| Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
| Dec. 31, 2015 |
| Accounting Policies [Abstract] | |
| Description of Business | Description of Business We are a fee-based, growth-oriented master limited partnership formed by Shell to own, operate, develop and acquire pipelines and other midstream assets. Our assets consist of interests in entities that own crude oil and refined products pipelines serving as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast refining markets and to deliver refined products from those markets to major demand centers. As of December 31, 2015, we own interests in four crude oil pipeline systems, two refined products systems and a crude storage terminal. The crude oil pipeline systems, which are held by Zydeco Pipeline Company LLC (“Zydeco”), Mars Oil Pipeline Company (“Mars”), Poseidon Oil Pipeline Company LLC (“Poseidon”) and the Auger Pipeline System (“Auger”), are strategically located along the Texas and Louisiana Gulf Coast and in the Gulf of Mexico. These systems link major onshore and offshore production areas with key refining markets. The refined products pipeline systems, which are held by Bengal Pipeline Company LLC (“Bengal”) and Colonial Pipeline Company (“Colonial”), connect Gulf Coast and southeastern U.S. refineries to major demand centers from Alabama to New York. The crude storage terminal, which is held by the Lockport Terminal (“Lockport”), is located southwest of Chicago and serves Midwest refineries. On July 1, 2014, SPLC formed a wholly owned subsidiary named Zydeco. In anticipation of our initial public offering (“IPO”) of common units by the Partnership, SPLC contributed the fixed assets and certain agreements of the crude oil pipeline system from Houston, Texas to Houma, Louisiana (Ho-Ho, now referred to as “Zydeco pipeline” or “Zydeco pipeline system”) and other related fixed assets of SPLC to Zydeco. The working capital balances of $1.8 million related to Zydeco pipeline as of June 30, 2014 were not contributed from SPLC to Zydeco. On November 3, 2014, we completed our IPO and our common units trade on the New York Stock Exchange under the symbol “SHLX.” In preparation for its sale of the Auger and Lockport businesses to us (the “Shell Auger and Lockport Operations” or “Auger and Lockport”), on October 1, 2015, SPLC contributed all but the working capital of Auger and Lockport to Pecten Midstream LLC (“Pecten”), a wholly owned subsidiary of SPLC. On November 11, 2015 (effective October 1, 2015), we acquired a 100.0% interest in Pecten from SPLC for $390.0 million. We funded this acquisition with a combination of a public issuance of common units, the issuance of additional general partner units to our general partner, borrowings under our 364-Day Revolver and cash on hand. As of December 31, 2015, we own a 100.0% interest in Pecten, a 62.5% interest in Zydeco, a 28.6% interest in Mars, a 36.0% interest in Poseidon, a 49.0% interest in Bengal and a 3.0% interest in Colonial. Zydeco is consolidated within our consolidated financial statements as a subsidiary. We obtained control of this affiliate via a voting agreement with SPLC through which we have voting power over the ownership interest retained by SPLC in Zydeco. The 37.5% ownership interest in Zydeco retained by SPLC is reflected as noncontrolling interest in our consolidated financial statements. The ownership of Pecten is consolidated within our consolidated financial statements as a subsidiary. We account for each of our investments in Mars, Bengal and Poseidon using the equity method of accounting, and we account for our investment in Colonial using the cost method of accounting. We generate the majority of our revenue under long-term agreements by charging fees for the transportation and storage of crude oil and refined products through our pipelines and storage tanks. We do not engage in the marketing and trading of any commodities. Our operations consist of one reportable segment. |
| Basis of Presentation | Basis of Presentation Our consolidated financial statements include all majority owned and non-majority owned subsidiaries required to be consolidated under generally accepted accounting principles in the United States (“GAAP”). Our reporting currency is U.S. dollars, and all references to dollars are U.S. dollars. The accompanying consolidated financial statements and related notes have been prepared under the rules and regulations of the Securities and Exchange Commission (the “SEC”). These rules and regulations conform to the accounting principles contained in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification, the single source of GAAP. The acquisition of Pecten was a transfer of a business between entities under common control, which requires it to be accounted for as if the transfer had occurred at the beginning of the period of transfer, with prior periods retrospectively adjusted to furnish comparative financial information. Accordingly, the accompanying financial statements and notes have been retrospectively adjusted to include the historical results and financial position of the Shell Auger and Lockport Operations prior to the effective date of the acquisition. The additional acquisitions of interests in Zydeco, Colonial and Poseidon, all made in 2015, represented transfers of assets. Accordingly, these assets are included in the financial statements prospectively from the effective date of each acquisition. See Note 3 – Acquisitions The consolidated financial statements for the periods below were derived from the financial statements and accounting records of SPLC and Shell. Our predecessor refers to our operations prior to the IPO. Specifically, our predecessor for accounting purposes (“Predecessor”) comprises the following:
