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What changed in Energy Transfer LP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Energy Transfer LP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+732 added−645 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in Energy Transfer LP's 2023 10-K

732 paragraphs added · 645 removed · 524 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

189 edited+61 added−36 removed293 unchanged
Biggest changeNGL and Refined Products Transportation and Services 22 Table of Contents In dex to Financial Statements The following details the assets in our NGL and refined products transportation and services segment: Description of Assets Miles of Liquids Pipeline NGL Fractionation / Processing Capacity (MBbls/d) Working Storage Capacity (MBbls) Liquids Pipelines: Gulf Coast NGL Express 900 — — West Texas Gateway 510 — — Other Permian Basin NGL 1,600 — — Mariner East 680 — — Mariner West 450 — — Mont Belvieu to Nederland 270 White Cliffs (1) 540 — — Other NGL 600 — — Liquids Fractionation and Storage Facilities: Mont Belvieu — 940 58,000 Spindletop — — 8,000 ET Geismar Olefins (2) 100 35 — Hattiesburg — — 5,200 Cedar Bayou — — 1,600 NGL Terminals: Nederland — — 1,900 Orbit Gulf Coast — — 1,200 Marcus Hook — — 6,000 Inkster — — 860 Refined Products Pipelines: Eastern region 1,580 — — Midcontinent region 440 — — Southwest region 550 — — Inland 600 — — JC Nolan Pipeline 500 — — Refined Products Terminals: Eagle Point — — 6,700 Marcus Hook Terminal — — 930 Marcus Hook Tank Farm — — 1,900 Marketing Terminals — — 7,700 JC Nolan Terminal — — 130 (1) The White Cliffs Pipeline consists of two parallel, 12-inch common carrier pipelines: one crude oil pipeline and one NGL pipeline.
Biggest changeOn behalf of ORS, we operate its Ohio Utica River System, which consists of 47 miles of 36-inch, 13 miles of 30-inch and 3 miles of 24-inch gathering trunklines, and which delivers up to 3.6 Bcf/d to Rockies Express Pipeline, Texas Eastern Transmission, Leach Xpress, Rover and DEO TPL-18. 20 Table of Contents Index to Financial Statements NGL and Refined Products Transportation and Services The following details the assets in our NGL and refined products transportation and services segment: Description of Assets Miles of Liquids Pipeline NGL Fractionation / Processing Capacity (MBbls/d) Working Storage Capacity (MBbls) Liquids Pipelines: Gulf Coast NGL Express 900 — — West Texas Gateway 510 — — Other Permian Basin NGL 1,600 — — Mariner East 680 — — Mariner West 450 — — Mont Belvieu to Nederland 270 — — White Cliffs (1) 540 — — Other NGL 750 — — Liquids Fractionation and Storage Facilities: Mont Belvieu NGL Complex — 1,150 60,000 Spindletop — — 8,000 Crestwood — — 10,000 ET Geismar Olefins (2) — 35 — Hattiesburg — — 5,200 Cedar Bayou — — 1,600 21 Table of Contents Index to Financial Statements NGL Terminals: Nederland — — 1,900 Orbit Gulf Coast — — 1,200 Marcus Hook — — 6,000 Inkster — — 860 Refined Products Pipelines: Eastern region 1,580 — — Midcontinent region 480 — — Southwest region 590 — — Inland 610 — — J.C.
Intrastate Transportation and Storage Segment Natural gas transportation pipelines receive natural gas from other mainline transportation pipelines, storage facilities and gathering systems and deliver the natural gas to industrial end-users, storage facilities, utilities, power generators and other third-party pipelines.
Intrastate Transportation and Storage Segment Intrastate natural gas transportation pipelines receive natural gas from other mainline transportation pipelines, storage facilities and gathering systems, and deliver the natural gas to industrial end-users, storage facilities, utilities, power generators and other third-party pipelines.
Interstate Transportation and Storage Segment Natural gas transportation pipelines receive natural gas from supply sources including other transportation pipelines, storage facilities and gathering systems and deliver the natural gas to industrial end-users and other pipelines.
Interstate Transportation and Storage Segment Interstate natural gas transportation pipelines receive natural gas from supply sources including other transportation pipelines, storage facilities and gathering systems, and deliver the natural gas to industrial end-users and other pipelines.
Lake Charles LNG, our wholly-owned subsidiary, owns an LNG import terminal and regasification facility located on Louisiana’s Gulf Coast near Lake Charles, Louisiana. The import terminal has approximately 9.0 Bcf of above ground storage capacity and the regasification facility has a send out capacity of 1.8 Bcf/d.
Regasification Facility Lake Charles LNG, our wholly owned subsidiary, owns an LNG import terminal and regasification facility located on Louisiana’s Gulf Coast near Lake Charles, Louisiana. The import terminal has approximately 9.0 Bcf of above ground LNG storage capacity and the regasification facility has a send out capacity of 1.8 Bcf/d.
Lake Charles LNG derives all of its revenue from a series of long-term contracts with a wholly-owned subsidiary of Royal Dutch Shell plc (“Shell”). Lake Charles LNG Export, our wholly-owned subsidiary, is developing a natural gas liquefaction project at the site of our Lake Charles LNG import terminal and regasification facility.
Lake Charles LNG derives all of its revenue from a series of long-term contracts with a wholly owned subsidiary of Royal Dutch Shell plc (“Shell”). Liquefaction Project Lake Charles LNG Export, our wholly owned subsidiary, is developing a natural gas liquefaction project at the site of our Lake Charles LNG import terminal and regasification facility.
The ET Fuel System has many interconnections with pipelines providing direct access to power plants, other intrastate and interstate pipelines, and has bi-directional capabilities.
The ET Fuel System has bi-directional capabilities and has many interconnections with pipelines providing direct access to power plants and other intrastate and interstate pipelines.
The Partnership owns a 16% membership interest in and operates Comanche Trail. • Trans-Pecos Pipeline is a 143-mile intrastate pipeline that delivers natural gas from the Waha Hub near Pecos, Texas to the United States/Mexico border near Presidio, Texas.
The Partnership owns a 16% membership interest in and operates Comanche Trail Pipeline. • Trans-Pecos Pipeline is a 143-mile intrastate pipeline that delivers natural gas from the Waha Hub near Pecos, Texas to the United States/Mexico border near Presidio, Texas.
Through numerous pipeline interconnections along the system and at the Perryville Hub, EGT customers have access to the Midwest and Northeast markets, as well as most of the major natural gas consuming markets east of the Mississippi River. • MRT provides natural gas transportation and storage services in Texas, Arkansas, Louisiana, Missouri and Illinois.
Through numerous pipeline interconnections along the system and at the Perryville Hub, EGT customers have access to Midwest and Northeast markets as well as most of the major natural gas consuming markets east of the Mississippi River. • MRT provides natural gas transportation and storage services in Texas, Arkansas, Louisiana, Missouri and Illinois.
These pipelines are comprised of crude oil trunk pipelines and crude oil gathering pipelines in Texas and Oklahoma and provide takeaway capacity from the Permian Basin, with origins in multiple locations in West Texas. • White Cliffs Crude Pipeline.
These pipelines are comprised of crude oil trunk pipelines and crude oil gathering pipelines in Texas and Oklahoma and provide takeaway capacity from the Permian Basin, with origins in multiple locations in West Texas. • White Cliffs Pipeline.
Climate Change. Climate change continues to attract considerable public, governmental and scientific attention. As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit emissions of greenhouse gases (“GHGs”).
Climate change continues to attract considerable public, governmental and scientific attention. As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government to monitor and limit emissions of greenhouse gases (“GHGs”).
Additionally, the SAFETE Act provides that any Tribe in Oklahoma may seek “Treatment as a State” by the EPA, and it is possible that one or more of the Tribes in Oklahoma may seek such an approval from EPA. At this time, we cannot predict how these jurisdictional issues may ultimately be resolved.
Additionally, the SAFETE Act provides that any Tribe in Oklahoma may seek “Treatment as a State” by the EPA, and it is possible that one or more of the Tribes in Oklahoma may seek such an approval from the EPA. At this time, we cannot predict how these jurisdictional issues may ultimately be resolved.
