we control the use of the land surface as leases.

Upon adoption on January 1, 2019, we recognized operating lease right-of-use (“ROU”) assets and corresponding lease liabilities of $5 million. As lessor, the accounting for operating leases has not changed and the adoption did not have an impact on our existing transportation and terminaling services agreements that are considered operating leases. As lessee, the accounting for finance leases (capital leases) was substantially unchanged.

Lessee accounting

We determine if an arrangement is or contains a lease at inception. Our assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period and (3) whether we have the right to direct the use of the asset. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably

certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease classification affects the expense recognition in the income statement. Operating lease costs are recorded entirely in operating expenses. Finance lease costs are split, where amortization of the ROU asset is recorded in operating expenses and an implied interest component is recorded in interest expense.

Under the lease standard, operating leases (as lessee) are included in Operating lease right-of-use assets, Accrued liabilities - third parties and Operating lease liabilities in our consolidated balance sheets. Finance leases (as lessee) are included in Property, plant and equipment, Accrued liabilities – third parties and Finance lease liabilities in our consolidated balance sheets. ROU assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate (“IBR”) based on the information available at transition date in determining the present value of future payments. The ROU asset includes any lease payments made but excludes lease incentives and initial direct costs incurred, if any. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have long-term non-cancelable third-party operating leases for land. Several of the leases provide for renewal terms. We hold cancellable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline systems. Obligations under these easements are not material to the results of our operations. 

Odyssey entered into an operating lease in May 1999 with a third party for usage of offshore platform space at Main Pass 289C. The terms of this operating lease agreement were modified as of August 27, 2021 and the contract modification is effective retrospectively from January 26, 2021. The variable lease payment for the modified agreement consists of the operating expenses incurred and the throughput fee required by the platform. The agreement will terminate as of January 1, 2023.

We are also obligated under two finance leases. On December 1, 2014, we entered into a terminal services agreement in which we were to take possession of certain storage tanks located in Port Neches, Texas, effective December 1, 2015. In October 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 paid a nominal monthly fee. Our capitalized costs and related capital lease obligation commenced effective December 1, 2015, and the storage tanks were placed in-service on September 1, 2016. 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%, 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%. We also have a lease of offshore platform space on the Garden Banks 128 “A” platform.

Lease extensions. Many of our leases have options to either extend or terminate the lease. In determining the lease term, we considered all available contract extensions that are reasonably certain of occurring.

Significant assumptions and judgments

Incremental borrowing rate. We are generally not made aware of the interest rate implicit in a lease due to several reasons, including: (1) uncertainty as to the total amount of the costs incurred by the lessor in negotiating the lease or whether certain costs incurred by the lessor would qualify as initial direct costs and (2) uncertainty as to the lessor’s expectation of the residual value of the asset at the end of the lease. Therefore, we use our IBR at the commencement of the lease and estimate the IBR for each lease agreement taking into consideration lease contract term, collateral and entity credit ratings, and use sensitivity analyses to evaluate the reasonableness of the rates determined.

Lease balances and costs

The following tables summarize balance sheet data related to leases at December 31, 2021 and 2020 and our lease costs as of and for the year ended December 31, 2021, 2020 and 2019:

Leases	Classification	December 31, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease right-of-use assets	$	3	$	4
Finance lease assets	Property, plant and equipment, net (1)	14		16
Total lease assets		$	17	$	20
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1	$	1
Noncurrent
Operating	Operating lease liabilities	4		4
Finance	Finance lease liabilities	23		24
Total lease liabilities		$	28	$	29

(1) Finance lease assets are recorded net of accumulated amortization of $9 million as of December 31, 2021 and $8 million as of December 31, 2020.

Lease cost	Classification	December 31, 2021		December 31, 2020		December 31, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1		1
Interest on lease liabilities	Interest expense, net	3		4		4
Total lease cost		$	4	$	5	$	5

(1) Amounts for each year ended December 31, 2021, 2020 and 2019 were less than $1 million.

Other information

	December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—	$	—
Operating cash flows from finance leases	(3)		(3)
Financing cash flows from finance leases	(1)		(1)

(1) Amounts for each year ended December 31, 2021 and 2020 were less than $1 million.