·
Houston-to-Houma crude oil pipeline system (“Ho-Ho”) for periods prior to July 1, 2014;
·
Zydeco Pipeline Company LLC (“Zydeco”) for the period from July 1, 2014 through November 2, 2014; provided, however, the financial results of Ho-Ho and Zydeco have been retrospectively adjusted for the acquisition of the Shell Auger and Lockport Operations. We refer to the Shell Auger and Lockport Operations for the period from November 3, 2014 through September 30, 2015 as “the Shell Auger and Lockport Predecessor.” We refer to our Predecessor and the Shell Auger and Lockport Predecessor collectively as our “Predecessors.” Effective October 1, 2015, we acquired a business from SPLC, the Shell Auger and Lockport Operations, which we consolidate. The results of our Predecessors also include the operations of this business prior to October 1, 2015. These statements reflect the consolidated historical results of operations, financial position and cash flows as if the Predecessors’ business and the Shell Auger and Lockport Operations business had been consolidated entities for all periods prior to the effective dates of acquisition, November 3, 2014 and October 1, 2015. Expense Allocations. The consolidated statements of income also include expense allocations to our Predecessor, as retrospectively adjusted for the acquisition of the Shell Auger and Lockport Operations, prior to July 1, 2014, and to the Shell Auger and Lockport Predecessor for the period from July 1, 2014 through September 30, 2015, for certain functions performed by SPLC and Shell during such periods. Such costs were charged to our Predecessor and are included in either general and administrative expenses or operations and maintenance expenses in the accompanying consolidated statements of income, depending on the nature of the employee’s role in our operations. The expense allocations have been determined on a basis that we, SPLC and Shell consider to be a reasonable reflection of the utilization of the services provided or the benefit received by our Predecessor during the periods presented. Nevertheless, the consolidated financial statements may not include all of the expenses that would have been incurred as a separate, publicly-traded company during the periods prior to November 3, 2014 and may not reflect our consolidated statements of income and cash flows as a separate, publicly-traded company during the periods prior to November 3, 2014. Beginning from July 1, 2014, Zydeco, our Predecessor, entered into an operating and management agreement with SPLC (the “Management Agreement”) under which SPLC provides general management and administrative services to us. Therefore, we no longer receive allocated corporate expenses from SPLC. We will continue to receive direct and allocated field and regional expenses from SPLC including payroll expenses not covered under the operating and management agreement. In addition, beginning from October 1, 2015, Pecten entered into an operating and management agreement under which we receive direct and allocated field and regional expenses from SPLC. See details of related party transactions in Note 4 — Related Party Transactions Cash. Prior to the contribution of fixed assets and certain agreements on July 1, 2014, regarding Zydeco, and October 1, 2015 regarding the Shell Auger and Lockport Operations, the cash generated and used by our operations was deposited to SPLC’s centralized account which was comingled with the cash of other pipeline entities controlled by SPLC. SPLC funded our operating and investing activities as needed. Accordingly, we did not record any cash and cash equivalents held by SPLC on our behalf for any period prior to July 1, 2014, regarding Zydeco, and October 1, 2015, regarding the Shell Auger and Lockport Operations. We reflected the cash generated by our operations and expenses paid by SPLC on behalf of our operations as Net contributions from (distributions to) Parent within the accompanying consolidated statements of changes in equity and consolidated statements of cash flows. On July 1, 2014, regarding Zydeco, and October 1, 2015, regarding the Shell Auger and Lockport Operations, we established our own cash accounts for the funding of our operating and investing activities, with the exception of the capital expenditures incurred by SPLC on our behalf and then contributed to us. All financial information represents the consolidated statements of income, balance sheets and cash flows accordingly:
·
Our consolidated statements of income and cash flows for 2015 consist of the combined results of the Shell Auger and Lockport Operations prior to the acquisition date and the consolidated activity of the Partnership. Our consolidated statements of income and cash flows for 2014 consist of the consolidated results of the Partnership for the period from November 3, 2014 through December 31, 2014, the results of the Shell Auger and Lockport Operations for the entirety of 2014, and the combined results of our Predecessor for the period from January 1, 2014 through November 2, 2014. Our consolidated statements of income and cash flows for 2013 consists of the combined results of the Shell Auger and Lockport Operations and our Predecessor.
