Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies

Commitments and Contingencies

18.Commitments and Contingencies

The Company has commitments for demand charges under existing long-term contracts and binding precedent agreements with various pipelines.  Future payments for these items as of December 31, 2011 totaled $2,331.4 million (2012 - $192.2 million, 2013 - $165.2 million, 2014 - $148.3 million, 2015 - $178.7 million, 2016 - $173.7 million and thereafter - $1,473.3).  The Company believes that a portion of these demand charges are recoverable in customer rates as follows: approximately $17.6 million in 2012, $3.5 million in 2013, $3.5 million in 2014, $3.5 million in 2015, and $0.9 million in 2016.  The Company has entered into agreements to release some of its capacity to various third parties.  Amounts included above for capacity released under long-term agreements approximate $61.8 million, $47.5 million and $20.4 million in 2012, 2013 and 2014, respectively.

The Company has agreements with drilling contractors to provide drilling equipment and services to the Company.  These obligations totaled approximately $90.2 million as of December 31, 2011.  Operating lease rentals for drilling contractors, office locations and warehouse buildings, as well as a limited amount of equipment, amounted to approximately $76.9 million in 2011, $97.4 million in 2010 and $62.3 million in 2009.  Future lease payments under non-cancelable operating leases as of December 31, 2011 totaled $200.3 million (2012 - $39.9 million, 2013 - $38.7 million, 2014 - $28.7 million, 2015 - $18.3 million, 2016 - $7.9 million and thereafter - $66.8 million).  The Company has subleased three floors of its previous corporate headquarters building.  The Company will receive future lease payments under the non-cancelable subleases totaling approximately $30.2 million as of December 31, 2011 (2012 - $2.1 million, 2013 - $2.1 million, 2014 - $2.2 million, 2015 - $2.2 million, 2016 - $2.2 million and thereafter - $19.4 million).

The Company is subject to various federal, state and local environmental and environmentally related laws and regulations.  These laws and regulations, which are constantly changing, can require expenditures for remediation and may in certain instances result in assessment of fines.  The Company has established procedures for ongoing evaluation of its operations to identify potential environmental exposures and to assure compliance with regulatory policies and procedures.  The estimated costs associated with identified situations that require remedial action are accrued.  However, certain costs are deferred as regulatory assets when recoverable through regulated rates.  Ongoing expenditures for compliance with environmental laws and regulations, including investments in plant and facilities to meet environmental requirements, have not been material.  Management believes that any such required expenditures will not be significantly different in either their nature or amount in the future and does not know of any environmental liabilities that will have a material effect on the Company’s financial position, results of operations or liquidity.  The Company has identified situations that require remedial action for which approximately $1.7 million is included in other credits in the Consolidated Balance Sheets as of December 31, 2011.

In the ordinary course of business, various legal and regulatory claims and proceedings are pending or threatened against the Company.  While the amounts claimed may be substantial, the Company is unable to predict with certainty the ultimate outcome of such claims and proceedings.  The Company accrues legal or other direct costs related to loss contingencies when actually incurred.  The Company has established reserves it believes to be appropriate for pending matters and after consultation with counsel and giving appropriate consideration to available insurance, the Company believes that the ultimate outcome of any matter currently pending against the Company will not materially affect the financial position, results of operations or liquidity of the Company.