The Oasis pipeline enhances the Southeast Texas System by (i) providing access for natural gas gathered on the Southeast Texas System to other third-party supply and market points and interconnecting pipelines and (ii) allowing us to bypass our processing plants and treating facilities on the Southeast Texas System when processing margins are unfavorable by blending untreated natural gas from the Southeast Texas System with gas on the Oasis pipeline while continuing to meet pipeline quality specifications. • The HPL System is an extensive network of intrastate natural gas pipelines, an underground Bammel storage reservoir and related transportation assets.
The Oasis Pipeline enhances the Southeast Texas System by (i) providing access for natural gas gathered on the Southeast Texas System to third-party supply and market points and interconnecting pipelines and (ii) allowing us to bypass our processing plants and treating facilities on the Southeast Texas System when processing margins are unfavorable by blending untreated natural gas from the Southeast Texas System with gas on the Oasis pipeline while continuing to meet pipeline quality specifications. • The HPL System is an extensive network of intrastate natural gas pipelines, the underground Bammel storage reservoir and related transportation assets.
The percentage of electrical energy we purchase on a given day originating from solar and wind sources is approaching 20 percent. Since 2019, we have entered into dedicated solar contracts to purchase 148 megawatts of solar power to support the operations of our assets. We also operate approximately 18,000 solar panel-powered metering stations across the United States.
The percentage of electrical energy we purchase on a given day originating from solar and wind sources is approaching 20%. Since 2019, we have entered into dedicated solar contracts to purchase 148 megawatts of solar power to support the operations of our assets. We also operate approximately 18,000 solar panel-powered metering stations across the United States.
Fayetteville Express Pipeline is owned by a 50/50 joint venture with Kinder Morgan, Inc. • Sea Robin Pipeline’s system consists of two offshore Louisiana natural gas supply pipelines extending 120 miles into the Gulf of Mexico. • Stingray Pipeline is an interstate natural gas pipeline system with assets located in the western Gulf of Mexico and Johnson Bayou, Louisiana. • Rover Pipeline is a large diameter pipeline which transports natural gas from processing plants in West Virginia, Eastern Ohio and Western Pennsylvania for delivery to other pipeline interconnects in Ohio and Michigan, where the gas is delivered for distribution to markets across the United States, as well as to Ontario, Canada. • Midcontinent Express Pipeline originates near Bennington, Oklahoma and traverses northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipeline system in Butler, Alabama.
Fayetteville Express Pipeline is owned by a 50/50 joint venture with Kinder Morgan, Inc. • Sea Robin Pipeline’s system consists of two offshore Louisiana natural gas supply pipelines extending 120 miles into the Gulf of Mexico. • Stingray Pipeline is an interstate natural gas pipeline system with assets located in the western Gulf of Mexico and Johnson Bayou, Louisiana. • Rover Pipeline is a large diameter pipeline which transports natural gas from processing plants in West Virginia, eastern Ohio and western Pennsylvania for delivery to other pipeline interconnects in Ohio and Michigan, where the gas is delivered for distribution to markets across the United States and to Ontario, Canada. • Midcontinent Express Pipeline originates near Bennington, Oklahoma and traverses northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipeline system in Butler, Alabama.
Investment in Sunoco LP Sunoco LP is engaged in the distribution of motor fuels to independent dealers, distributors, and other commercial customers and the distribution of motor fuels to end-user customers at retail sites operated by commission agents. Additionally, it receives rental income through the leasing or subleasing of real estate used in the retail distribution of motor fuel.
Investment in Sunoco LP Sunoco LP is primarily engaged in the distribution of motor fuels to independent dealers, distributors, and other commercial customers and the distribution of motor fuels to end-user customers at retail sites operated by commission agents. Additionally, it receives rental income through the leasing or subleasing of real estate used in the retail distribution of motor fuel.
Our marketing terminals are located primarily in the northeast, midwest and southwest United States, with approximately 8 MMBbls of refined products storage capacity. Our refined products operations utilize our integrated pipeline and terminalling assets, as well as acquisition and marketing activities, to service refined products markets in several regions throughout the United States.
Our refined product marketing terminals are located primarily in the Northeast, Midwest and Southwest United States, with approximately 8 MMBbls of refined products storage capacity. Our refined products operations utilize our integrated pipeline and terminalling assets, as well as acquisition and marketing activities, to service refined products markets in several regions throughout the United States.
All Other Segment Our “All Other” segment includes the following: • Our gas marketing activities, which optimize basis pricing differentials by purchasing natural gas, transporting, primarily on company owned pipelines, and selling that gas primarily to industrial end-users or to other marketers. • Our commodity marketing company, which focuses primarily on wholesale power trading activities. • Our natural gas compression equipment business, which has operations in Arkansas, California, Colorado, Louisiana, New Mexico, Oklahoma, Pennsylvania and Texas. • Our wholly-owned subsidiary, Dual Drive Technologies, Ltd., which provides compression services to customers engaged in the transportation of natural gas, including our other segments. • Our subsidiaries are involved in the management of coal and natural resources properties and the related collection of royalties.
All Other Segment Our “All Other” segment includes: • our gas marketing activities, which optimize basis pricing differentials by purchasing and transporting natural gas, primarily on company owned pipelines, and selling that gas primarily to industrial end-users or to other marketers; • our commodity marketing company, which focuses primarily on wholesale power trading activities; • our natural gas compression equipment business, which has operations in Arkansas, California, Colorado, Louisiana, New Mexico, Oklahoma, Pennsylvania and Texas; • our wholly owned subsidiary, Dual Drive Technologies, Ltd., which provides compression services to customers engaged in the transportation of natural gas, including our other segments; and • subsidiaries involved in the management of coal and natural resources properties and the related collection of royalties.
We believe strict adherence to our Code of Business Conduct and Ethics is not only right, but is in the best interest of the Partnership, its Unitholders, its customers, and the industry in general. In all instances, the policies of the Partnership require that the business of the Partnership be conducted in a lawful and ethical manner.
We believe strict adherence to our Code of Business Conduct and Ethics is not only right, but is in the best interest of the Partnership, its Unitholders, its customers, and the industry in general. In all applicable instances, the policies of the Partnership require that the business of the Partnership be conducted in a lawful and ethical manner.
Our environmental, health and safety department’s more than 200 environmental and safety professionals provide environmental and safety training to our field representatives. This group also assists others throughout the organization in identifying continuous training for personnel, including the training that is required by applicable laws, regulations, standards, and permit conditions.
Our environmental, health and safety department’s more than 200 environmental and safety professionals provide environmental and safety training to our field representatives. This group also assists others throughout the organization by identifying continuous training for personnel, including training that is required by applicable laws, regulations, standards, and permit conditions.
Sunoco Retail also leases owned sites to commissioned agents who sell motor fuels to the motoring public on Sunoco Retail’s behalf for a commission; • Aloha Petroleum LLC, a Delaware limited liability company, distributes motor fuel and operates terminal facilities on the Hawaiian Islands; and • Aloha Petroleum, Ltd.
Sunoco Retail also leases owned sites to commission agents who sell motor fuels to the motoring public on Sunoco Retail's behalf for a commission. • Aloha Petroleum LLC, a Delaware limited liability company, distributes motor fuel and operates terminal facilities on the Hawaiian Islands. • Aloha Petroleum, Ltd.
Every employee acting on behalf of the Partnership must adhere to these policies. Please refer to “Item 10. Directors, Executive Officers and Corporate Governance” for additional information on our Code of Business Conduct and Ethics. Commitment to Protecting Public Health, Safety and the Environment .
Every employee acting on behalf of the Partnership must adhere to these policies. Please refer to “Item 10. Directors, Executive Officers and Corporate Governance” for additional information on our Code of Business Conduct and Ethics. Commitment to Public Health, Safety and the Environment.
SEC Reporting We file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any related amendments and supplements thereto with the SEC. From time to time, we may also file registration and related statements pertaining to equity or debt offerings.
SEC Reporting We file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any related amendments and supplements thereto with the SEC. From time to time, we may also file registration statements and related documents pertaining to equity or debt offerings.
The tank farm has a total active refined products storage capacity of approximately 7 MMBbls and provides customers with access to the facility via ship, barge and pipeline. The terminal can deliver via ship, barge, truck or pipeline, providing customers with access to various markets.