·
Our consolidated balance sheet as of December 31, 2015, consists of the consolidated balances of the Partnership, while as of December 31, 2014, it consists of the combined balances of the Shell Auger and Lockport Operations and the Partnership.
·
Our consolidated statement of changes in equity for 2015 consists of the combined results of the Shell Auger and Lockport Operations prior to the acquisition date and the consolidated activity of the Partnership. Our consolidated statement of changes in equity for 2014 consists of both the combined activity for the Shell Auger and Lockport Operations and our Predecessor prior to November 3, 2014, and the consolidated activity for the Shell Auger and Lockport Operations and the Partnership completed subsequent to the IPO on November 3, 2014. Our consolidated statement of changes in equity for 2013 consists of the combined activity of the Shell Auger and Lockport Operations and our Predecessor. The Partnership generally accounts for investments in 20.0% to 50.0%-owned affiliates, and investments in less than 20.0%-owned affiliates where it has the ability to exercise significant influence, under the equity method. We own a 100.0% interest in Pecten, a 62.5% interest in Zydeco, a 28.6% interest in Mars, a 49.0% interest in Bengal, a 36.0% interest in Poseidon and a 3.0% interest in Colonial. Accordingly, the consolidated historical financial statements for the Partnership reflect the consolidation of Pecten (Shell Auger and Lockport Operations) and Zydeco (100.0%), and the investments in Mars, Bengal and Poseidon using the equity method of accounting. Our investment in Colonial is accounted for as a cost method investment. Post-IPO Periods On November 3, 2014, we completed our IPO of 46,000,000 common units (including 6,000,000 common units issued pursuant to the exercise of the underwriters’ over-allotment option). The Partnership received net proceeds of $1,011.7 million from the sale of 46,000,000 common units, after deducting underwriter discounts, commissions, structuring fees and other offering expenses of $46.3 million. At the completion of the IPO, SPLC owned 21,475,068 common units and 67,475,068 subordinated units, representing an aggregate 64.6% limited partner interest. SPLC also owned a 100.0% interest in our general partner, which in turn owned 2,754,084 general partner units, representing a 2.0% general partner interest. References to the Partnership or other expressions defined above for time periods beginning November 3, 2014 refer to the post-IPO accounting periods of Shell Midstream Partners, L.P. Prior period financial information has been retrospectively adjusted for the acquisition of the Shell Auger and Lockport Operations. On May 18, 2015, the Partnership completed the sale of 7,692,308 common units representing limited partner interests (the “Common Units”) to unaffiliated third parties in a private placement (the “Private Placement”) for approximately $297.4 million net proceeds ($300.0 million of gross proceeds less $2.6 million of placement agent fees and other offering costs) and issued 156,986 general partner units to our general partner to maintain its 2.0% general partner interest. On November 17, 2015, the Partnership completed the sale of 9,200,000 common units representing limited partner interests to unaffiliated third parties in a public offering (the “Offering”) for approximately $296.8 million net proceeds ($299.4 million of gross proceeds less $2.6 million of underwriters’ discount and other offering costs). The Partnership also issued 187,755 general partner units to our general partner to maintain its 2.0% general partner interest. Upon the closing of the offering on November 17, 2015, SPLC’s wholly-owned subsidiary, Shell Midstream LP Holdings LLC, owned 21,475,068 common units and 67,475,068 subordinated units in the Partnership, representing an aggregate 57.4% limited partner interest. SPLC also owned a 100.0% interest in Shell Midstream Partners GP LLC, which in turn owned 3,098,825 general partner units, representing a 2.0% general partner interest, and all of the incentive distribution rights in the Partnership. |
| Principles of Consolidation | Principles of Consolidation Our consolidated financial statements include all subsidiaries where the Partnership has control. The assets and liabilities in the accompanying consolidated financial statements have been reflected on a historical basis. All significant intercompany accounts and transactions are eliminated upon consolidation. We own 62.5% of the ownership interest in Zydeco. We record a noncontrolling interest for the 37.5% ownership interest in Zydeco retained by SPLC. We obtained control of Zydeco via the voting agreement between SPLC and us under which we have voting power over the ownership interests retained by SPLC in Zydeco. On November 17, 2015, the Partnership acquired 100.0% of the ownership interest in Pecten, with an effective date of October 1, 2015. Our historical financial statements have been retrospectively adjusted to reflect the results of operations, financial position, and cash flows of the Shell Auger and Lockport Operations prior to the effective date of the acquisition, as if we owned the business for all periods presented since this was a common control transaction. |
| Regulation | Regulation Certain businesses are subject to regulation by various authorities including, but not limited to the Federal Energy Regulatory Commission (“FERC”). Regulatory bodies exercise statutory authority over matters such as construction, rates and ratemaking and agreements with customers. |
