2.2.0.25falsefalse0202 - Disclosure - Summary of Significant Accounting Policiestruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) USD ($) / shares $Jan-01-2010_Dec-31-2010http://www.sec.gov/CIK0000805022duration2010-01-01T00:00:002010-12-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0bpl_SummaryOfSignificantAccountingPoliciesAbstractbplfalsenadurationSummary of Significant Accounting Policies.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringSummary of Significant Accounting Policies.falsefalseSummary of Significant Accounting Policies [Abstract]3false0us-gaap_SignificantAccountingPoliciesTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We adhere to the following significant accounting policies in the preparation of our consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Basis of Presentation and Principles of Consolidation</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     These consolidated financial statements were originally the financial statements of BGH prior to the effective date of the Merger. The Merger was accounted for as an equity transaction, and as such, changes in BGH’s ownership interest as a result of the Merger did not result in gain or loss recognition. Under applicable accounting guidance, the exchange of BGH’s units for our LP Units was accounted for as a BGH equity issuance and BGH was the surviving entity for accounting purposes. Although BGH was the surviving entity for accounting purposes, Buckeye was the surviving entity for legal purposes; consequently, the name on these financial statements was changed from “Buckeye GP Holdings L.P.” to “Buckeye Partners, L.P.” </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The reconciliation of our net income, as historically reported, to the net income reported in these financial statements is as follows (in thousands): </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Year Ended December 31,</b></td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2008</b></td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net income, as previously reported </div></td> <td> </td> <td align="left">$</td> <td align="right">146,900</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">189,881</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Adjustments: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Depreciation and amortization (1) </div></td> <td> </td> <td> </td> <td align="right">4,465</td> <td> </td> <td> </td> <td> </td> <td align="right">4,465</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Costs and expenses (2) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(9,108</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(11,594</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Other (3) </div></td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(620</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="left"> </td> <td align="right">(2,129</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net income </div></td> <td> </td> <td align="left">$</td> <td align="right">141,637</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">180,623</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96%"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td>Represents the amortization of the market value of LP Units issued in August 1997 in connection with the restructuring of Services Company’s ESOP. The market value of those LP Units was $64.2 million, and this amount was recorded as a deferred charge and is being amortized on a straight-line basis over 13.5 years.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td>Amounts include payroll and benefits costs, professional fees, certain state franchise taxes, insurance costs and miscellaneous other expenses incurred by BGH.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td> <td> </td> <td>Includes interest expense on Services Company’s debt and commitment fees on BGH’s credit facility. See Note 13 for further information.</td> </tr> </table> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Pursuant to the Merger, BGH’s unitholders received a total of approximately 20.0 million of Buckeye’s LP Units in the aggregate in exchange for all outstanding BGH common units and management units. As a result, the number of Buckeye’s LP Units outstanding increased from 51.6 million to 71.4 million. However, for historical reporting purposes, the impact of this change was accounted for as a reverse split of BGH’s units of 0.705 to 1.0, together with the addition of Buckeye’s existing LP Units. Therefore, since BGH was the surviving accounting entity, the weighted average number of LP Units outstanding used for basic and diluted earnings per LP Unit calculations are BGH’s historical weighted average common units outstanding adjusted for the reverse unit split and the addition of Buckeye’s existing LP Units. Amounts reflecting historical BGH unit and per unit amounts included in this report have been restated for the reverse unit split. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”). The financial statements include our accounts on a consolidated basis. We have eliminated all intercompany transactions in consolidation. The consolidated financial statements include the accounts of our wholly-owned subsidiaries and the accounts of Services Company on a consolidated basis. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Business Segments</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We operate and report in five business segments: Pipelines & Terminals; International Operations; Natural Gas Storage; Energy Services; and Development & Logistics. See Note 23 for a more detailed discussion of our business segments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Asset Retirement Obligations</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We regularly assess our legal obligations with respect to estimated retirements of certain of our long-lived assets to determine if an asset retirement obligation (“ARO”) exists. GAAP requires that the fair value of a liability related to the retirement of long-lived assets be recorded at the time a legal obligation is incurred including obligations to perform an asset retirement activity in which the timing or method of settlement are conditional on a future event that may or may not be within the control of the entity. If an ARO is identified and a liability is recorded, a corresponding asset is recorded concurrently and is depreciated over the remaining useful life of the asset. After the initial measurement, the liability is periodically adjusted to reflect changes in the ARO’s fair value. Generally, the fair value of any liability is determined based on estimates and assumptions related to future retirement costs, future inflation rates and credit-adjusted risk-free interest rates. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Other than assets in the Natural Gas Storage segment, our assets generally consist of underground refined petroleum products pipelines installed along rights-of-way acquired from land owners and related above-ground facilities and terminals that we own. We are unable to predict if and when our pipelines, which generally serve high-population and high-demand markets, will become completely obsolete and require decommissioning. Further, our rights-of-way agreements typically do not require the dismantling and removal of the pipelines and reclamation of the rights-of-way upon permanent removal of the pipelines from service. Accordingly, other than with respect to the Natural Gas Storage segment, we have recorded no liabilities, or corresponding assets, because the future dismantlement and removal dates of the majority of our assets, and the amount of any associated costs, are indeterminable. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Natural Gas Storage segment’s pipelines and surface facilities are located on land that is leased. An ARO asset and liability was established due to a requirement in the land leases to remove certain assets in the event that the site is abandoned. The ARO liability will be adjusted prospectively for costs incurred or settled, accretion expense, and any revisions made to the assumptions related to the retirement costs. See Note 8 for further discussion of our AROs. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Capitalization of Interest</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Interest on borrowed funds is capitalized on projects during construction based on the approximate average interest rate of our debt. Interest capitalized for the years ended December 31, 2010, 2009 and 2008 was $2.5 million, $3.4 million and $2.3 million, respectively. The weighted average rates used to capitalize interest on borrowed funds was 4.8%, 5.4% and 5.4% for the years ended December 31, 2010, 2009 and 2008, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Cash and Cash Equivalents</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Cash equivalents represent all highly marketable securities with original maturities of three months or less. The carrying value of cash equivalents approximates fair value because of the short term nature of these investments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Our consolidated statements of cash flows are prepared using the indirect method. The indirect method derives net cash flows from operating activities by adjusting net income to remove (i) the effects of all deferrals of past operating cash receipts and payments, such as changes during the period in inventory, deferred income and similar transactions, (ii) the effects of all accruals of expected future operating cash receipts and cash payments, such as changes during the period in receivables and payables, (iii) the effects of all items classified as investing or financing cash flows, such as gains or losses on sale of property, plant and equipment or extinguishment of debt, and (iv) other non-cash amounts such as depreciation, amortization and changes in the fair market value of derivative instruments. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Comprehensive Income</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Our comprehensive income is determined based on net income adjusted for changes in other comprehensive income from certain of our hedging transactions, related amortization of our pension and post-retirement benefit plan costs and changes in the funded status of our pension and post-retirement benefit plans. Prior to the Merger, our comprehensive income equaled our net income. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Construction and Pipeline Relocation Receivables</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Construction and pipeline relocation receivables represent valid claims against non-affiliated customers for services rendered in constructing or relocating pipelines and are recognized when services are rendered. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Contingencies</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Certain conditions may exist as of the date our consolidated financial statements are issued that may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, with input from legal counsel, assesses such contingent liabilities, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in proceedings, our management, with input from legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Cost of Product Sales and Natural Gas Storage Services</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Cost of product sales relates to sales of refined petroleum products, consisting primarily of gasoline, heating oil and diesel fuel, and includes the direct costs of product acquisition as well as the effects of hedges of such product acquisition costs and hedges of fixed-price contracts. In addition, costs related to hub service agreements, which consist of a variety of gas storage services under interruptible storage agreements, for which we will be required to make payment to a third party, are recognized as cost of natural gas storage services. These services principally include park and loan transactions. Parks occur when gas from a third party is injected and stored for a specified period. The third party then is obligated to withdraw its stored gas at a future date. Title to the gas remains with the third party. Loans occur when gas is delivered to a third party in a specified period. The third party then has the obligation to redeliver gas at a future date. Costs related to park and loan transactions for which we are required to make payment are recognized ratably over the term of the agreement. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Debt Issuance Costs</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Costs incurred upon the issuance of our debt instruments are capitalized and amortized over the life of the associated debt instrument on a straight-line basis, which approximates the effective interest method. If the debt instrument is retired before its scheduled maturity date, any remaining issuance costs associated with that debt instrument are expensed in the same period. Deferred debt issuance costs were $21.6 million and $18.1 million at December 31, 2010 and 2009, respectively. We incurred approximately $3.6 million of debt issuance costs during the year ended December 31, 2010 primarily related to the amendment to the Buckeye Energy Services LLC (“BES”) credit agreement (see Note 13). Accumulated amortization was approximately $10.4 million and $7.0 million at December 31, 2010 and 2009, respectively. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Derivative Instruments</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We use derivative instruments such as swaps, forwards, futures and other contracts to manage market price risks associated with inventories, firm commitments, interest rates and certain anticipated transactions. We recognize these transactions on our consolidated balance sheet as assets and liabilities based on the instrument’s fair value. Changes in fair value of derivative instrument contracts are recognized in the current period in earnings unless specific hedge accounting criteria are met. If the derivative instrument is designated as a hedging instrument in a fair value hedge, gains and losses incurred on the instrument will be recorded in earnings to offset corresponding losses and gains on the hedged item. If the derivative instrument is designated as a hedging instrument in a cash flow hedge, gains and losses incurred on the instrument are recorded in other comprehensive income. In both cases, any gains or losses incurred on the derivative instrument that are not effective in offsetting changes in fair value or cash flows of the hedged item are recognized immediately in earnings. Gains and losses on cash flow hedges are reclassified from other comprehensive income to earnings when the forecasted transaction occurs or, as appropriate, over the economic life of the underlying asset or liability. A derivative instrument designated as a hedge of an anticipated transaction that is no longer likely to occur is immediately recognized in earnings. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     To qualify as a hedge, the item to be hedged must expose us to risk and we must have an expectation that the related hedging instrument will be effective at reducing or mitigating that exposure. Certain other hedging requirements, such as documentation at inception as discussed below, must also be met. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Documentation of all hedging relationships is completed at inception and includes a description of the risk-management objective and strategy for undertaking the hedge, identification of the hedging instrument, the hedged item, the nature of the risk being hedged, the method for assessing effectiveness of the hedging instrument in offsetting the hedged risk and the method of measuring any ineffectiveness. This process includes linking all derivative instruments that are designated as fair value or cash flow hedges to specific assets and liabilities on the consolidated balance sheets or to specific firm commitments or forecasted transactions. We also formally assess, both at the hedge’s inception and on an ongoing basis at least quarterly, whether the derivative instruments that are used in designated hedging relationships are highly effective in offsetting changes in fair values or cash flows of hedged items. If it is determined that a derivative instrument is not highly effective as a hedge or that it has ceased to be a highly effective hedge, we discontinue hedge accounting prospectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Earnings per LP Unit</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Basic earnings per LP Unit is determined by dividing our net income, after deducting the amount allocated to noncontrolling interests, by the weighted average number of LP Units outstanding for the period. Diluted earnings per LP Unit is calculated the same way except the weighted average LP Units outstanding include any dilutive effect of LP Unit option grants or grants under the 2009 Long-Term Incentive Plan of Buckeye Partners, L.P. (the “LTIP”) (see Note 22). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Amounts reflecting historical BGH unit and per unit amounts included in this report have been restated for the reverse unit split. Pursuant to the Merger, BGH’s unitholders received a total of approximately 20.0 million of Buckeye’s LP Units in the aggregate in exchange for all outstanding BGH common units and management units. As a result, the number of Buckeye’s LP Units outstanding increased from 51.6 million to 71.4 million. However, for historical reporting purposes, the impact of this change was accounted for as a reverse split of BGH’s units of 0.705 to 1.0, together with the addition of Buckeye’s existing LP Units. Therefore, since BGH was the surviving accounting entity, the weighted average number of LP Units outstanding used for basic and diluted earnings per LP Unit calculations are BGH’s historical weighted average common units outstanding adjusted for the reverse unit split and the addition of Buckeye’s existing LP Units. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Environmental Expenditures</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We accrue for environmental costs that relate to existing conditions caused by past operations, including, in some cases, pre-existing conditions related to acquired assets. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Environmental costs include initial site surveys and environmental studies of potentially contaminated sites, costs for remediation and restoration of sites determined to be contaminated and ongoing monitoring costs, as well as damages and other costs, when estimable. We monitor the balance of accrued undiscounted environmental liabilities on a regular basis. We record liabilities for environmental costs at a specific site when our liability for such costs is probable and a reasonable estimate of the associated costs can be made. Adjustments to initial estimates are recorded, from time to time, to reflect changing circumstances and estimates based upon additional information developed in subsequent periods. Estimates of our ultimate liabilities associated with environmental costs are particularly difficult to make with certainty due to the number of variables involved, including the early stage of investigation at certain sites, the lengthy time frames required to complete remediation alternatives available and the evolving nature of environmental laws and regulations. None of our estimated environmental remediation liabilities are discounted to present value since the ultimate amount and timing of cash payments for such liabilities are not readily determinable. Expenditures to mitigate or prevent future environmental contamination are capitalized. We maintain insurance which may cover certain environmental expenditures. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     At December 31, 2010 and 2009, our accrued liabilities for environmental remediation projects totaled $30.8 million and $29.9 million, respectively. These amounts were derived from a range of reasonable estimates based upon studies and site surveys. Unanticipated changes in circumstances and/or legal requirements could result in expenses being incurred in future periods in addition to an increase in expenditures required to remediate contamination for which we are responsible. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Equity Investments</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We account for investments in entities in which we do not exercise control, but have significant influence, using the equity method. Under this method, an investment is recorded at acquisition cost plus our equity in undistributed earnings or losses since acquisition, reduced by distributions received and amortization of excess net investment. Excess investment is the amount by which the initial investment exceeds the proportionate share of the book value of the net assets of the investment. We evaluate equity method investments for impairment whenever events or circumstances indicate that there is a loss in value of the investment which is other than temporary. In the event that the loss in value of an investment is other than temporary, we record a charge to earnings to adjust the carrying value to fair value. There were no impairments of our equity investments during the years ended December 31, 2010, 2009 or 2008. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Estimates</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The preparation of consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions. These estimates and assumptions, which may differ from actual results, will affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue and expense during the reporting periods. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Fair Value</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Cash and cash equivalents, trade receivables, net, construction and pipeline relocation receivables, margin deposits, prepaid and other current assets and all current liabilities are reported in the consolidated balance sheets at amounts which approximate fair value due to the relatively short period to maturity of these financial instruments. The fair values of our fixed-rate debt were estimated by observing market trading prices and by comparing the historic market prices of our publicly-issued debt with the market prices of other MLPs’ publicly-issued debt with similar credit ratings and terms. The fair values of our variable-rate debt are their carrying amounts, as the carrying amount reasonably approximates fair value due to the variability of the interest rates. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a specified measurement date. Our Energy Services segment also has derivative assets and liabilities. These assets and liabilities consist of exchange-traded futures contracts and fixed-price contracts with customers. These assets and liabilities are measured and reported at fair values. We consider the impact of credit valuation adjustments with respect to the fixed-price contracts. See Note 16 for further discussion. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Goodwill</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Goodwill represents the excess of purchase price over fair value of net assets acquired. Our goodwill amounts are assessed for impairment (i) on an annual basis on January 1 of each year or (ii) on an interim basis if circumstances indicate it is more likely than not the fair value of a reporting unit is less than its fair value. Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. A reporting unit is a business segment or one level below a business segment for which discrete financial information is available and regularly reviewed by segment management. Our reporting units are our business segments. A goodwill impairment assessment requires that the estimated fair value of the reporting unit to which the goodwill is assigned be determined and compared to its book value. If the fair value of the reporting unit exceeds its book value including associated goodwill amounts, the goodwill is considered to be unimpaired and no impairment charge is required. If the fair value of the reporting unit is less than its book value including associated goodwill amounts, a charge to earnings is recorded to reduce the carrying value of the goodwill to its implied fair value. We have not recognized any impairment losses related to goodwill for any of the periods presented. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Income Taxes</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     For U.S. federal and state income tax purposes, we and each of our subsidiaries, except for Buckeye Development & Logistics I, LLC (“BDL”), are not taxable entities. Accordingly, our taxable income, except for BDL, is generally includable in the U.S. federal and state income tax returns of our individual partners. Buckeye Caribbean Terminals Inc., which was converted to a limited liability company in 2011, is subject to income taxes within the Commonwealth of Puerto Rico. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Effective August 1, 2004, BDL elected to be treated as a taxable corporation for federal income tax purposes. Accordingly, it has recognized deferred tax assets and liabilities for temporary differences between the amounts of assets and liabilities measured for financial reporting purposes and the amounts measured for federal income tax purposes. Changes in tax legislation are included in the relevant computations in the period in which such changes are effective. Deferred tax assets are reduced by a valuation allowance when the amount of any tax benefit is not expected to be realized. We recorded deferred tax liabilities of $0.2 million and $0.4 million as of December 31, 2010 and 2009, respectively, which are recorded in non-current liabilities. As of December 31, 2010 and 2009, our reported amount of net assets for GAAP purposes exceeded our tax basis for allocating taxable income under our partnership agreement. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Income taxes were benefits of $0.9 million and $0.3 million for the years ended December 31, 2010 and 2009, respectively. For the year ended December 31, 2008, income taxes were an expense of $0.8 million. Income tax benefit/expense is included in operating expenses in the consolidated statements of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Puerto Rican entity that we acquired is undergoing an audit of its Puerto Rico income tax returns for the tax years 2002 through 2005. In our purchase price allocation, we recorded a $17.7 million liability related to the uncertain outcome of the income tax audit with an offsetting indemnification asset from Shell for the same amount. See Note 4 for further discussion. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Intangible Assets</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Intangible assets with finite useful lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Intangible assets that have finite useful lives are amortized over their useful lives. See Note 10 for further discussion. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Inventories</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We generally maintain two types of inventory. Within our Energy Services segment, we principally maintain refined petroleum products inventory, which consists primarily of gasoline, heating oil and diesel fuel, which are valued at the lower of cost or market, unless such inventories are hedged. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We also maintain, principally within our Pipelines & Terminals segment, an inventory of materials and supplies such as pipes, valves, pumps, electrical/electronic components, drag reducing agent and other miscellaneous items that are valued at the lower of cost or market based on the weighted-average cost method (see Note 6). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Long-Lived Assets</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We assess the recoverability of our long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We assess recoverability based on estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposal. The measurement of an impairment loss, if recognition of any loss is required, is based on the difference between the carrying amount and fair value of the asset. During the year ended December 31, 2009, we recorded a non-cash charge of $59.7 million related to an asset impairment (see Note 8). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Net Income Allocation</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     For periods prior to the Merger, net income allocated to noncontrolling interests was determined by deducting Buckeye GP’s allocated share of Buckeye’s net income for the period from Buckeye’s net income. Buckeye GP’s allocated share of Buckeye’s net income was determined by Buckeye’s partnership agreement. Buckeye allocated net income to its limited partners and its general partner based upon their ownership interests in Buckeye. Buckeye first allocated net income to its general partner based on the incentive distributions paid during the current quarter. After the allocation of the incentive distribution interests, the general partner and limited partners shared in the remaining income or loss based upon their proportionate interests in Buckeye. Following the Merger, we allocate a portion of our net income to noncontrolling interests related to Services Company and third-party owners of Sabina Pipeline (“Sabina”) and WesPac Pipelines — Memphis LLC (“WesPac Memphis”) and a majority of our net income to our limited partners. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Noncontrolling Interests</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The consolidated balance sheets include noncontrolling interests that relate primarily to the Services Company and the portions of Sabina and WesPac Memphis that are not owned by Buckeye. Similarly, the consolidated statements of operations include noncontrolling interests that reflect amounts not attributable to Buckeye. Prior to the Merger, noncontrolling interests reported by BGH also included equity interests in Buckeye that were not owned by BGH. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Pensions</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Services Company sponsors a defined contribution plan (see Note 17), defined benefit plans (see Note 17) and the ESOP (see Note 19) that provide retirement benefits to certain regular full-time employees. Certain hourly employees of Services Company are covered by a defined contribution plan under a union agreement (see Note 17). These plans are included in our consolidated financial statements because we are a guarantor of these obligations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Postretirement Benefits Other Than Pensions</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Services Company provides post-retirement health care and life insurance benefits for certain of its retirees. Certain other retired employees are covered by a health and welfare plan under a union agreement (see Note 17). This plan is included in our consolidated financial statements because we are a guarantor of these obligations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Property, Plant and Equipment</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We record property, plant and equipment at its original acquisition cost. Property, plant and equipment consist primarily of pipelines, wells, storage and terminal facilities, pad gas and pumping and compression equipment. Depreciation on pipelines and terminals is generally calculated using the straight-line method over the estimated useful lives ranging from 44 to 50 years. Plant and equipment associated with natural gas storage is generally depreciated over 44 years, except for pad gas. The Natural Gas Storage segment maintains a level of natural gas in its underground storage facility generally known as pad gas, which is not routinely cycled but, instead, serves the function of maintaining the necessary pressure to allow routine injection and withdrawal to meet demand. The pad gas is considered to be a component of the facility and as such is not depreciated because it is expected to ultimately be recovered and sold. Other plant and equipment is generally depreciated on a straight-line basis over an estimated life of 5 to 50 years. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Additions to property, plant and equipment, including major replacements or betterments, are recorded at cost. We charge maintenance and repairs to expense in the period incurred. The cost of property, plant and equipment sold or retired and the related depreciation, except for certain pipeline system assets, are removed from our consolidated balance sheet in the period of sale or disposition, and any resulting gain or loss is included in earnings. For our pipeline system assets, we generally charge the original cost of property sold or retired to accumulated depreciation and amortization, net of salvage and cost of removal. When a separately identifiable group of assets, such as a stand-alone pipeline system is sold, we will recognize a gain or loss in our consolidated statements of operations for the difference between the cash received and the net book value of the assets sold. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The following table represents the depreciation life for the major components of our assets: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Life in Years</b></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Right of way </div></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">44-50</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Line pipe and fittings </div></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">44-50</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Buildings </div></td> <td> </td> <td> </td> <td align="right">50</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Wells </div></td> <td> </td> <td> </td> <td align="right">44</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Pumping and compression equipment </div></td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">44-50</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Oil tanks </div></td> <td> </td> <td> </td> <td align="right">50</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Office furniture and equipment </div></td> <td> </td> <td> </td> <td align="right">18</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Vehicles and other work equipment </div></td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Servers and software </div></td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Recent Accounting Developments</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Fair Value Measurements</i></u>. In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance that requires new disclosures related to fair value measurements. The new guidance requires expanded disclosures related to transfers between Level 1 and 2 activities and a gross presentation for Level 3 activity. The new accounting guidance is effective for fiscal years and interim periods beginning after December 15, 2009, except for the new disclosures related to Level 3 activities, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those years. The new guidance became effective for us on January 1, 2010, except for the new disclosures related to Level 3 activities, which will be effective for us on January 1, 2011. We have included the enhanced disclosure requirements regarding fair value measurements in Note 16. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Health Care Reform Acts</i></u>. In April 2010, the FASB issued guidance that addresses changes in accounting for income taxes resulting from the Health Care and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act. We adopted the new guidance as of its effective date, April 14, 2010. The adoption of this new guidance did not have a material impact on our consolidated financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Intangibles, Goodwill and Other</i></u>. In December 2010, the FASB issued guidance that amended the goodwill impairment test for reporting units with zero or negative carrying amounts. The objective of this new guidance is to address questions about entities with reporting units with zero or negative carrying amounts because some entities concluded that the first step of the goodwill impairment test is passed in those circumstances because the fair value of their reporting unit will generally be greater than zero. The new guidance is effective for fiscal years and interim periods, within those years, beginning after December 15, 2010. We do not expect that the adoption of this guidance will have an impact on our consolidated financial statements. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Business Combinations</i></u>. In December 2010, the FASB issued guidance that clarifies disclosures related to pro forma information for business combinations that occurred in the current period. The amendments specify that if an entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The new guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements or disclosures. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Regulatory Reporting</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The majority of our refined petroleum products pipelines are subject to regulation by the Federal Energy Regulatory Commission (“FERC”), which prescribes certain accounting principles and practices for the annual Form 6 Report filed with the FERC that differ from those used in these consolidated financial statements. Reports to FERC differ from the consolidated financial statements, which have been prepared in accordance with GAAP, generally in that such reports calculate depreciation over estimated useful lives of the assets as prescribed by FERC. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Revenue Recognition</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Pipelines & Terminals segment</i></u>. Revenues from pipeline tariffs and fees are associated with the transportation of refined petroleum products at published tariffs as well as revenues associated with line leases for committed capacity on a particular system that may or may not be utilized. Tariff revenues are recognized either at the point of delivery or at the point of receipt, pursuant to specifications outlined in the respective regulated and non-regulated tariffs. Revenues associated with line leases are recognized ratably over the respective lease terms, regardless of whether the capacity is actually utilized, and are subject to take or pay arrangements. All pipeline tariff and fee revenues are based on actual volumes and rates. As is common in the industry, our tariffs incorporate loss allocation or loss allowance factors that are intended to, among other things, offset losses due to evaporation, measurement and other losses in transit. We value the variance of allowance volumes to actual losses at the estimated net realizable value at the time the variance occurred, and the result is recorded as either an increase or decrease to transportation and other service revenues. In addition, we have certain agreements that require counterparties to ship a minimum volume over an agreed-upon period. Revenue pursuant to such agreements is recognized at the earlier of when the volume is shipped or when the counterparty’s ability to make up the minimum volume has expired. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Revenues from terminalling, storage and rental operations are recognized as the services are performed. Storage and terminalling revenues include storage fees that are generated when we lease storage capacity and terminalling fees, or throughput fees, that are generated when we receive refined petroleum products from one connecting pipeline and redeliver such products to another connecting carrier or to customers through a truck-loading rack. We generate revenue through a combination of month-to-month and multi-year storage capacity leases and terminalling service arrangements. Storage fees resulting from short-term and long-term contracts are typically recognized in revenue ratably over the term of the contract, regardless of the actual storage capacity utilized. Terminalling fees are recognized as the refined petroleum product exits the terminal and is delivered to a connecting carrier, third-party terminal or a customer through a truck-loading rack. In addition, we have certain agreements that require counterparties to throughput a minimum volume over an agreed-upon period. Revenue pursuant to such agreements is recognized at the earlier of when the volume exits the terminal or when the counterparty’s ability to make up the minimum volume has expired. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>International Operations segment</i></u><i>. </i>Revenues from terminalling, storage and rental operations at our Yabucoa, Puerto Rico terminal are recognized as the services are performed as discussed above. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Natural Gas Storage segment</i></u>. Revenue from natural gas storage, which consists of demand charges, or lease revenues, for the reservation of storage space under firm storage agreements, is recognized over the term of the related storage agreement. The demand charge entitles the customer to a fixed amount of storage space and certain injection and withdrawal rights. Title to the stored gas remains with the customer. Revenues from hub services, which consist of a variety of other gas storage services under interruptible storage agreements, are recognized ratably over the term of the agreement. These services principally include park and loan transactions. Parks occur when gas from a customer is injected and stored for a specified period. The customer then has the obligation to withdraw its stored gas at a future date. Title to the gas remains with the customer. Loans occur when gas is delivered to a customer in a specified period. The customer then has the obligation to redeliver gas at a future date. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Energy Services segment</i></u>. Revenue from the sale of refined petroleum products, which are sold on a wholesale basis, is recognized at the time title to the product sold transfers to the purchaser, which occurs upon delivery of the product to the purchaser or its designee. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <u><i>Development & Logistics segment</i></u>. Revenues from contract operation and construction services of facilities and pipelines not directly owned by us are recognized as the services are performed. Contract and construction services revenue typically includes costs to be reimbursed by the customer plus an operator fee. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Trade Receivables and Concentration of Credit Risk</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Trade receivables represent valid claims against non-affiliated customers and are recognized when products are sold or services are rendered. We extend credit terms to certain customers based on historical dealings and to other customers after a full review of various financial credit indicators, including the customers’ credit rating (if available), and verified trade references. Our allowance for doubtful accounts is determined based on specific identification and estimates of future uncollectible accounts. At December 31, 2010 and 2009, our allowance for doubtful accounts was $2.9 million and $1.5 million, respectively, and is included in trade receivables in our consolidated balance sheets. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Our procedure for determining the allowance for doubtful accounts is based on (i) historical experience with customers, (ii) the perceived financial stability of customers based on our research, and (iii) the levels of credit we grant to customers. In addition, we may increase the allowance for doubtful accounts in response to the specific identification of customers involved in bankruptcy proceedings and similar financial difficulties. On a routine basis, we review estimates associated with the allowance for doubtful accounts to ensure that we have recorded sufficient reserves to cover potential losses. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We have a concentration of trade receivables due from major integrated oil companies and their marketing affiliates, major petroleum refiners, major chemical companies, large regional marketing companies and large commercial airlines. Additionally, we have trade receivables from gas marketing companies, independent gatherers, investment banks that have established a trading platform, and brokers and marketers. These concentrations of customers may affect our overall credit risk in that the customers may be similarly affected by changes in economic, regulatory or other factors. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     For the years ended December 31, 2010, 2009 and 2008, no customer contributed more than 10% of consolidated revenue. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     We manage our exposure to credit risk through credit analysis and monitoring procedures, and sometimes use letters of credit, prepayments and guarantees. The Energy Services segment and the Pipelines & Terminals segment’s pipelines bill their customers on a weekly basis. The Pipelines & Terminals segment’s terminals, the Natural Gas Storage segment and Development & Logistics segment bill their customers on a monthly basis. We believe that these billing practices may reduce credit risk. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 1%"><i>Unit-Based Compensation</i> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     BGH GP has an equity compensation plan (“Equity Compensation Plan”) for certain members of BGH GP’s senior management, who also serve as our senior management. The Equity Compensation Plan included both time-based and performance-based participation in the equity of BGH GP (but not ours) referred to as override units. On December 31, 2010, the Equity Compensation Plan was modified, and as a result of the modification, we recognized a non-cash compensation charge of $21.1 million (see Note 18 for further information). We also award unit-based compensation to employees and directors primarily under the LTIP, which became effective in March 2009. We formerly awarded options to acquire LP Units to employees pursuant to the Buckeye Partners, L.P. Unit Option and Distribution Equivalent Plan (the “Option Plan”). All unit-based payments to employees under these plans, including grants of employee unit options, phantom units and performance units, are recognized in the consolidated statements of operations based on their fair values. See Note 18 for further discussion of our unit-based compensation plans. </div> </div>  <!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis element may be used to describe all significant accounting policies of the reporting entity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 falsefalseSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES12Summary of Significant Accounting PoliciesUnKnownUnKnownUnKnownUnKnownfalsetrue