Sales of NGLs and related products $ 15,916.0 $ 14,218.5 $ 16,724.6
Midstream services 1,204.2 949.9 758.7
Total 17,120.2 15,168.4 17,483.3
Onshore Natural Gas Pipelines & Services:
Sales of natural gas 2,571.6 2,395.4 2,866.5
Midstream services 966.9 957.2 863.7
Total 3,538.5 3,352.6 3,730.2
Onshore Crude Oil Pipelines & Services:
Sales of crude oil 20,371.3 17,548.7 15,962.6
Midstream services 279.1 113.0 98.5
Total 20,650.4 17,661.7 16,061.1
Offshore Pipelines & Services:
Sales of natural gas 0.5 0.4 1.1
Sales of crude oil 5.7 3.3 9.4
Midstream services 153.2 187.8 245.5
Total 159.4 191.5 256.0
Petrochemical & Refined Products Services:
Sales of petrochemicals and refined products 5,568.8 5,470.9 6,000.6
Midstream services 689.7 738.0 781.8
Total 6,258.5 6,208.9 6,782.4
Total consolidated revenues $ 47,727.0 $ 42,583.1 $ 44,313.0
Substantially all of our consolidated revenues are earned in the U.S. and derived from a wide customer base. Our largest non-affiliated customer for 2013 was BP p.l.c. and its affiliates (“BP”), which accounted for $4.31 billion, or 9.0%, of our consolidated revenues for the year. The following table presents our consolidated revenues from BP by business segment for the year ended December 31, 2013 (dollars in millions):
NGL Pipelines & Services $ 1,137.6 Onshore Natural Gas Pipelines & Services 164.3 Onshore Crude Oil Pipelines & Services 2,833.1 Petrochemical & Refined Products Services 176.7 Total consolidated revenues from BP $ 4,311.7
BP was also our largest non-affiliated customer for 2012, accounting for 9.5% of our consolidated revenues for the year ended December 31, 2012. Shell Oil Company and its affiliates was our largest non-affiliated customer in 2011, accounting for 10.6% of our consolidated revenues for the year ended December 31, 2011.
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Selected Energy Commodity Price Data
The following table presents index prices for natural gas, crude oil and selected NGL and petrochemical products for the periods indicated:
Polymer Refinery
Natural Normal Natural Grade Grade WTI LLS
Gas, Ethane, Propane, Butane, Isobutane, Gasoline, Propylene, Propylene, Crude Oil, Crude Oil, $/MMBtu $/gallon $/gallon $/gallon $/gallon $/gallon $/pound $/pound $/barrel $/barrel
(1) (2) (2) (2) (2) (2) (3) (3) (4) (4) 2011 Averages $4.04 $0.77 $1.46 $1.85 $2.06 $2.34 $0.76 $0.64 $95.12 $112.28 2012 by quarter: 1st Quarter $2.72 $0.56 $1.26 $1.93 $2.04 $2.39 $0.69 $0.60 $102.93 $119.59 2nd Quarter $2.21 $0.40 $0.98 $1.62 $1.75 $2.05 $0.66 $0.51 $93.49 $108.47 3rd Quarter $2.80 $0.34 $0.89 $1.44 $1.62 $2.01 $0.51 $0.37 $92.22 $109.40 4th Quarter $3.41 $0.28 $0.88 $1.64 $1.82 $2.15 $0.56 $0.48 $88.18 $109.43 2012 Averages $2.79 $0.40 $1.00 $1.65 $1.81 $2.15 $0.60 $0.49 $94.20 $111.72 2013 by quarter: 1st Quarter $3.34 $0.26 $0.86 $1.58 $1.65 $2.23 $0.75 $0.65 $94.37 $113.93 2nd Quarter $4.10 $0.27 $0.91 $1.24 $1.27 $2.04 $0.63 $0.53 $94.22 $104.63 3rd Quarter $3.58 $0.25 $1.03 $1.33 $1.35 $2.15 $0.68 $0.58 $105.82 $109.89 4th Quarter $3.60 $0.26 $1.20 $1.43 $1.45 $2.10 $0.68 $0.56 $97.46 $100.94 2013 Averages $3.65 $0.26 $1.00 $1.39 $1.43 $2.13 $0.69 $0.58 $97.97 $107.34 (1) Natural gas prices are based on Henry-Hub Inside FERC commercial index prices as reported by Platts, which is a division of McGraw Hill
Financial, Inc.