The tank farm has a total active refined products storage capacity of approximately 7 MMBbls and provides customers with access to the facility via ship, barge, rail and pipeline. The terminal can deliver via ship, barge, rail, truck or pipeline, providing customers with access to various markets.
The international community gathered again in Glasgow in November 2021 at the 26th Conference to the Parties (“COP26”) during which multiple announcements were made, including a call for parties to eliminate fossil fuel subsidies, amongst other measures.
The international community gathered again in Glasgow in November 2021 at the 26th Conference of the Parties (“COP26”) during which multiple announcements were made, including a call for parties to eliminate fossil fuel subsidies, amongst other measures.
Pursuant to the FERC’s rules promulgated under the Energy Policy Act of 2005, it is unlawful for any entity, directly or indirectly, in connection with the purchase or sale of electric energy or natural gas or the purchase or sale of transmission or transportation services subject to FERC jurisdiction: (i) to defraud using any device, scheme or artifice; (ii) to make any untrue statement of material fact or omit a material fact; or (iii) to engage in any act, practice or course of business that operates or would operate as a fraud or deceit.
Pursuant to the FERC’s rules promulgated under the Energy Policy Act of 2005 (the “EPAct of 2005”), it is unlawful for any entity, directly or indirectly, in connection with the purchase or sale of electric energy or natural gas or the purchase or sale of transmission or transportation services subject to FERC jurisdiction: (i) to defraud using any device, scheme or artifice; (ii) to make any untrue statement of material fact or omit a material fact; or (iii) to engage in any act, practice or course of business that operates or would operate as a fraud or deceit.
Some examples of our teams’ efforts include: • in our natural gas compression business, the use of our patented dual-drive technology, which offers the ability to switch compression drivers between an electric motor and a natural gas engine, allowed us to reduce our emissions of nitrogen oxide, carbon monoxide, CO2 and VOCs; • the installation of approximately 12,000 low-emission pneumatic devices throughout our pipeline systems has allowed us to safely and efficiently adjust and control our operations and reduce methane emissions; • the voluntary installation of thermal oxidizers, which destroy VOCs and convert methane to CO2 (a less carbon-intense GHG), thereby reducing VOC and methane emissions by 98 percent or more at many of our more than 50 natural gas processing and sweetening plants; 43 Table of Contents In dex to Financial Statements • the implementation of an innovative liquids management process throughout much of our natural gas gathering pipeline system has allowed us to minimize flash emissions and methane emissions; • the use of optical gas imaging cameras at our more than 2,200 gas gathering and processing facilities as part of our leak detection and repair program allow us to reduce emissions, improve safety, reduce costs, prevent product loss, and maintain equipment integrity; • the use of in-line inspection tools, or smart pigs, allow us to detect corrosion, cracks or other defects along our pipeline systems thereby protecting the environment and the safety of our communities, employees and landowners; and • the use of other methods, including pipeline blowdown direct injection, liquids pipeline system optimization, crude oil truck unloading and direct injection, all of which help to reduce emissions and the release of methane into the atmosphere across our operations.
Some examples of our teams’ efforts include: • in our natural gas compression business, the use of our proprietary dual-drive technology, which offers the ability to switch compression drivers between an electric motor and a natural gas engine, allowed us to reduce our emissions of nitrogen oxide, carbon monoxide, CO2 and VOCs; • the installation of approximately 12,000 low-emission pneumatic devices throughout our pipeline systems has allowed us to safely and efficiently adjust and control our operations and reduce methane emissions; • the voluntary installation of thermal oxidizers, which destroy VOCs and convert methane to CO2 (a less carbon-intense GHG), thereby reducing VOC and methane emissions by 98% or more at many of our more than 50 natural gas processing and sweetening plants; • the implementation of an innovative liquids management process throughout much of our natural gas gathering pipeline system has allowed us to minimize flash emissions and methane emissions; • the use of optical gas imaging cameras at our more than 2,200 gas gathering and processing facilities as part of our leak detection and repair program allow us to reduce emissions, improve safety, reduce costs, prevent product loss, and maintain equipment integrity; • the use of in-line inspection tools, or smart pigs, allow us to detect corrosion, cracks or other defects along our pipeline systems thereby protecting the environment and the safety of our communities, employees and landowners; and 43 Table of Contents Index to Financial Statements • the use of other methods, including pipeline blowdown direct injection, liquids pipeline system optimization, crude oil truck unloading and direct injection, all of which help to reduce emissions and the release of methane into the atmosphere across our operations.
Our Eastern Region assets include approximately 600 miles of natural gas gathering pipelines, natural gas trunklines, fresh-water pipelines, and nine gathering and processing systems, as well as the 200 MMcf/d Revolution processing plant, which feeds into our Mariner East and Rover pipeline systems. • We also own a 51% membership interest in Aqua – ETC Water Solutions LLC, a joint venture that transports and supplies fresh water to natural gas producers drilling in the Marcellus Shale in Pennsylvania. • We own a 75% membership interest in ORS.
Our Eastern region assets include approximately 600 miles of natural gas gathering pipelines, natural gas trunklines and fresh-water pipelines, nine gathering and processing systems and the 200 MMcf/d Revolution processing plant, which feeds into our Mariner East and Rover pipeline systems. • We also own a 51% membership interest in Aqua – ETC Water Solutions LLC, a joint venture that transports and supplies fresh water to natural gas producers drilling in the Marcellus Shale in Pennsylvania. • We own a 75% membership interest in ORS.
The ETC Katy pipeline expansions include the 36-inch East Texas extension to connect our Reed compressor station in Freestone County to our Grimes County compressor station, the 36-inch Katy expansion connecting Grimes to the Katy Hub, and the 42-inch Southeast Bossier pipeline connecting our Cleburne to Carthage pipeline to the HPL System. • RIGS is a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets. • EOIT is a 2,200-mile pipeline system that provides natural gas transportation and storage services to customers in Oklahoma.
The ETC Katy Pipeline expansions include the 36-inch East Texas extension to connect our Reed compressor station in Freestone County to our Grimes County compressor station, the 36-inch Katy expansion connecting Grimes to the Katy Hub and the 42-inch Southeast Bossier pipeline connecting our Cleburne to Carthage pipeline to the HPL System. • RIGS is a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets. • OIT is a 2,200-mile pipeline system that provides natural gas transportation and storage services to customers in Oklahoma.
USAC is not directly exposed to commodity price risk because it does not take title to the natural gas or crude oil involved in its services and because the natural gas used as fuel by its compression units is supplied by its customers without cost to USAC. 11 Table of Contents In dex to Financial Statements USAC’s assets and operations are all located and conducted in the United States.
USAC is not directly exposed to commodity price risk because it does not take title to the natural gas or crude oil involved in its services and because the natural gas used as fuel by its compression units is supplied by its customers without cost to USAC. 11 Table of Contents Index to Financial Statements USAC’s assets and operations are all located and conducted in the United States.
North Central Texas Region: • The North Central Texas System is an integrated system located in four counties in North Central Texas that gathers, compresses, treats, processes and transports natural gas from the Barnett and Woodford Shales.
North Central Texas: • The North Central Texas System is an integrated system located in four counties in North Central Texas that gathers, compresses, treats, processes and transports natural gas from the Barnett and Woodford shales.
Eastern Region: • The Eastern Region assets are located in eleven counties in Pennsylvania, four counties in Ohio, three counties in West Virginia, and gather natural gas from the Marcellus and Utica Shales.
Eastern: • The Eastern region assets are located in eleven counties in Pennsylvania, four counties in Ohio and three counties in West Virginia, which gather natural gas from the Marcellus and Utica shales.
Segment Overview See Note 16 to our consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” for additional financial information about our segments.
Segment Overview See Note 16 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for additional financial information about our segments.
During the year ended December 31, 2022, none of our customers individually accounted for more than 10% of our consolidated revenues. Regulation Regulation of Interstate Natural Gas Pipelines. The FERC has broad regulatory authority over the business and operations of interstate natural gas pipelines. Under the NGA, the FERC generally regulates the transportation of natural gas in interstate commerce.