	December 31, 2021		December 31, 2020		December 31, 2019
Weighted-average remaining lease term (years):
Operating leases	18		19		20
Finance leases	9		10		11
Weighted-average discount rate:
Operating leases	5.3	%	5.8	%	5.8	%
Finance leases	14.3	%	14.3	%	14.3	%

Annual maturity analysis

The future annual maturity of lease payments as of December 31, 2021 for the above lease obligations was:

Maturity of lease liabilities	Operating Leases (1)		Finance Leases (2)		Total
2022	$	—	$	4	$	4
2023	1		4		5
2024	—		4		4
2025	—		5		5
2026	—		5		5
Remainder	5		22		27
Total lease payments	6		44		50
Less: Interest (3)	(2)		(20)		(22)
Present value of lease liabilities (4)	$	4	$	24	$	28

(1) Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

(2) Includes $24 million in principal and excludes $7 million in executory costs.

(3) Calculated using the interest rate for each lease.

(4) Includes the current portion of $1 million for the finance lease.

Lessor accounting

We have certain transportation and terminaling services agreements with related parties entered into prior to the adoption date of January 1, 2019 that are considered operating leases and include both a lease component and an implied operation and maintenance service component (“non-lease service component”). Certain of these agreements were entered into for terms of ten years with the option to extend for two additional terms of five years each. One of these contracts was amended to include an option for the lessee to extend for a fourteen-month term prior to the original extension options. However, it is reasonably certain that the original extension options of the two additional five-year terms will not be exercised for this contract. Further, we have agreements with an initial term of ten years with the option to extend for up to ten additional one-year terms. As is the case with certain of our agreements, when the renewal options are reasonably certain to be exercised, the payments are included in the future maturity of lease payments. Our transportation, terminaling and storage services revenue and lease revenue from related parties for the years ended December 31, 2021, 2020 and 2019 are disclosed in Note 12 — Revenue Recognition.

Our risk management strategy for the residual assets is mitigated by the long-term nature of the underlying assets and the long-term nature of our lease agreements.

Significant assumptions and judgments

Lease and non-lease components. Certain of our revenues are accounted for under the lease standard, as the underlying contracts convey the right to control the use of the identified asset for a period of time. We allocate the arrangement consideration between the lease components that fall within the scope of the lease standard and any non-lease service components within the scope of the revenue standard based on the relative stand-alone selling price of each component. See Note 12 — Revenue Recognition for additional information regarding the allocation of the consideration in a contract between the lease and non-lease service components.

Annual maturity analysis

As of December 31, 2021, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease payments	Operating leases (1)
2022	$	56
2023	56
2024	56
2025	56
2026	56
Remainder	394
Total lease payments	$	674

(1) Operating lease payments include $366 million related to options to extend lease terms that are reasonably certain of being exercised.

Other

As of December 31, 2021 and 2020, we had short-term payment obligations relating to capital expenditures each totaling $1 million, respectively. These represent unconditional payment obligations to vendors for products and services delivered in connection with capital projects.

Leases

Leases

Adoption of ASC Topic 842 “Leases”

On January 1, 2019, we adopted the lease standard by applying the modified retrospective approach to all leases on January 1, 2019. We elected the package of practical expedients upon transition that permits us to not reassess (1) whether any contracts entered into prior to adoption are or contain leases, (2) the lease classification of existing leases and (3) initial direct costs for any leases that existed prior to adoption. We also elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. Generally, we account for term-based land easements where we control the use of the land surface as leases.

Upon adoption on January 1, 2019, we recognized operating lease right-of-use (“ROU”) assets and corresponding lease liabilities of $5 million. As lessor, the accounting for operating leases has not changed and the adoption did not have an impact on our existing transportation and terminaling services agreements that are considered operating leases. As lessee, the accounting for finance leases (capital leases) was substantially unchanged.

Lessee accounting

We determine if an arrangement is or contains a lease at inception. Our assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period and (3) whether we have the right to direct the use of the asset. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably

certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease classification affects the expense recognition in the income statement. Operating lease costs are recorded entirely in operating expenses. Finance lease costs are split, where amortization of the ROU asset is recorded in operating expenses and an implied interest component is recorded in interest expense.

Under the lease standard, operating leases (as lessee) are included in Operating lease right-of-use assets, Accrued liabilities - third parties and Operating lease liabilities in our consolidated balance sheets. Finance leases (as lessee) are included in Property, plant and equipment, Accrued liabilities – third parties and Finance lease liabilities in our consolidated balance sheets. ROU assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate (“IBR”) based on the information available at transition date in determining the present value of future payments. The ROU asset includes any lease payments made but excludes lease incentives and initial direct costs incurred, if any. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have long-term non-cancelable third-party operating leases for land. Several of the leases provide for renewal terms. We hold cancellable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline systems. Obligations under these easements are not material to the results of our operations. 

Odyssey entered into an operating lease in May 1999 with a third party for usage of offshore platform space at Main Pass 289C. The terms of this operating lease agreement were modified as of August 27, 2021 and the contract modification is effective retrospectively from January 26, 2021. The variable lease payment for the modified agreement consists of the operating expenses incurred and the throughput fee required by the platform. The agreement will terminate as of January 1, 2023.