(2) NGL prices for ethane, propane, normal butane, isobutane and natural gasoline are based on Mont Belvieu Non-TET commercial index prices as reported by Oil Price Information Service.
(3) Polymer grade propylene prices represent average contract pricing for such product as reported by Chemical Market Associates, Inc. (“CMAI”). Refinery grade propylene prices represent weighted-average spot prices for such product as reported by CMAI.
(4) Crude oil prices are based on commercial index prices for WTI as measured on the New York Mercantile Exchange (“NYMEX”) and for LLS as reported by Platts.
Period-to-period fluctuations in our consolidated revenues and cost of sales amounts are explained in large part by changes in energy commodity prices. Energy commodity prices fluctuate for a variety of reasons, including supply and demand imbalances and geopolitical tensions. The following is a discussion of changes in key commodity prices affecting our results of operations during the year ended December 31, 2013:
The weighted-average indicative market price for NGLs (based on prices for such products at Mont Belvieu, Texas, which is the primary industry hub for domestic NGL production) was $1.02 per gallon for 2013 compared to $1.12 per gallon for 2012 – a 10% year-to-year decrease. Ethane accounts for the largest volume of NGLs extracted from the natural gas stream. The price of ethane averaged $0.26 per gallon during 2013 compared to $0.40 per gallon during 2012. According to U.S. Energy Information Administration statistics, ethane volumes account for approximately 35% of NGLs produced from natural gas processing activities. As a result of producers allocating more of their capital budgets to developing NGL-rich shale plays and their success in extracting such resources, ethane production has increased more rapidly than the ethylene industry’s current capability to consume the increase in supplies. This oversupply situation has contributed to a significant decrease in average ethane prices since the fourth quarter of 2011. The market price of natural gas (as measured at the Henry Hub in Louisiana) averaged $3.65 per MMBtu for 2013 compared to $2.79 per MMBtu during 2012 – a 31% year-to-year increase. The increase in prices is generally due to higher natural gas demand for power generation and as a heating fuel.
The market price of WTI crude oil (as measured on the NYMEX) averaged $97.97 per barrel for 2013 compared to $94.20 per barrel for 2012. A significant factor in the increase in WTI crude oil prices has been the completion of midstream infrastructure projects, such as the reversal of our Seaway pipeline in
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mid-2012, which allowed crude oil production formerly stranded at the Cushing hub to reach refining markets along the Gulf Coast.
A decrease in our consolidated marketing revenues due to lower energy commodity sales prices may not result in a decrease in gross operating margin or cash available for distribution, since our consolidated cost of sales amounts would also be lower due to comparable decreases in the purchase prices of the underlying energy commodities. The same correlation would be true in the case of higher energy commodity sales prices and purchase costs.
We attempt to mitigate any commodity price exposure through our hedging activities as well as through converting keepwhole and similar contracts to fee-based arrangements. See Note 6 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report for information regarding our commodity hedging activities.
Consolidated Income Statement Highlights
The following information highlights significant changes in our comparative income statement amounts and the primary drivers of such changes.
Comparison of 2013 with 2012. Revenues for 2013 increased $5.14 billion when compared to 2012. Revenues from the marketing of crude oil increased $2.83 billion year-to-year primarily due to higher sales volumes, which accounted for a $2.28 billion increase, and sales prices, which accounted for an additional $543.8 million increase. Revenues from the marketing of NGLs increased a net $1.7 billion year-to-year primarily due to higher sales volumes, which accounted for a $3.64 billion increase, partially offset by lower sales prices, which accounted for a $1.94 billion decrease. Revenues from the marketing of natural gas and petrochemical products increased a net $392.4 million year-to-year primarily due to higher sales prices, which accounted for a $1.1 billion increase, partially offset by lower sales volumes, which accounted for a $708.3 million decrease. Revenues from the marketing of refined products decreased a net $106.8 million year-to-year primarily due to lower sales prices, which accounted for a $697.7 million decrease, which was partially offset by the impact of higher sales volumes, which accounted for a $590.9 million increase. Revenues from midstream asset services increased $347.2 million year-to- year primarily due to contributions from recently completed assets that have started operations in the Eagle Ford Shale and at our Mont Belvieu complex.