During the year ended December 31, 2023, none of our customers individually accounted for more than 10% of our consolidated revenues. Regulation Regulation of Interstate Natural Gas Pipelines. The FERC has broad regulatory authority over the business and operations of interstate natural gas pipelines. Under the NGA, the FERC generally regulates the transportation of natural gas in interstate commerce.
Sunoco LP also operates 76 retail stores located in Hawaii and New Jersey. Sunoco LP is a distributor of motor fuels and other petroleum products which Sunoco LP supplies to third-party dealers and distributors, to independent operators of commission agent locations and other commercial consumers of motor fuel.
Sunoco LP also operates 75 retail stores located in Hawaii and New Jersey. Sunoco LP is a distributor of motor fuels and other petroleum products which Sunoco LP supplies to third-party dealers and distributors, to independent operators of commission agent locations and other commercial consumers of motor fuel.
EOIT delivers natural gas from the Anadarko and Arkoma Basins, including the SCOOP, STACK, Cana Woodford, Granite Wash, Cleveland, Tonkawa and Mississippi Lime Shale plays in western Oklahoma to utilities and industrial end users connected to EOIT and to interstate and intrastate pipelines interconnected with EOIT.
OIT delivers natural gas from the Anadarko and Arkoma basins, including the SCOOP, STACK, Cana Woodford, Granite Wash, Cleveland, Tonkawa and Mississippi Lime Shale plays in western Oklahoma to utilities and industrial end-users connected to OIT and to interstate and intrastate pipelines interconnected with OIT.
The map below and the maps included within the segment asset descriptions include certain non-wholly-owned joint ventures and exclude corporate and field offices and certain assets that are less significant to the Partnership on a consolidated basis. 13 Table of Contents In dex to Financial Statements Intrastate Transportation and Storage The following details our pipelines and storage facilities in the intrastate transportation and storage segment: Description of Assets Ownership Interest Miles of Natural Gas Pipeline Pipeline Throughput Capacity (Bcf/d) Working Storage Capacity (Bcf) ET Fuel System 100 % 3,150 5.2 11.2 Oasis Pipeline (1) 100 % 750 2.0 — Houston Pipeline (“HPL”) System 100 % 3,920 5.3 52.5 ETC Katy Pipeline 100 % 460 2.9 — Regency Intrastate Gas System (“RIGS”) 100 % 450 2.1 — Enable Oklahoma Intrastate Transmission (“EOIT”) 100 % 2,200 2.4 24.0 Comanche Trail Pipeline 16 % 195 1.1 — Trans-Pecos Pipeline 16 % 140 1.4 — Red Bluff Express Pipeline 70 % 120 1.4 — (1) Includes bi-directional capabilities 14 Table of Contents In dex to Financial Statements The following information describes our principal intrastate transportation and storage assets: • The ET Fuel System serves some of the most prolific production areas in the United States and is comprised of intrastate natural gas pipelines and related natural gas storage facilities.
The map below and the maps included within the segment asset descriptions include certain non-wholly owned joint ventures and exclude corporate and field offices and certain assets that are less significant to the Partnership on a consolidated basis. 12 Table of Contents Index to Financial Statements Intrastate Transportation and Storage The following details our pipelines and storage facilities in the intrastate transportation and storage segment: Description of Assets Ownership Interest Miles of Natural Gas Pipeline Pipeline Throughput Capacity (Bcf/d) Working Storage Capacity (Bcf) ET Fuel System (1) 100 % 3,150 5.2 11.2 Oasis Pipeline (1) 100 % 750 2.0 — Houston Pipeline (“HPL”) System 100 % 3,920 5.3 52.5 ETC Katy Pipeline 100 % 460 2.9 — Regency Intrastate Gas System (“RIGS”) 100 % 450 2.1 — Oklahoma Intrastate Transmission (“OIT”) (1) 100 % 2,200 2.4 24.0 Comanche Trail Pipeline 16 % 195 1.1 — Trans-Pecos Pipeline 16 % 140 1.4 — Red Bluff Express Pipeline 70 % 120 1.4 — (1) Includes bi-directional capabilities 13 Table of Contents Index to Financial Statements The following information describes our principal intrastate transportation and storage assets: • The ET Fuel System serves some of the most prolific production areas in the United States and is comprised of intrastate natural gas pipelines and related natural gas storage facilities.
In addition, we own investments in other businesses, including Sunoco LP and USAC, both of which are publicly traded master limited partnerships. Energy Transfer derives cash flows from distributions related to its investment in its subsidiaries, including Sunoco LP and USAC.
In addition, we own investments in other businesses, including Sunoco LP and USAC, both of which are master limited partnerships. Energy Transfer derives cash flows from distributions related to its investment in its subsidiaries, including Sunoco LP and USAC.
However, Canada has implemented a federal carbon pricing regime, and, in the United States, President Biden has announced that he intends to pursue substantial reductions in greenhouse gas emissions, particularly from the oil and gas sector.
However, Canada has implemented a federal carbon pricing regime, and, in the United States, President Biden has announced that he intends to pursue substantial reductions in GHG emissions, particularly from the oil and gas sector.
Owners or operators of affected emission units or processes would have to comply with specific standards of performance that may include leak detection using optical gas imaging and subsequent repair requirements, reduction of emissions by 95% through capture and control systems, zero-emission requirements, operations and maintenance requirements, and so-called “green well” completion requirements.
Owners or operators of affected emission units or processes will have to comply with specific standards of performance that include leak detection using optical gas imaging and subsequent repair requirements, reduction of emissions by 95% through capture and control systems, zero-emission requirements, operations and maintenance requirements, and so-called “green well” completion requirements.
The Partnership owns a 16% membership interest in and operates Trans-Pecos. • The Red Bluff Express Pipeline is an approximately 120-mile intrastate pipeline that runs through the heart of the Delaware Basin and connects our Orla Plant, as well as third-party plants to the Waha Oasis Header.
The Partnership owns a 16% membership interest in and operates Trans-Pecos Pipeline. • The Red Bluff Express Pipeline is an approximately 120-mile intrastate pipeline that runs through the heart of the Delaware Basin and connects certain of our plants as well as third-party plants to the Waha Oasis Header.
With regard to our physical purchases and sales of natural gas, NGLs or other energy commodities; our transportation of these energy commodities; and any related hedging activities that we undertake, we are required to observe these anti-market manipulation laws and related regulations enforced by the FERC and/or the CFTC.
With regard to our physical purchases and sales of natural gas, NGLs or other energy commodities; our transportation of these energy commodities; and any related hedging activities that we undertake, we are required to observe these anti-market manipulation laws and related regulations enforced by the FERC, the CFTC and/or the Federal Trade Commission.
We also generate revenues and margin from the sale of natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users and marketing companies on our HPL System. Generally, we purchase natural gas from either the market (including purchases from our marketing operations) or from producers at the wellhead.
We also generate revenues and margin from the sale of natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users and marketing companies. Generally, we purchase natural gas from either the market (including purchases from our marketing operations) or from producers at the wellhead.
Our Chisholm, Kenedy, Jackson and King Ranch processing plants are connected to our intrastate transportation pipeline systems for deliveries of residue gas and are also connected with our NGL pipelines. • We own a 60% interest in Edward Lime Gathering, LLC, which operates natural gas gathering, compression and treating facilities, and an oil pipeline and oil stabilization facility in South Texas.
Our Chisholm, Kenedy, Jackson and King Ranch processing plants are connected to our intrastate transportation pipeline systems for deliveries of residue gas and are also connected with our NGL pipelines. • We own a 60% interest in Edwards Lime Gathering, LLC, which operates natural gas gathering, compression and treating facilities as well as an oil pipeline and oil stabilization facility in South Texas.
These reports are available on our website as soon as reasonably practicable after we electronically file such materials with the SEC. Information contained on our website is not part of this report. 46 Table of Contents In dex to Financial Statements
These reports are available on our website as soon as reasonably practicable after we electronically file such materials with the SEC. Information contained on our website is not part of this report. 46 Table of Contents Index to Financial Statements
In addition, the NGA prohibits natural gas companies from unduly preferring or unreasonably discriminating against any person with respect to pipeline rates or terms and conditions of service. 32 Table of Contents In dex to Financial Statements The maximum rates to be charged by NGA-jurisdictional natural gas companies and their terms and conditions for service are required to be on file with the FERC.