| Net Parent Investment | Net Parent Investment In the accompanying consolidated balance sheets, Net Parent Investment represents SPLC’s historical investment in us, our accumulated net earnings through the date which we obtained control of the respective subsidiaries, and the net effect of transactions with, and allocations from, SPLC and Shell Oil Company. Retrospectively adjusted financial information from prior to the acquisition of the Shell Auger and Lockport Operations is included in Net Parent Investment. |
| Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. Actual results could differ from those estimates. |
| Common Control Transactions | Common Control Transactions |
| Revenue Recognition | Revenue Recognition Our revenues are primarily generated from crude oil transportation services and also storage services. In general, we recognize revenue from customers when all of the following criteria are met: (1) persuasive evidence of an exchange arrangement exists; (2) delivery or storage has occurred or services have been rendered; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. We record revenue for crude oil transportation and storage services over the period in which they are earned (i.e., either physical delivery or storage of product has taken place or the services designated in the contract have been performed). We accrue revenue based on services rendered but not billed for that accounting month. Additionally, we provide crude storage rental services to third parties and related parties under long-term contracts. As a result of FERC regulations, revenues we collect may be subject to refund. We establish reserves for these potential refunds based on actual expected refund amounts on the specific facts and circumstances. We had no reserves for potential refunds as of December 31, 2015 and 2014. Our FERC-approved transportation services agreements on Zydeco entitle the customer to a specified amount of guaranteed capacity on a pipeline. This capacity cannot be pro-rated even if the pipeline is oversubscribed. In exchange, the customer makes a specified monthly payment regardless of the volume transported. If the customer does not ship its full guaranteed volume in a given month, it makes the full monthly cash payment and may ship the unused volume in a later month for no additional cash payment for up to 12 months, subject to availability on the pipeline. If there is insufficient capacity on the pipeline to allow the unused volume to be shipped, the customer forfeits its right to ship such unused volume. Cash collected from customers for shortfalls under these agreements are recorded as deferred revenue. The Partnership recognizes deferred revenue under these arrangements into revenue once all contingencies or potential performance obligations associated with the related volumes have either (1) been satisfied through the transportation of future excess volumes of crude oil, or (2) expired (or lapsed) through the passage of time pursuant to the terms of the FERC-approved transportation services agreement. Because the expiration of a customer’s right to utilize shortfall payments is twelve months or less, we classify deferred revenue as a short term liability. Deferred revenue balance was $6.2 million and $20.0 million as of December 31, 2015 and 2014, respectively. Our long-term transportation agreements and tariffs for crude oil transportation include a product loss allowance, or “PLA.” PLA is intended to assure proper measurement of the crude oil despite solids, water, evaporation and variable crude types that can cause mismeasurement. The PLA provides additional revenue for us if product losses on our pipelines are within the allowed levels, and we are required to compensate our customers for any product losses that exceed the allowed levels. We take title to any excess loss allowance when product losses are within an allowed level, and we convert that product to cash several times per year at prevailing market prices to a related party. Revenues for the indicated years comprise the following:
2015
2014
2013
Transportation Revenue - third party
$
214.3
$
146.5
$
55.1
Transportation Revenue - related party
96.2
86.1
71.5
Total transportation revenue
310.5
232.6
126.6
Storage services revenue - third party
8.5
8.5
9.9
Storage services revenue - related party
7.5
9.2
11.3
Total storage revenue
16.0
17.7
21.2
Total revenue
$
326.5
$
250.3
$
147.8 |
| Cash and Cash Equivalents | Cash and cash equivalents Cash and cash equivalents comprise cash on deposit at banks. |
| Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable represent valid claims against customers for products sold or services rendered, net of allowances for doubtful accounts. We assess the creditworthiness of our counterparties on an ongoing basis and require security, including prepayments and other forms of collateral, when appropriate. We establish provisions for losses on accounts receivable due from shippers and operators if we determine that we will not collect all or part of the outstanding balance. Outstanding customer receivables are regularly reviewed for possible nonpayment indicators, and allowances for doubtful accounts are recorded based upon management’s estimate of collectability at each balance sheet date. As of December 31, 2015 and 2014, our allowance for doubtful accounts was not material. |