We are also obligated under two finance leases. On December 1, 2014, we entered into a terminal services agreement in which we were to take possession of certain storage tanks located in Port Neches, Texas, effective December 1, 2015. In October 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 paid a nominal monthly fee. Our capitalized costs and related capital lease obligation commenced effective December 1, 2015, and the storage tanks were placed in-service on September 1, 2016. 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%, 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%. We also have a lease of offshore platform space on the Garden Banks 128 “A” platform.

Lease extensions. Many of our leases have options to either extend or terminate the lease. In determining the lease term, we considered all available contract extensions that are reasonably certain of occurring.

Significant assumptions and judgments

Incremental borrowing rate. We are generally not made aware of the interest rate implicit in a lease due to several reasons, including: (1) uncertainty as to the total amount of the costs incurred by the lessor in negotiating the lease or whether certain costs incurred by the lessor would qualify as initial direct costs and (2) uncertainty as to the lessor’s expectation of the residual value of the asset at the end of the lease. Therefore, we use our IBR at the commencement of the lease and estimate the IBR for each lease agreement taking into consideration lease contract term, collateral and entity credit ratings, and use sensitivity analyses to evaluate the reasonableness of the rates determined.

Lease balances and costs

The following tables summarize balance sheet data related to leases at December 31, 2021 and 2020 and our lease costs as of and for the year ended December 31, 2021, 2020 and 2019:

Leases	Classification	December 31, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease right-of-use assets	$	3	$	4
Finance lease assets	Property, plant and equipment, net (1)	14		16
Total lease assets		$	17	$	20
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1	$	1
Noncurrent
Operating	Operating lease liabilities	4		4
Finance	Finance lease liabilities	23		24
Total lease liabilities		$	28	$	29

(1) Finance lease assets are recorded net of accumulated amortization of $9 million as of December 31, 2021 and $8 million as of December 31, 2020.

Lease cost	Classification	December 31, 2021		December 31, 2020		December 31, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1		1
Interest on lease liabilities	Interest expense, net	3		4		4
Total lease cost		$	4	$	5	$	5

(1) Amounts for each year ended December 31, 2021, 2020 and 2019 were less than $1 million.

Other information

	December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—	$	—
Operating cash flows from finance leases	(3)		(3)
Financing cash flows from finance leases	(1)		(1)

(1) Amounts for each year ended December 31, 2021 and 2020 were less than $1 million.

	December 31, 2021		December 31, 2020		December 31, 2019
Weighted-average remaining lease term (years):
Operating leases	18		19		20
Finance leases	9		10		11
Weighted-average discount rate:
Operating leases	5.3	%	5.8	%	5.8	%
Finance leases	14.3	%	14.3	%	14.3	%

Annual maturity analysis

The future annual maturity of lease payments as of December 31, 2021 for the above lease obligations was:

Maturity of lease liabilities	Operating Leases (1)		Finance Leases (2)		Total
2022	$	—	$	4	$	4
2023	1		4		5
2024	—		4		4
2025	—		5		5
2026	—		5		5
Remainder	5		22		27
Total lease payments	6		44		50
Less: Interest (3)	(2)		(20)		(22)
Present value of lease liabilities (4)	$	4	$	24	$	28

(1) Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

(2) Includes $24 million in principal and excludes $7 million in executory costs.

(3) Calculated using the interest rate for each lease.

(4) Includes the current portion of $1 million for the finance lease.

Lessor accounting

We have certain transportation and terminaling services agreements with related parties entered into prior to the adoption date of January 1, 2019 that are considered operating leases and include both a lease component and an implied operation and maintenance service component (“non-lease service component”). Certain of these agreements were entered into for terms of ten years with the option to extend for two additional terms of five years each. One of these contracts was amended to include an option for the lessee to extend for a fourteen-month term prior to the original extension options. However, it is reasonably certain that the original extension options of the two additional five-year terms will not be exercised for this contract. Further, we have agreements with an initial term of ten years with the option to extend for up to ten additional one-year terms. As is the case with certain of our agreements, when the renewal options are reasonably certain to be exercised, the payments are included in the future maturity of lease payments. Our transportation, terminaling and storage services revenue and lease revenue from related parties for the years ended December 31, 2021, 2020 and 2019 are disclosed in Note 12 — Revenue Recognition.

Our risk management strategy for the residual assets is mitigated by the long-term nature of the underlying assets and the long-term nature of our lease agreements.