In addition, the NGA prohibits natural gas companies from unduly preferring or unreasonably discriminating against any person with respect to pipeline rates or terms and conditions of service. 31 Table of Contents Index to Financial Statements The maximum rates to be charged by NGA-jurisdictional natural gas companies and their terms and conditions for service are required to be on file with the FERC.
In addition, the rates, terms and conditions of service for shipments of NGLs on our pipelines are subject to regulation by the FERC under the Interstate Commerce Act (“ICA”) and the Energy Policy Act of 1992 (the “EPAct of 1992”) if the NGLs are transported in interstate or foreign 33 Table of Contents In dex to Financial Statements commerce whether by our pipelines or other means of transportation.
In addition, the rates, terms and conditions 32 Table of Contents Index to Financial Statements of service for shipments of NGLs on our pipelines are subject to regulation by the FERC under the Interstate Commerce Act (“ICA”) and the Energy Policy Act of 1992 (the “EPAct of 1992”) if the NGLs are transported in interstate or foreign commerce whether by our pipelines or other means of transportation.
As of December 31, 2022, USAC had 3.7 million horsepower in its fleet. USAC operates a modern fleet of compression units, with an average age of approximately 11 years. USAC’s standard new-build compression units are generally configured for multiple compression stages allowing USAC to operate its units across a broad range of operating conditions.
As of December 31, 2023, USAC had 3.8 million horsepower in its fleet. USAC operates a modern fleet of compression units, with an average age of approximately 11 years. USAC’s standard new-build compression units are generally configured for multiple compression stages allowing USAC to operate its units across a broad range of operating conditions.
In addition to providing NGL storage and terminalling services to both affiliates and third-party customers, the Marcus Hook Terminal currently serves as an off-take outlet for our Mariner East Pipeline System. The Marcus Hook Terminal also has a tank farm with total refined products storage capacity of approximately 2 MMBbls.
In addition to providing NGL storage and terminalling services to both affiliates and third-party customers, the Marcus Hook Terminal serves as an offtake outlet for our Mariner East Pipeline System. The Marcus Hook Terminal also has a tank farm with total refined products storage capacity of approximately 2 MMBbls.
Ark-La-Tex Region: • Our Ark-La-Tex assets are comprised of several gathering systems in the Haynesville Shale with access to multiple markets through interconnects with several pipelines, including our Tiger pipeline. Our Northern Louisiana assets include the Bistineau, Creedence, Tristate, Logansport, Magnolia, Olympia, Amoruso, and Lumberjack systems, which collectively include eleven natural gas treating facilities, with aggregate capacity of 3.0 Bcf/d.
Ark-La-Tex: • Our Ark-La-Tex assets are comprised of several gathering systems in the Haynesville Shale with access to multiple markets through interconnects with several pipelines, including our Tiger pipeline. Our northern Louisiana assets include the Bistineau, Creedence, Tristate, Logansport, Magnolia, Olympia, Amoruso, and Lumberjack systems, which collectively include 11 natural gas treating facilities, with aggregate capacity of 3.1 Bcf/d.
Our NGL and refined products transportation and services segment includes: • approximately 5,650 miles of NGL pipelines; • Nederland Terminal and connecting pipelines which provide transportation of ethane, propane, butane and natural gasoline from our Mont Belvieu Facility to our Nederland Terminal where these products can be exported; • Marcus Hook Terminal which includes fractionation, storage and exporting assets.
Our NGL and refined products transportation and services segment includes: • approximately 5,700 miles of NGL pipelines; • our Nederland Terminal and connecting pipelines which provide transportation of ethane, propane, butane and natural gasoline from our Mont Belvieu NGL Complex to our Nederland Terminal where these products can be exported; • our Marcus Hook Terminal which includes fractionation, storage and exporting assets.
This segment also derives revenues from fee-based export activities, the marketing of NGLs and processing and fractionating refinery off-gas. Crude Oil Transportation and Services Segment Our crude oil operations provide transportation (via pipeline and trucking), terminalling and acquisition and marketing services to crude oil markets throughout the southwest, midwest and northeastern United States.
This segment also derives revenues from fee-based export activities, the marketing of NGLs as well as processing and fractionating refinery off-gas. Crude Oil Transportation and Services Segment Our crude oil operations provide transportation (via pipeline and trucking), terminalling as well as acquisition and marketing services to crude oil markets throughout the Southwest, Midwest and Northeast United States.
These laws and regulations require environmental assessment and remediation efforts at many of ETC Sunoco’s facilities and at formerly owned or third-party sites. Accruals for these environmental remediation activities amounted to $219 million and $234 million at December 31, 2022 and 2021, respectively, which is included in the total accruals above.
These laws and regulations require environmental assessment and remediation efforts at many of ETC Sunoco’s facilities and at formerly owned or third-party sites. Accruals for these environmental remediation activities amounted to $213 million and $219 million at December 31, 2023 and 2022, respectively, which is included in the total accruals above.
In total, the terminal is capable of delivering over 2 MMBbls/d of crude oil to our crude oil pipelines or a number of third-party pipelines including the DOE. The Nederland Terminal generates crude oil revenues primarily by providing term or spot storage services and throughput capabilities to a number of customers. • Fort Mifflin.
In total, the terminal is capable of delivering over 2 MMBbls/d of crude oil to our crude oil pipelines or a number of third-party pipelines including the DOE. The Nederland Terminal generates crude oil revenues primarily by providing term or spot storage services and throughput capabilities to a number of customers. • Midland, TX.
As of December 31, 2022, we owned or controlled approximately 733 million tons of proven and probable coal reserves in central and northern Appalachia, properties in eastern Kentucky, southwestern Virginia and southern West Virginia, and in the Illinois Basin, properties in southern Illinois, Indiana, and western Kentucky and as the operator of end-user coal handling facilities.
As of December 31, 2023, we owned or controlled approximately 730 million tons of proven and probable coal reserves in central and northern Appalachia, properties in eastern Kentucky, southwestern Virginia and southern West Virginia, and in the Illinois Basin, properties in southern Illinois, Indiana, and western Kentucky and as the operator of end-user coal handling facilities.
We rely on our ability to provide value-added and reliable service and to control our operating costs in order to maintain our margins and competitive position. 31 Table of Contents In dex to Financial Statements In our retail business, we face strong competition in the market for the sale of retail gasoline and merchandise.
We rely on our ability to provide value-added and reliable service and to control our operating costs in order to maintain our margins and competitive position. 30 Table of Contents Index to Financial Statements In our retail business, we face strong competition in the market for the sale of retail gasoline and merchandise.
As of December 31, 2022, the captive insurance company held $145 million of cash and investments. The Partnership’s accrual for environmental remediation activities reflects anticipated work at identified sites where an assessment has indicated that cleanup costs are probable and reasonably estimable.
As of December 31, 2023, the captive insurance company held $140 million of cash and investments. The Partnership’s accrual for environmental remediation activities reflects anticipated work at identified sites where an assessment has indicated that cleanup costs are probable and reasonably estimable.
EOIT also has two underground natural gas storage facilities in Oklahoma, which operate at a combined capacity of 24 Bcf with a peak withdrawal rate of 0.60 Bcf/d. 15 Table of Contents In dex to Financial Statements • Comanche Trail Pipeline is a 195-mile intrastate pipeline that delivers natural gas from the Waha Hub near Pecos, Texas to the United States/Mexico border near San Elizario, Texas.
OIT also has two underground natural gas storage facilities in Oklahoma, which operate at a combined capacity of 24 Bcf with a peak withdrawal rate of 0.60 Bcf/d. 14 Table of Contents Index to Financial Statements • Comanche Trail Pipeline is a 195-mile intrastate pipeline that delivers natural gas from the Waha Hub near Pecos, Texas to the United States/Mexico border near San Elizario, Texas.
Additionally, the EPA has adopted rules under authority of the Clean Air Act that, among other things, establish Potential for Significant Deterioration (“PSD”) construction and Title V operating permit reviews for GHG emissions from certain large stationary sources that are also potential major sources of certain principal, or criteria, pollutant emissions, which reviews could require securing PSD permits at covered facilities emitting GHGs and meeting “best available control technology” standards for those GHG emissions.