| Allowance Oil | Allowance Oil A PLA factor per barrel is incorporated into applicable crude oil tariffs to cover evaporation and other loss in transit. Allowance oil represents the net difference between the tariff PLA volumes and the actual volumetric losses. Our allowance oil is valued at cost using the average market price of the relevant type of crude oil during the month product was transported. As of December 31, 2015 and 2014, allowance oil on the balance sheet was $4.2 million and $4.1 million, respectively. Gains and losses from the conversion of allowance oil to cash and gains and losses from pipeline operations that relate to allowance oil are recorded in Operations and maintenance expenses in the accompanying consolidated statements of income. During 2014, we made a sale of allowance oil at prevailing market prices to a Shell affiliate. In 2015, we made multiple sales of allowance oil to third parties and Shell affiliates. See Note 4 — Related Party Transactions |
| Equity Method Investments | Equity Method Investments Investments in entities over which we have significant influence, but not control, are accounted for using the equity method of accounting. Income from equity method investments represents our proportionate share of net income generated by the equity method investees. Equity method investments are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred, if the loss is deemed to be other than temporary. When the loss is deemed to be other than temporary, the carrying value of the equity method investment is written down to fair value, and the amount of the write-down is included in net income. Differences in the basis of the investments and the separate net asset value of the investees, if any, are amortized into net income over the remaining useful lives of the underlying assets. The following table shows our net purchase cost adjustment and amortization of such regarding our equity method investments as of 2015 and 2014:
Mars
Bengal (1)
Poseidon (2)
Total
Acquired on November 3, 2014
$
12.2
$
(6.3
)
$
—
$
5.9
Amortization
0.1
—
—
0.1
Balance as of December 31, 2014
12.1
(6.3
)
—
5.8
July 2015 Acquisition
—
—
10.7
10.7
Amortization
1.0
(0.3
)
0.4
1.1
Balance as of December 31, 2015
$
11.1
$
(6.0
)
$
10.3
$
15.4
(1) (2) Note 3 - Acquisitions. |
| Property, Plant and Equipment | Property, Plant and Equipment Our property, plant and equipment is recorded at its historical cost of construction or, upon acquisition, at either the fair value of the assets acquired or the cost to the entity that placed the asset in service. Expenditures for major renewals and betterments are capitalized while those minor replacement, maintenance, and repairs which do not improve or extend asset life are expensed when incurred. For constructed assets, we capitalize all construction-related direct labor and material costs, as well as indirect construction costs. We use the straight-line method to depreciate property, plant and equipment based on the estimated useful life of the asset. We report gains or losses on dispositions of fixed assets as loss (gain) from disposition of fixed assets in the accompanying consolidated statements of income. |
| Impairment of Long-lived Assets | Impairment of Long-lived Assets We evaluate long-lived assets of identifiable business activities for impairment when events or changes in circumstances indicate, in our management’s judgment, that the carrying value of such assets may not be recoverable. These events include market declines that are believed to be other than temporary, changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset and adverse changes in the legal or business environment such as adverse actions by regulators. If an event occurs, which is a determination that involves judgment, we perform an impairment assessment by comparing our management’s estimate of forecasted undiscounted future cash flows associated with the asset to the asset’s net book value. If the net book value exceeds our estimate of forecasted undiscounted cash flows, an impairment is calculated as the amount the net book value exceeds the estimated discounted future cash flows associated with the asset. We determined that there were no asset impairments in 2015, 2014 or 2013. |
| Income Taxes | Income Taxes We are not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax. Taxes on our net income are generally borne by our partners through the allocation of taxable income. Our income tax expense results from partnership activity in the state of Texas, as conducted by Zydeco. Income taxes (benefit) expense for 2015, 2014, and 2013 were $(0.1) million, $0.2 million and $0.1 million, respectively. |
| Cost Method Investment | Cost Method Investment We account for investments in entities we do not control or account for under the equity method under the cost method. Cost method investments are reported as other assets in our consolidated balance sheets. Our cost investment included a 3.0% interest in Colonial with a balance of $6.2 million as of December 31, 2015, and a 1.612% interest in Colonial with a balance of $3.7 million |