Significant assumptions and judgments

Lease and non-lease components. Certain of our revenues are accounted for under the lease standard, as the underlying contracts convey the right to control the use of the identified asset for a period of time. We allocate the arrangement consideration between the lease components that fall within the scope of the lease standard and any non-lease service components within the scope of the revenue standard based on the relative stand-alone selling price of each component. See Note 12 — Revenue Recognition for additional information regarding the allocation of the consideration in a contract between the lease and non-lease service components.

Annual maturity analysis

As of December 31, 2021, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease payments	Operating leases (1)
2022	$	56
2023	56
2024	56
2025	56
2026	56
Remainder	394
Total lease payments	$	674

(1) Operating lease payments include $366 million related to options to extend lease terms that are reasonably certain of being exercised.

Other

As of December 31, 2021 and 2020, we had short-term payment obligations relating to capital expenditures each totaling $1 million, respectively. These represent unconditional payment obligations to vendors for products and services delivered in connection with capital projects.

Leases

Leases

Adoption of ASC Topic 842 “Leases”

On January 1, 2019, we adopted the lease standard by applying the modified retrospective approach to all leases on January 1, 2019. We elected the package of practical expedients upon transition that permits us to not reassess (1) whether any contracts entered into prior to adoption are or contain leases, (2) the lease classification of existing leases and (3) initial direct costs for any leases that existed prior to adoption. We also elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. Generally, we account for term-based land easements where we control the use of the land surface as leases.

Upon adoption on January 1, 2019, we recognized operating lease right-of-use (“ROU”) assets and corresponding lease liabilities of $5 million. As lessor, the accounting for operating leases has not changed and the adoption did not have an impact on our existing transportation and terminaling services agreements that are considered operating leases. As lessee, the accounting for finance leases (capital leases) was substantially unchanged.

Lessee accounting

We determine if an arrangement is or contains a lease at inception. Our assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period and (3) whether we have the right to direct the use of the asset. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably

certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease classification affects the expense recognition in the income statement. Operating lease costs are recorded entirely in operating expenses. Finance lease costs are split, where amortization of the ROU asset is recorded in operating expenses and an implied interest component is recorded in interest expense.

Under the lease standard, operating leases (as lessee) are included in Operating lease right-of-use assets, Accrued liabilities - third parties and Operating lease liabilities in our consolidated balance sheets. Finance leases (as lessee) are included in Property, plant and equipment, Accrued liabilities – third parties and Finance lease liabilities in our consolidated balance sheets. ROU assets and lease liabilities are recognized at commencement date based on the present value of the future minimum lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate (“IBR”) based on the information available at transition date in determining the present value of future payments. The ROU asset includes any lease payments made but excludes lease incentives and initial direct costs incurred, if any. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have long-term non-cancelable third-party operating leases for land. Several of the leases provide for renewal terms. We hold cancellable easements or rights-of-way arrangements from landowners permitting the use of land for the construction and operation of our pipeline systems. Obligations under these easements are not material to the results of our operations. 

Odyssey entered into an operating lease in May 1999 with a third party for usage of offshore platform space at Main Pass 289C. The terms of this operating lease agreement were modified as of August 27, 2021 and the contract modification is effective retrospectively from January 26, 2021. The variable lease payment for the modified agreement consists of the operating expenses incurred and the throughput fee required by the platform. The agreement will terminate as of January 1, 2023.

We are also obligated under two finance leases. On December 1, 2014, we entered into a terminal services agreement in which we were to take possession of certain storage tanks located in Port Neches, Texas, effective December 1, 2015. In October 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 paid a nominal monthly fee. Our capitalized costs and related capital lease obligation commenced effective December 1, 2015, and the storage tanks were placed in-service on September 1, 2016. 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%, 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%. We also have a lease of offshore platform space on the Garden Banks 128 “A” platform.

Lease extensions. Many of our leases have options to either extend or terminate the lease. In determining the lease term, we considered all available contract extensions that are reasonably certain of occurring.

Significant assumptions and judgments

Incremental borrowing rate. We are generally not made aware of the interest rate implicit in a lease due to several reasons, including: (1) uncertainty as to the total amount of the costs incurred by the lessor in negotiating the lease or whether certain costs incurred by the lessor would qualify as initial direct costs and (2) uncertainty as to the lessor’s expectation of the residual value of the asset at the end of the lease. Therefore, we use our IBR at the commencement of the lease and estimate the IBR for each lease agreement taking into consideration lease contract term, collateral and entity credit ratings, and use sensitivity analyses to evaluate the reasonableness of the rates determined.