Additionally, the EPA has adopted rules under authority of the Clean Air Act that, among other things, establish Potential for Significant Deterioration 41 Table of Contents Index to Financial Statements (“PSD”) construction and Title V operating permit reviews for GHG emissions from certain large stationary sources that are also potential major sources of certain principal, or criteria, pollutant emissions, which reviews could require securing PSD permits at covered facilities emitting GHGs and meeting “best available control technology” standards for those GHG emissions.
To the extent that these actions are pursued by PHMSA, midstream operators of NGL fractionation facilities and associated storage facilities subject to such inspection may be required to make operational changes or modifications at their facilities to meet standards beyond current PSM and RMP requirements, 37 Table of Contents In dex to Financial Statements which changes or modifications may result in additional capital costs, possible operational delays and increased costs of operation that, in some instances, may be significant.
To the extent that these actions are pursued by PHMSA, midstream operators of NGL fractionation facilities and associated storage facilities subject to such inspection may be required to make operational changes or modifications at their facilities to meet standards beyond current PSM and RMP requirements, which changes or modifications may result in additional capital costs, possible operational delays and increased costs of operation that, in some instances, may be significant.
The NGL pipelines primarily transport NGLs from the Permian Basin and the Barnett and Eagle Ford Shales to Mont Belvieu, Texas, as well as NGLs from the Marcellus and Utica Shales to both our Marcus Hook Terminal and to customer facilities in Marysville, Michigan and to delivery points on the Canadian border.
Our NGL pipelines primarily transport NGLs from the Permian Basin, the Barnett and Eagle Ford shales to Mont Belvieu, Texas. In the Northeast, our NGL pipelines transport from the Marcellus and Utica shales to our Marcus Hook Terminal, to customer facilities in Marysville, Michigan and to delivery points on the Canadian border.
Failure to comply with the NGA, the Energy Policy Act of 2005, the CEA and the other federal laws and regulations governing our operations and business activities can result in the imposition of administrative, civil and criminal remedies. Regulation of Intrastate Natural Gas and NGL Pipelines.
Failure to comply with the NGA, the EPAct of 2005, the CEA and the other federal laws and regulations governing our operations and business activities can result in the imposition of administrative, civil and criminal remedies. Regulation of Intrastate Natural Gas and NGL Pipelines.
Each facility typically consists of multiple storage tanks and is equipped with automated truck loading equipment that is operational 24 hours a day. • In addition to crude oil service, the Eagle Point terminal can accommodate three marine vessels (ships or barges) to receive and deliver refined products to outbound ships and barges.
Each facility typically consists of multiple storage tanks and is equipped with automated truck loading equipment that is operational 24 hours a day. • The Eagle Point Terminal can accommodate three marine vessels (ships or barges) to receive and deliver refined products to outbound ships and barges.
The rule imposes safety regulations on approximately 400,000 miles of previously unregulated onshore gas gathering lines that, among other things, will impose criteria for inspection and repair of fugitive emissions, extend reporting requirements to all gas gathering operators and apply a set of minimum safety requirements to certain gas gathering pipelines with large diameters and high operating pressures.
The rule imposes safety regulations on approximately 400,000 miles of previously unregulated onshore gas gathering lines that, among other things, will impose criteria for 36 Table of Contents Index to Financial Statements inspection and repair of fugitive emissions, extend reporting requirements to all gas gathering operators and apply a set of minimum safety requirements to certain gas gathering pipelines with large diameters and high operating pressures.
We expect our subsidiaries to utilize their resources, along with cash from their operations, to fund their announced growth capital expenditures and working capital needs; however, Energy Transfer may issue debt or equity securities from time to time as we deem prudent to provide liquidity for new capital projects of our subsidiaries or for other partnership purposes. 6 Table of Contents In dex to Financial Statements The following chart summarizes our organizational structure as of February 10, 2023.
We expect our subsidiaries to utilize their resources, along with cash from their operations, to fund their announced growth capital expenditures and working capital needs; however, Energy Transfer may issue debt or equity securities from time to time as we deem prudent to provide liquidity for new capital projects of our subsidiaries or for other partnership purposes. 6 Table of Contents Index to Financial Statements The following chart summarizes our organizational structure as of February 9, 2024.
EOIT is a web-like configuration with multidirectional flow capabilities between numerous receipt points and delivery points.
OIT is a web-like configuration with multidirectional flow capabilities between numerous receipt points and delivery points.
In December 2020, FERC issued an order setting the indexed rate at PPI-FG plus 0.78% during the five-year period commencing July 1, 2021 and ending June 30, 2026. The FERC received requests for rehearing of its December 17, 2020 order and on January 20, 2022, granted rehearing and modified the oil index.
In December 2020, FERC issued an order setting the indexed rate at PPI-FG plus 0.78% during the five-year period commencing July 1, 2021 and ending June 30, 2026. The FERC received requests for rehearing of its December 17, 2020 order 34 Table of Contents Index to Financial Statements and on January 20, 2022, granted rehearing and modified the oil index.
As a result of these laws and regulations, our construction and operation costs include capital, operating and maintenance cost items necessary to maintain or upgrade our equipment and facilities. We have implemented procedures designed to ensure that governmental environmental approvals for both existing operations and those under construction are updated as circumstances require.
As a result of these laws and regulations, our construction and operation costs include capital, operating and maintenance cost items necessary to maintain or upgrade our equipment and facilities. 37 Table of Contents Index to Financial Statements We have implemented procedures designed to ensure that governmental environmental approvals for both existing operations and those under construction are updated as circumstances require.
Our employees are our greatest asset, and we seek to attract and retain top talent by fostering a culture that is guided by our core values in a manner that respects all people and cultures, promotes safety, and focuses on the protection of public health and the environment. Ethics and Values .
Our employees are our greatest asset, and we seek to attract and retain top talent by fostering a culture that is guided by our core values and that respects all people and cultures, promotes safety, and focuses on the protection of public health and being a good steward of the environment. Ethics and Values .
Crude Oil Acquisition and Marketing Our crude oil acquisition and marketing operations are conducted using our assets, which include approximately 363 crude oil transport trucks, 350 trailers and approximately 166 crude oil truck unloading facilities, as well as third-party truck, rail, pipeline and marine assets.
Crude Oil Acquisition and Marketing Our crude oil acquisition and marketing operations are conducted using our assets, which include approximately 378 crude oil transport trucks, 350 trailers, approximately 176 crude oil truck unloading facilities as well as third-party truck, rail, pipeline and marine assets.
We intend to leverage our existing infrastructure and customer relationships by constructing and expanding systems to meet new or increased demand for midstream and transportation services. 30 Table of Contents In dex to Financial Statements Increase cash flow from fee-based businesses .
We intend to leverage our existing infrastructure and customer relationships by constructing and expanding systems to meet new or increased demand for midstream and transportation services. 29 Table of Contents Index to Financial Statements Increase cash flow from fee-based businesses .
We may be responsible under CERCLA or state laws for all or part of the costs required to clean up sites at which such substances or wastes have been disposed. 38 Table of Contents In dex to Financial Statements We also generate both hazardous and nonhazardous wastes that are subject to requirements of the federal Resource Conservation and Recovery Act, as amended, (“RCRA”) and comparable state statutes.
We may be responsible under CERCLA or state laws for all or part of the costs required to clean up sites at which such substances or wastes have been disposed. We also generate both hazardous and nonhazardous wastes that are subject to requirements of the federal Resource Conservation and Recovery Act, as amended, (“RCRA”) and comparable state statutes.
As of December 31, 2022, we had approximately 17.2 Bcf committed under fee-based arrangements with third parties and approximately 32.8 Bcf stored in the facility for our own account. • The ETC Katy Pipeline connects three treating facilities, one of which we own, with our gathering system known as Southeast Texas System.
As of December 31, 2023, we had approximately 17.2 Bcf committed under fee-based arrangements with third parties and approximately 37.0 Bcf stored in the facility for our own account. • The ETC Katy Pipeline connects three treating facilities, one of which we own, with our gathering system known as Southeast Texas System.