| Asset Retirement Obligations | Asset Retirement Obligations Asset retirement obligations represent legal and constructive obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset. We record liabilities for obligations related to the retirement and removal of long-lived assets used in our businesses at fair value on a discounted basis when they are incurred and can be reasonably estimated. Amounts recorded for the related assets are increased by the amount of these obligations. Over time, the liabilities increase due to the change in their present value, and the initial capitalized costs are depreciated over the useful lives of the related assets. The liabilities are eventually extinguished when settled at the time the asset is taken out of service. Our asset retirement obligations relate to our exclusive right of use of a portion of the Garden Banks 128 “A” Platform (GB 128A), where we operate facilities relating to the Auger pipeline system. Our right of use agreement provides that we pay our share of the GB 128A decommissioning costs when and if that platform ceases operation. We have determined that a significant portion of our assets utilizing GB 128A have an indeterminate life, and as such, the fair values of those associated retirement obligations are not reasonably estimable. These assets include offshore pipelines pump and meter stations whose retirement dates will depend mostly on the various supply sources that connect to our systems and the ongoing demand for usage in the markets we serve. We expect these supply sources and market demands to continue for the foreseeable future, therefore we are unable to estimate retirement dates that would result in asset retirement obligations. Asset retirement obligations are adjusted each period for liabilities incurred or settled during the period, accretion expense and any revisions made to the estimated cash flows. A reconciliation of changes in asset retirement obligations for 2015 and 2014 is as follows:
2015
2014
Balance at beginning of year
$
1.3
$
1.2
Accretion expense
—
0.1
Balance at end of year
$
1.3
$
1.3
We continue to evaluate our asset retirement obligations and future developments could impact the amounts we record. The demand for our pipelines depends on the ongoing demand to move crude oil through the system. Although individual assets will be replaced as needed, our pipelines will continue to exist for an indefinite useful life. As such, there is uncertainty around the timing of any asset retirement activities. As a result, with the exception of the platform related asset retirement obligations stated above, we determined that there is not sufficient information to make a reasonable estimate of the asset retirement obligations for our remaining assets as of December 31, 2015 and 2014. |
| Pensions and Other Postretirement Benefits | Pensions and Other Postretirement Benefits We do not have our own employees. Employees that work on our pipelines or terminal are employees of SPLC and we share employees with other SPLC-controlled and non-controlled entities. For presentation of these accompanying consolidated financial statements, our portion of payroll costs and employee benefit plan costs have been allocated to us as a charge to us by SPLC and Shell Oil Company. Shell Oil Company sponsors various employee pension and postretirement health and life insurance plans. For purposes of these accompanying consolidated financial statements, we are considered to be participating in the benefit plans of Shell Oil Company. We participate in the following defined benefits plans: Shell Oil Pension Plan, Shell Oil Retiree Health Care Plan, and Pennzoil-Quaker State Retiree Medical & Life Insurance. As a participant in these benefit plans, we recognize as expense in each period an allocation from Shell Oil Company, and we do not recognize any employee benefit plan assets or liabilities. See Note 4 — Related Party Transactions |
| Legal | Legal We are subject to litigation and regulatory proceedings as the result of our business operations and transactions. We use both internal and external counsel in evaluating our potential exposure to adverse outcomes from orders, judgments or settlements. In general, we expense legal costs as incurred. When we identify specific litigation that is expected to continue for a significant period of time, is reasonably possible to occur and may require substantial expenditures, we identify a range of possible costs expected to be required to litigate the matter to a conclusion or reach an acceptable settlement, and we accrue for the lower end of the range. To the extent that actual outcomes differ from our estimates, or additional facts and circumstances cause us to revise our estimates, our earnings will be affected. |
| Environmental Matters | Environmental Matters We are subject to federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their economic benefit. We expense costs such as permits, compliance with existing environmental regulations, remedial investigations, soil sampling, testing and monitoring costs to meet applicable environmental laws and regulations where prudently incurred or determined to be reasonably possible in the ordinary course of business. We are permitted to recover such expenditure through tariff rates charged to customers. We also expense costs that relate to an existing condition caused by past environmental incidents, which do not contribute to current or future revenue generation. We discount environmental liabilities to a net present value, and we record environmental liabilities when environmental assessments and/or remedial efforts are probable and we can reasonably estimate the costs. Generally, our recording of these accruals coincides with our completion of a feasibility study or our commitment to a formal plan of action. We recognize receivables for anticipated associated insurance recoveries when such recoveries are deemed to be probable. We do not use