Lease balances and costs

The following tables summarize balance sheet data related to leases at December 31, 2021 and 2020 and our lease costs as of and for the year ended December 31, 2021, 2020 and 2019:

Leases	Classification	December 31, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease right-of-use assets	$	3	$	4
Finance lease assets	Property, plant and equipment, net (1)	14		16
Total lease assets		$	17	$	20
Liabilities
Current
Finance	Accrued liabilities - third parties	$	1	$	1
Noncurrent
Operating	Operating lease liabilities	4		4
Finance	Finance lease liabilities	23		24
Total lease liabilities		$	28	$	29

(1) Finance lease assets are recorded net of accumulated amortization of $9 million as of December 31, 2021 and $8 million as of December 31, 2020.

Lease cost	Classification	December 31, 2021		December 31, 2020		December 31, 2019
Operating lease cost (1)	Operations and maintenance - third parties	$	—	$	—	$	—
Finance lease cost (cost resulting from lease payments):
Amortization of leased assets	Depreciation and amortization	1		1		1
Interest on lease liabilities	Interest expense, net	3		4		4
Total lease cost		$	4	$	5	$	5

(1) Amounts for each year ended December 31, 2021, 2020 and 2019 were less than $1 million.

Other information

	December 31, 2021		December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	—	$	—
Operating cash flows from finance leases	(3)		(3)
Financing cash flows from finance leases	(1)		(1)

(1) Amounts for each year ended December 31, 2021 and 2020 were less than $1 million.

	December 31, 2021		December 31, 2020		December 31, 2019
Weighted-average remaining lease term (years):
Operating leases	18		19		20
Finance leases	9		10		11
Weighted-average discount rate:
Operating leases	5.3	%	5.8	%	5.8	%
Finance leases	14.3	%	14.3	%	14.3	%

Annual maturity analysis

The future annual maturity of lease payments as of December 31, 2021 for the above lease obligations was:

Maturity of lease liabilities	Operating Leases (1)		Finance Leases (2)		Total
2022	$	—	$	4	$	4
2023	1		4		5
2024	—		4		4
2025	—		5		5
2026	—		5		5
Remainder	5		22		27
Total lease payments	6		44		50
Less: Interest (3)	(2)		(20)		(22)
Present value of lease liabilities (4)	$	4	$	24	$	28

(1) Operating lease payments include $2 million related to options to extend lease terms that are reasonably certain of being exercised.

(2) Includes $24 million in principal and excludes $7 million in executory costs.

(3) Calculated using the interest rate for each lease.

(4) Includes the current portion of $1 million for the finance lease.

Lessor accounting

We have certain transportation and terminaling services agreements with related parties entered into prior to the adoption date of January 1, 2019 that are considered operating leases and include both a lease component and an implied operation and maintenance service component (“non-lease service component”). Certain of these agreements were entered into for terms of ten years with the option to extend for two additional terms of five years each. One of these contracts was amended to include an option for the lessee to extend for a fourteen-month term prior to the original extension options. However, it is reasonably certain that the original extension options of the two additional five-year terms will not be exercised for this contract. Further, we have agreements with an initial term of ten years with the option to extend for up to ten additional one-year terms. As is the case with certain of our agreements, when the renewal options are reasonably certain to be exercised, the payments are included in the future maturity of lease payments. Our transportation, terminaling and storage services revenue and lease revenue from related parties for the years ended December 31, 2021, 2020 and 2019 are disclosed in Note 12 — Revenue Recognition.

Our risk management strategy for the residual assets is mitigated by the long-term nature of the underlying assets and the long-term nature of our lease agreements.

Significant assumptions and judgments

Lease and non-lease components. Certain of our revenues are accounted for under the lease standard, as the underlying contracts convey the right to control the use of the identified asset for a period of time. We allocate the arrangement consideration between the lease components that fall within the scope of the lease standard and any non-lease service components within the scope of the revenue standard based on the relative stand-alone selling price of each component. See Note 12 — Revenue Recognition for additional information regarding the allocation of the consideration in a contract between the lease and non-lease service components.

Annual maturity analysis

As of December 31, 2021, future annual maturity of lease payments to be received under the contract terms of these operating leases, which includes only the lease components of these leases, was estimated to be:

Maturity of lease payments	Operating leases (1)
2022	$	56
2023	56
2024	56
2025	56
2026	56
Remainder	394
Total lease payments	$	674

(1) Operating lease payments include $366 million related to options to extend lease terms that are reasonably certain of being exercised.

Other

As of December 31, 2021 and 2020, we had short-term payment obligations relating to capital expenditures each totaling $1 million, respectively. These represent unconditional payment obligations to vendors for products and services delivered in connection with capital projects.