Accordingly, the low end of the range often represents the amount of loss which has been recorded. The Partnership’s consolidated balance sheet reflected $282 million in environmental accruals as of December 31, 2022.
Accordingly, the low end of the range often represents the amount of loss which has been recorded. The Partnership’s consolidated balance sheet reflected $277 million in environmental accruals as of December 31, 2023.
The Ark-La-Tex assets gather, compress, treat and dehydrate natural gas in several parishes in north and west Louisiana and several counties in East Texas.
The Ark-La-Tex assets gather, compress, treat and dehydrate natural gas in several parishes in northwest Louisiana and several counties in East Texas.
The terminal currently has a total storage capacity of approximately 31 MMBbls in approximately 150 above ground storage tanks with individual capacities of up to 660 MBbls. The Nederland Terminal can receive crude oil at three of its six ship docks and three of its four barge berths.
The terminal currently has a total storage capacity of approximately 30 MMBbls in more than 80 above ground storage tanks with individual capacities of up to 660 MBbls. The Nederland Terminal can receive crude oil at three of its six ship docks and three of its four barge berths.
Our midstream segment results are derived primarily from margins we earn for natural gas volumes that are gathered, transported, purchased and sold through our pipeline systems and the natural gas and NGL volumes processed at our processing and treating facilities. 9 Table of Contents In dex to Financial Statements NGL and Refined Products Transportation and Services Segment Our NGL and refined products operations transport, store and execute acquisition and marketing activities utilizing a complementary network of pipelines, storage and blending facilities, and strategic off-take locations that provide access to multiple markets.
Our midstream segment’s results are derived primarily from margins we earn from natural gas volumes that are gathered, transported, purchased and sold through our pipeline systems and the natural gas and NGL volumes processed at our processing and treating facilities. 9 Table of Contents Index to Financial Statements NGL and Refined Products Transportation and Services Segment Our NGL and refined products operations transport, store and execute acquisition and marketing activities utilizing a complementary network of pipelines, storage and blending facilities as well as strategic offtake locations that provide access to multiple markets.
The Partnership owns a 70% membership interest in and operates Red Bluff Express. 16 Table of Contents In dex to Financial Statements Interstate Transportation and Storage The following details our pipelines in the interstate transportation and storage segment: Description of Assets Ownership Interest Miles of Natural Gas Pipeline Pipeline Throughput Capacity (Bcf/d) Working Storage Capacity (Bcf) Florida Gas Transmission (“FGT”) 50 % 5,380 3.9 — Transwestern Pipeline 100 % 2,590 2.1 — Panhandle Eastern Pipe Line (1) 100 % 6,300 2.8 73.0 Trunkline 100 % 2,190 0.9 13.0 Tiger 100 % 200 2.4 — Fayetteville Express Pipeline 50 % 185 2.0 — Sea Robin Pipeline 100 % 740 2.0 — Stingray Pipeline 100 % 290 0.4 — Rover Pipeline 32.6 % 720 3.4 — Midcontinent Express Pipeline 50 % 510 1.8 — Enable Gas Transmission (“EGT”) 100 % 5,700 4.8 29.3 Mississippi River Transmission (“MRT”) 100 % 1,600 1.7 48.9 Southeast Supply Header (“SESH”) 50 % 290 1.1 — Gulf Run Pipeline 100 % 335 (2) 3.0 (2) — (1) Storage capacity figure includes storage leased from Southwest Gas and third-party companies.
Interstate Transportation and Storage The following details our pipelines in the interstate transportation and storage segment: Description of Assets Ownership Interest Miles of Natural Gas Pipeline Pipeline Throughput Capacity (Bcf/d) Working Storage Capacity (Bcf) Florida Gas Transmission (“FGT”) 50 % 5,380 4.0 — Transwestern Pipeline 100 % 2,590 2.1 — Panhandle Eastern Pipe Line (1) 100 % 6,300 2.8 73.0 Trunkline 100 % 2,190 0.9 13.0 Tiger 100 % 200 2.4 — Fayetteville Express Pipeline 50 % 185 2.0 — Sea Robin Pipeline 100 % 765 2.0 — Stingray Pipeline 100 % 335 0.4 — Rover Pipeline 32.6 % 720 3.4 — Midcontinent Express Pipeline 50 % 510 1.8 — 15 Table of Contents Index to Financial Statements Enable Gas Transmission (“EGT”) 100 % 5,700 4.8 29.3 Mississippi River Transmission (“MRT”) 100 % 1,675 1.7 48.9 Southeast Supply Header (“SESH”) 50 % 290 1.1 — Gulf Run Pipeline 100 % 335 3.0 — (1) Storage capacity figure includes storage leased from Southwest Gas and third-party companies.
Through our intrastate transportation and storage segment, we own and operate (through wholly-owned subsidiaries or through joint venture interests) approximately 11,600 miles of natural gas transportation pipelines with approximately 24 Bcf/d of transportation capacity, three natural gas storage facilities located in the state of Texas and two natural gas storage facilities located in the state of Oklahoma.
Through our intrastate transportation and storage segment, we own and operate (through wholly owned subsidiaries or through joint venture interests) approximately 12,200 miles of intrastate natural gas transportation pipelines with approximately 24 Bcf/d of transportation capacity, three natural gas storage facilities located in Texas and two natural gas storage facilities located in Oklahoma.
This system also includes three natural gas processing plants (La Grange, Alamo and Brookeland) with an aggregate capacity of 510 MMcf/d. These plants process the rich gas that flows through our gathering system to produce residue gas and NGLs.
This system also includes three natural gas processing plants (La Grange, Alamo and Brookeland) with 18 Table of Contents Index to Financial Statements an aggregate capacity of 510 MMcf/d. These plants process the rich gas that flows through our gathering system to produce residue gas and NGLs.
As a result of the proximity of our system to the Waha Hub, the Waha Gathering System has a variety of market outlets for the natural gas that we gather and process, including several major interstate and intrastate pipelines serving California, the midcontinent region of the United States and Texas natural gas markets.
As a result of the proximity of our system to the Waha Hub, the Waha Gathering System has a variety of market outlets for the natural gas that we gather and process, including several major interstate and intrastate pipelines serving California, the Midcontinent and Texas natural gas markets. The NGL market outlets includes our NGL pipeline system.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur results of operations and our ability to grow and to make distributions to Unitholders will depend in part on our ability to make acquisitions that are accretive to our distributable cash flow per unit. 59 Table of Contents In dex to Financial Statements We may be unable to make accretive acquisitions for any of the following reasons, among others: • because we are unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts with them; • because we are unable to raise financing for such acquisitions on economically acceptable terms; or • because we are outbid by competitors, some of which are substantially larger than us and have greater financial resources and lower costs of capital then we do.
Biggest changeWe may be unable to make accretive acquisitions for any of the following reasons, among others: • because we are unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts with them; • because we are unable to raise financing for such acquisitions on economically acceptable terms; • because of recent heightened antitrust focus in the energy industry creating potential risk, expense and delays in connection with prospective acquisitions and consolidations; or • because we are outbid by competitors, particularly as a trend of consolidation within the energy industry continues, some of which are substantially larger than us and have greater financial resources and lower costs of capital then we do.
The Working Group’s interim estimate of the social cost of carbon has been subject to litigation in 2022, but is in use while litigation is pending. EPA has also separately developed its own proposal for a social cost of carbon, which is significantly higher than that proposed by the Working Group.
The Working Group’s interim estimate of the social cost of carbon has been subject to litigation in 2022, but is in use while litigation is pending. The EPA has also separately developed its own proposal for a social cost of carbon, which is significantly higher than that proposed by the Working Group.
Sunoco LP currently depends on a limited number of principal suppliers in each of its operating areas for a substantial portion of its merchandise inventory and its products and ingredients for its food service facilities. A disruption in supply or a change in either relationship could have a material adverse effect on its business.
A disruption in supply or a change in either relationship could have a material adverse effect on its business. Sunoco LP currently depends on a limited number of principal suppliers in each of its operating areas for a substantial portion of its merchandise inventory and its products and ingredients for its food service facilities.
