Related Party Transactions | Related Party Transactions Related party transactions include transactions with SPLC and Shell, including those entities in which Shell has an ownership interest but does not have control. Acquisition Agreements See the description of the May 2017 Purchase and Sale Agreement related to the May 2017 Acquisition and the April 2017 Pipeline Sale and Purchase Agreement related to the April 2017 Divestiture as further described in Note 2—Acquisitions and Divestitures. For a discussion of all other related party acquisition agreements, see Note 4—Related Party Transactions in the Notes to Consolidated Financial Statements of our 2016 Annual Report. Commercial Agreements Omnibus Agreement On November 3, 2014, in connection with our initial public offering (“IPO”), and the acquisition of Zydeco, we entered into an Omnibus Agreement with SPLC and our general partner concerning our payment of an annual general and administrative services fee to SPLC as well as our reimbursement of certain costs incurred by SPLC on our behalf. This agreement addresses the following matters: • our payment of an annual general and administrative fee of $8.5 million for the provision of certain services by SPLC; • our obligation to reimburse SPLC for certain direct or allocated costs and expenses incurred by SPLC on our behalf; • our obligation to reimburse SPLC for all expenses incurred by SPLC as a result of us becoming and continuing as a publicly traded entity; we will reimburse our general partner for these expenses to the extent the fees relating to such services are not included in the general and administrative fee; and • the granting of a license from Shell to us with respect to using certain Shell trademarks and trade names. Under the Omnibus Agreement, SPLC indemnified us against certain enumerated risks. Of those indemnity obligations, two remain. First, SPLC agreed to be responsible for unknown environmental liabilities arising out of the ownership and operation of our initial assets prior to the closing of the IPO, to the extent identified before November 3, 2017. SPLC's indemnification of us against these environmental liabilities and certain other liabilities is subject to an aggregate limit of $15.0 million , of which $10.7 million remains. Second, SPLC agreed to indemnify us against tax liabilities relating to our initial assets that are identified prior to the date that is 60 days after the expiration of the statute of limitations applicable to such liabilities. This obligation has no threshold or cap. We in turn agreed to indemnify SPLC against events and conditions associated with the ownership or operation of our initial assets (other than any liabilities against which SPLC is specifically required to indemnify us as described above). During the nine months ended September 30, 2017 , neither we nor SPLC made any claims for indemnification under the Omnibus Agreement. Tax Sharing Agreement For a discussion of the Tax Sharing Agreement, see Note 4—Related Party Transactions in the Notes to Consolidated Financial Statements of our 2016 Annual Report. Other Agreements In connection with the IPO and our acquisitions from Shell, we have entered into several customary agreements with SPLC and Shell. These agreements include pipeline operating agreements, reimbursement agreements and services agreements. Noncontrolling Interest Noncontrolling interest consists of SPLC's 7.5% retained ownership interest in Zydeco as of September 30, 2017 and December 31, 2016 . Noncontrolling interest was 57.0% at the time of IPO, decreased to 37.5% with the May 2015 Acquisition, and further decreased to 7.5% with the May 2016 Acquisition. Other Related Party Balances Other related party balances consist of the following: September 30, 2017 December 31, 2016 Accounts receivable $ 16.2 $ 12.1 Prepaid expenses 0.6 3.2 Other assets 0.7 — Accounts payable (1) 10.5 5.4 Deferred revenue 20.8 7.9 Accrued liabilities (2) 5.9 5.1 Debt payable (3) 1,000.6 686.0 Lease liability (4) — 24.9 (1) Accounts payable reflects amounts owed to SPLC for reimbursement of third-party expenses incurred by SPLC for our benefit. (2) As of September 30, 2017 , accrued liabilities reflects $ 5.5 million accrued interest and $ 0.4 million other accrued liabilities. As of December 31, 2016, accrued liabilities reflects $ 2.6 million accrued interest, $ 1.6 million fuel accrual and $ 0.9 million other accrued liabilities. (3) Debt payable reflects borrowings outstanding after taking into account unamortized debt issuance costs of $1.3 million and $0.9 million as of September 30, 2017 and December 31, 2016 , respectively. (4) As part of the Motiva JV separation effective May 2017, Motiva is no longer a related party. As of September 30, 2017, this is a third-party balance. Related Party Credit Facilities We have entered into three credit facilities with Shell Treasury Center West (“STCW”), an affiliate of Shell: the Five Year Revolver, the Five Year Fixed Facility and the 364 -Day Revolver. The 364 -Day Revolver expired as of March 1, 2017, and has not been replaced. Zydeco has also entered into the Zydeco Revolver with STCW. For definitions and additional information regarding these credit facilities, see Note 7—Related Party Debt . Related Party Revenues and Expenses We provide crude oil transportation and storage services to related parties under long-term contracts. We entered into these contracts in the normal course of our business and the services are based on terms consistent with those provided to third parties. Our transportation services revenue from related parties was $28.6 million and $77.9 million for the three and nine months ended September 30, 2017 , respectively, and $25.8 million and $79.5 million for the three and nine months ended September 30, 2016 , respectively. Storage revenues from related parties were $1.2 million and $4.6 million for the three and nine months ended September 30, 2017 , respectively, and $2.3 million and $6.5 million for the three and nine months ended September 30, 2016 , respectively. Additionally, we have certain transportation services agreements with a related party that are considered operating leases under GAAP and are recorded within Lease revenue - related parties in the condensed consolidated statement of income. Lease revenues from related parties were $11.7 million and $19.4 million for the three and nine months ended September 30, 2017 , respectively, and zero for both the three and nine months ended September 30, 2016 . These agreements were each entered into for terms of ten years , with the option to extend for two additional five year terms. As of September 30, 2017 , future minimum payments to be received under the ten year contract term of these agreements were