regulatory accounting principles. For 2015, 2014 and 2013, we incurred zero, $3.0 million and $13.6 million, respectively of environmental cleanup costs. Due to the formation of Zydeco via the contribution of fixed assets and certain agreements from SPLC, Zydeco was indemnified by SPLC against environmental cleanup costs for incidents that occurred prior to Zydeco’s formation on July 1, 2014. In 2013, the West Columbia pipeline segment experienced a breach in which approximately 940 barrels of oil released in the vicinity of the pipeline. During 2013, we incurred $12.1 million in costs primarily related to several large maintenance projects for the containment of this incident at the West Columbia pipeline. Our Predecessor disposed of the West Columbia pipeline in 2013. In addition, as a result of the contribution of Pecten from SPLC, SHLX was indemnified by SPLC against cleanup costs for incidents that occurred at Auger or Lockport prior to the contribution of Pecten on October 1, 2015. There were no environmental incidents related to Auger or Lockport during the periods presented. As of December 31, 2015 and 2014, we had no accruals for environmental clean-up costs. Refer to Note 4 — Related Party Transactions We routinely conduct reviews of potential environmental issues and claims that could impact our assets or operations. These reviews assist us in identifying environmental issues and estimating the costs and timing of remediation efforts. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us and potential third-party liability claims. Often, as the remediation evaluation and effort progresses, additional information is obtained, requiring revisions to estimated costs. These revisions are reflected in our income in the period in which they are probable and reasonably estimable. |
| Other Contingencies | Other Contingencies We recognize liabilities for other contingencies when we have an exposure that indicates it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Where the most likely outcome of a contingency can be reasonably estimated, we accrue a liability for that amount. Where the most likely outcome cannot be estimated, a range of potential losses is established and if no one amount in that range is more likely than any other, the lower end of the range is accrued. |
| Fair Value Estimates | Fair Value Estimates We measure assets and liabilities requiring fair value presentation or disclosure using an exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability) and disclose such amounts according to the quality of valuation inputs under the following hierarchy: Level 1: Quoted prices in an active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are directly or indirectly observable. Level 3: Unobservable inputs that are significant to the fair value of assets or liabilities. We classify the fair value of an asset or liability based on the lowest level of input significant to its measurement. A fair value initially reported as Level 3 will be subsequently reported as Level 2 if the unobservable inputs become inconsequential to its measurement, or corroborating market data becomes available. Asset and liability fair values initially reported as Level 2 will be subsequently reported as Level 3 if corroborating market data becomes unavailable. The carrying amounts of our accounts receivable, accounts payable, accrued liabilities and revolving credit agreements approximate their carrying values due to their short term nature. Nonrecurring Fair Value Measurements — Fair value measurements are applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which consist primarily of asset retirement obligations. Nonrecurring fair value measurements are also applied, when applicable, to determine the fair value of our long-lived assets. |
| Net Income per Limited Partner Unit | Net income per limited partner unit Net income per unit applicable to common limited partner units and to subordinated limited partner units is computed by dividing the respective limited partners’ interest in net income for the period subsequent to the IPO by the weighted average number of common units and subordinated units, respectively, outstanding for the period. Because we have more than one class of participating securities, we use the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units, subordinated units, general partner units, and incentive distribution rights. Basic and diluted net income per unit are the same because we do not have any potentially dilutive units outstanding for the period presented. |
| Comprehensive Income | Comprehensive Income We have not reported comprehensive income due to the absence of items of other comprehensive income in the periods presented. |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2015, the FASB issued accounting standards update to Subtopic 835-30, Interest – Imputation of Interest In April 2015, the FASB issued an accounting standards update to topic 260, Earnings Per Share In July 2015, the FASB issued accounting standards update to topic 330, Inventory In August 2015, the FASB affirmed its earlier proposal to defer the effective date of the new revenue standard topic 606, Revenue from Contracts with Customers In August 2015, the FASB issued an accounting standards update to Subtopic 835-30, Interest – Imputation of Interest In September 2015, the FASB issued accounting standards update to topic 805, Business Combinations In February 2016, the FASB issued accounting standards update to topic 842, Leases . |