Total operating costs and expenses for 2013 increased $4.87 billion when compared to 2012 primarily due to a $4.75 billion increase in cost of sales. The cost of sales associated with our marketing of crude oil increased $2.59 billion year-to-year primarily due to higher sales volumes, which accounted for a $2.15 billion increase, and purchase prices, which accounted for an additional $440.1 million increase. Cost of sales associated with the marketing of NGLs increased a net $1.95 billion year-to-year primarily due to higher sales volumes, which accounted for a $3.36 billion increase, partially offset by lower purchase prices, which accounted for a $1.41 billion decrease. Cost of sales associated with our marketing of natural gas and petrochemical products increased a net $377.2 million year-to-year primarily due to higher purchase prices, which accounted for a $1.02 billion increase, partially offset by lower sales volumes, which accounted for a $643.4 million decrease. Cost of sales associated with the marketing of refined products decreased a net $105.1 million year-to-year primarily due to lower purchase prices, which accounted for a $733.9 million decrease, which was partially offset by the impact of higher sales volumes, which accounted for a $628.8 million increase. Other operating costs and expenses increased a net $65.5 million year-to-year, which includes a $188.8 million increase primarily due to the addition of operating costs of newly constructed assets that have recently started operations and higher overall maintenance costs, partially offset by a $123.3 million reduction in operating costs due to the sale of certain trucking and distribution assets in January and April 2013.
Depreciation, amortization and accretion expenses in operating costs and expenses increased $87.2 million for 2013 when compared to 2012 primarily due to recently constructed assets being placed into service.
We recorded net gains within operating costs and expenses of $83.4 million attributable to asset sales and insurance recoveries in 2013 compared to $17.6 million in 2012. In March 2013, we sold the Stratton Ridge-to- Mont Belvieu segment of the Seminole Pipeline, along with a related storage cavern, and recognized a $52.5 million
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gain on the sale. We recognized $15.0 million of gains attributable to the receipt of nonrefundable cash insurance proceeds related to our West Storage claims in 2013 compared to $30.0 million of such gains in 2012. These proceeds were attributable to property damage claims we filed in connection with the February 2011 NGL release and fire at the West Storage location of our Mont Belvieu, Texas underground storage facility. The remaining West Storage claims of approximately $95.0 million are anticipated to be collected during the first quarter of 2014. To the extent that additional nonrefundable cash insurance proceeds related to this incident are received, we expect to record gains equal to such proceeds.
Operating costs and expenses include $92.6 million and $63.4 million of non-cash asset impairment charges in 2013 and 2012, respectively. Our non-cash asset impairment charges for 2013 primarily relate to the abandonment of certain segments of crude oil and natural gas pipelines in Texas, Oklahoma and the Gulf of Mexico, certain refined products terminal assets in Texas, an NGL storage cavern in Arizona and an NGL fractionator and storage complex in Ohio. Our asset impairment charges for 2012 primarily relate to the abandonment of certain segments of crude oil and natural gas pipelines in Texas and the Gulf of Mexico.
General and administrative costs for 2013 increased $18.0 million when compared to 2012 primarily due to higher employee compensation expenses.
Equity income from our unconsolidated affiliates for 2013 increased $103.0 million when compared to 2012 primarily due to higher earnings from our investments in crude oil pipeline joint ventures.
Interest expense for 2013 increased $30.7 million when compared to 2012. The following table presents the components of our consolidated interest expense for the years indicated (dollars in millions):
For the Year Ended December 31,
2013 2012 2011