estimated to be: Total Less than 1 year Years 2 to 3 Years 4 to 5 More than 5 years Operating leases $ 443.6 $ 46.3 $ 92.6 $ 92.6 $ 212.1 During the three and nine months ended September 30, 2017 , we converted excess allowance oil to cash through sales to affiliates of Shell and recognized a gain of $0.1 million and $0.8 million , respectively, and for the three and nine months ended September 30, 2016 , we recognized a gain of $0.3 million and $0.8 million , respectively, from such sales in Operations and maintenance expense. During the three and nine months ended September 30, 2017, Zydeco, Bengal, Odyssey, Mars, Poseidon, Proteus, Endymion, Colonial, Explorer and Cleopatra paid cash distributions to us of $71.4 million and $249.1 million , of which $24.1 million and $105.5 million related to Zydeco. During the three and nine months ended September 30, 2016 , Zydeco, Bengal, Mars, Poseidon, Colonial and Explorer paid cash distributions to us of $63.9 million and $174.8 million , of which $35.1 million and $80.7 million related to Zydeco. During the three and nine months ended September 30, 2017 , we were allocated $3.4 million and $8.4 million , respectively, and during the three and nine months ended September 30, 2016 , we were allocated $2.3 million and $7.8 million respectively, of indirect general corporate expenses incurred by SPLC and Shell which are included within general and administrative expenses in the condensed consolidated statements of income. Beginning July 1, 2014, Zydeco entered into an operating and management agreement (the “Management Agreement”) with SPLC under which SPLC provides general management and administrative services to us. As a result, we are not allocated corporate expenses from SPLC or Shell, but are allocated direct expenses and our proportionate share of field and regional expenses, including payroll expenses not covered under the Management Agreement. Beginning October 1, 2015, Pecten entered into an operating and management agreement under which we are not allocated corporate expenses from SPLC or Shell, but are allocated direct expenses and our proportionate share of field and regional expenses from SPLC. Beginning May 10, 2017, Sand Dollar entered into an operating and management agreement under which we are not allocated corporate expenses from SPLC or Shell, but are allocated direct expenses and our proportionate share of field and regional expenses from SPLC. These expenses are primarily allocated to us on the basis of headcount, labor or other measure. These expense allocations have been determined on a basis that both SPLC and we consider to be a reasonable reflection of the utilization of services provided or the benefit received by us during the periods presented. For a discussion of these agreements and other agreements between Pecten and SPLC, see Note 4—Related Party Transactions in the Notes to Consolidated Financial Statements of our 2016 Annual Report. The majority of our insurance coverage is provided by a wholly owned subsidiary of Shell with the remaining coverage provided by third-party insurers. The related party portion of insurance expense for the three and nine months ended September 30, 2017 was $2.1 million and $5.1 million , respectively, and for the three and nine months ended September 30, 2016 , was $1.2 million and $4.2 million , respectively. The following table shows related party expenses, including personnel costs described above, incurred by Shell and SPLC on our behalf that are reflected in the accompanying condensed consolidated statements of income for the indicated periods: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Operations and maintenance - related parties $ 8.4 $ 7.5 $ 26.6 $ 22.6 General and administrative - related parties (1) 8.6 7.4 25.2 22.3 (1) For the three and nine months ended September 30, 2017 , we incurred $2.1 million and $6.1 million under the Management Agreement and $2.2 million and $6.4 million under the Omnibus Agreement for the general and administrative fee. For the three and nine months ended September 30, 2016 we incurred $1.9 million and $5.8 million under the Management Agreement and $2.2 million and $6.4 million under the Omnibus Agreement for the general and administrative fee. Pension and Retirement Savings Plans Employees who directly or indirectly support our operations participate in the pension, postretirement health and life insurance, and defined contribution benefit plans sponsored by Shell, which include other Shell subsidiaries. Our share of pension and postretirement health and life insurance costs for the three and nine months ended September 30, 2017 were $1.2 million and $2.9 million , respectively, and for the three and nine months ended September 30, 2016 were $0.9 million and $2.6 million , respectively. Our share of defined contribution benefit plan costs for the three and nine months ended September 30, 2017 were $0.5 million and $1.1 million , respectively and for the three and nine months ended September 30, 2016 were $0.4 million and $1.1 million , respectively. Pension and defined contribution benefit plan expenses are included in either general and administrative expenses or operations and maintenance expenses in the accompanying condensed consolidated statements of income, depending on the nature of the employee’s role in our operations. Equity and Cost Method Investments We have equity and cost method investments in entities, including Odyssey, Mars, Colonial and Explorer in which Shell also owns interests. In some cases we may be required to make capital contributions or other payments to these entities. See Note 4 – Equity Method Investments for additional details. Reimbursements from Our General Partner During the three and nine months ended September 30, 2017 , we filed claims for reimbursement from our Parent of $3.1 million and $13.6 million , respectively. This reflects our proportionate share of Zydeco directional drill project costs and expenses of $2.2 million and $12.1 million , respectively, for the three and nine months ended September 30, 2017 . Additionally, this includes reimbursement for the Refinery Gas Pipeline gas to butane service conversion project of $0.9 million and $1.5 million for the three and nine months ended September 30, 2017 , respectively. During the three and nine months ended September 30, 2016 , we received reimbursement from our Parent for our proportionate share of Zydeco directional drill costs and expenses of $0.1 million and $0.4 million , respectively, as well as reimbursement for certain costs and expenses incurred by Pecten for storm water improvements at Lockport of $1.0 million and $1.2 million , respectively. These reimbursements are treated as a capital contribution from our general partner. |