We plan to fund our growth capital expenditures, including any new pipeline construction projects and improvements or repairs to existing facilities that we may undertake, with proceeds from sales of our debt and equity securities and borrowings under our revolving credit facility; however, we cannot be certain that we will be able to issue our debt and equity securities on terms satisfactory to us, or at all.
We may fund our growth capital expenditures, including any new pipeline construction projects and improvements or repairs to existing facilities that we may undertake, with proceeds from sales of our debt and equity securities and borrowings under our revolving credit facility; however, we cannot be certain that we will be able to issue our debt and equity securities on terms satisfactory to us, or at all.
The prices for natural gas, NGLs, crude oil and refined products reflect market demand that fluctuates with changes in global and United States economic conditions and other factors, including: • the level of domestic natural gas, NGL, refined products and oil production; • the level of natural gas, NGL, refined products and oil imports and exports, including liquefied natural gas; • actions taken by natural gas and oil producing nations; • instability or other events affecting natural gas and oil producing nations; • the impact of weather, geopolitical events such as the armed conflict in Ukraine and political instability in the Middle East, public health crises such as pandemics (including COVID-19), and other events of nature on the demand for natural gas, NGLs, refined products and oil; • the availability of storage, terminal and transportation systems, and refining, processing and treating facilities; • the price, availability and marketing of competitive fuels; • supply chain disruptions and inflation; • the demand for electricity; • activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of oil and natural gas and related products; • rising interest rates and slowing economic growth; • the cost of capital needed to maintain or increase production levels and to construct and expand facilities; • the impact of energy conservation and fuel efficiency efforts; and • the extent of governmental regulations, taxation, fees and duties.
The prices for natural gas, NGLs, crude oil and refined products reflect market demand that fluctuates with changes in global and United States economic conditions and other factors, including: • the level of domestic natural gas, NGL, refined products and oil production; • the level of natural gas, NGL, refined products and oil imports and exports, including liquefied natural gas; • actions taken by natural gas and oil producing nations; • instability or other events affecting natural gas and oil producing nations; • the impact of weather, geopolitical events such as the armed conflict in Ukraine and political instability in the Middle East, public health crises, and other events of nature on the demand for natural gas, NGLs, refined products and oil; • the availability of storage, terminal and transportation systems, and refining, processing and treating facilities; • the price, availability and marketing of competitive fuels; • supply chain disruptions and inflation; • the demand for electricity; • activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of oil and natural gas and related products; • rising interest rates and slowing economic growth; • the cost of capital needed to maintain or increase production levels and to construct and expand facilities; • the impact of energy conservation and fuel efficiency efforts; and • the extent of governmental regulations, taxation, fees and duties.
Recent proposals have provided for the expansion of the qualifying income exception for publicly traded partnerships in certain circumstances and other proposal have provided for the total elimination of the qualifying income exception upon which we rely for our partnership tax treatment.
Recent proposals have provided for the expansion of the qualifying income exception for publicly traded partnerships in certain circumstances and other proposals have provided for the total elimination of the qualifying income exception upon which we rely for our partnership tax treatment.
Compliance with these more stringent regulatory requirements and with existing environmental and oil spill regulations, together with any uncertainties or inconsistencies in decisions and rulings by governmental agencies, delays in the processing and approval of drilling permits or exploration, development, oil spill-response and decommissioning plans, and possible additional regulatory initiatives could result in 75 Table of Contents In dex to Financial Statements difficult and more costly actions and adversely affect or delay new drilling and ongoing development efforts.
Compliance with these more stringent regulatory requirements and with existing environmental and oil spill regulations, together with any uncertainties or inconsistencies in 75 Table of Contents Index to Financial Statements decisions and rulings by governmental agencies, delays in the processing and approval of drilling permits or exploration, development, oil spill-response and decommissioning plans, and possible additional regulatory initiatives could result in difficult and more costly actions and adversely affect or delay new drilling and ongoing development efforts.
Any of these outcomes could result in fewer visits to Sunoco LP’s convenience stores or independently operated commission agents and dealer locations, a reduction in demand from their wholesale customers, decreases in both fuel and merchandise sales revenue, or reduced profit margins, any of which could have a material adverse effect on Sunoco LP’s business, financial condition, results of operations and cash available for distribution to its unitholders.
Any of these actions could result in fewer visits to convenience stores or independently operated commission agents and dealer locations, a reduction in demand from their wholesale customers, decreases in both fuel and merchandise sales revenue, or reduced profit margins, any of which could have a material adverse effect on Sunoco LP’s business, financial condition, results of operations and cash available for distribution to its unitholders.
This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner; • provides that our general partner is entitled to make other decisions in “good faith” if it reasonably believes that the decisions are in our best interests; • generally provides that affiliated transactions and resolutions of conflicts of interest not approved by a conflicts committee of the board of directors of our general partner and not involving a vote of Unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us; • provides that unless our general partner has acted in bad faith, the action taken by our general partner shall not constitute a breach of its fiduciary duty; • provides that our general partner may resolve any conflicts of interest involving us and our general partner and its affiliates, and any resolution of a conflict of interest by our general partner that is “fair and reasonable” to us will be deemed approved by all partners, including the Unitholders, and will not constitute a breach of the Partnership Agreement; • provides that our general partner may, but is not required, in connection with its resolution of a conflict of interest, to seek “special approval” of such resolution by appointing a conflicts committee of the general partner’s board of directors composed of two or more independent directors to consider such conflicts of interest and to recommend action to the board of directors, and any resolution of the conflict of interest by the conflicts committee shall be conclusively deemed “fair and reasonable” to us; and • provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general partner or those other persons acted in bad faith or engaged in fraud, willful misconduct or gross negligence.
This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner; • provides that our general partner is entitled to make other decisions in “good faith” if it reasonably believes that the decisions are in our best interests; • generally provides that affiliated transactions and resolutions of conflicts of interest not approved by a conflicts committee of the board of directors of our general partner and not involving a vote of Unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us; 87 Table of Contents Index to Financial Statements • provides that unless our general partner has acted in bad faith, the action taken by our general partner shall not constitute a breach of its fiduciary duty; • provides that our general partner may resolve any conflicts of interest involving us and our general partner and its affiliates, and any resolution of a conflict of interest by our general partner that is “fair and reasonable” to us will be deemed approved by all partners, including the Unitholders, and will not constitute a breach of the Partnership Agreement; • provides that our general partner may, but is not required, in connection with its resolution of a conflict of interest, to seek “special approval” of such resolution by appointing a conflicts committee of the general partner’s board of directors composed of two or more independent directors to consider such conflicts of interest and to recommend action to the board of directors, and any resolution of the conflict of interest by the conflicts committee shall be conclusively deemed “fair and reasonable” to us; and • provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general partner or those other persons acted in bad faith or engaged in fraud, willful misconduct or gross negligence.
Capital projects will require significant amounts of debt and equity financing, which may not be available to us on acceptable terms, or at all.
Capital projects may require significant amounts of debt and equity financing, which may not be available to us on acceptable terms, or at all.
Any such access, disclosure or loss could result in legal claims or proceedings, regulatory investigations and enforcement, penalties and fines, increased costs for system remediation and compliance requirements, disruption of our operations, damage to our reputation, or loss of confidence in our products and services, any or all of which could have a material adverse effect on our business and results.
Any such access, disclosure or loss could result in legal claims or proceedings, significant litigation costs, regulatory investigations and enforcement, penalties and fines, increased costs for system remediation and compliance requirements, disruption of our operations, damage to our reputation, or loss of confidence in our products and services, any or all of which could have a material adverse effect on our business and results.
Such disruptions could potentially have a material adverse impact on our financial condition or results of operations. 54 Table of Contents In dex to Financial Statements A natural disaster, catastrophe or other event could result in severe personal injury, property damage and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flow.
Such disruptions could potentially have a material adverse impact on our financial condition or results of operations. 54 Table of Contents Index to Financial Statements A natural disaster, catastrophe or other event could result in severe personal injury, property damage and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flow.
By an order issued January 16, 2019, the FERC initiated a review of Panhandle’s existing rates pursuant to Section 5 of the NGA to determine whether the rates currently charged by Panhandle are just and reasonable and set the matter for hearing. On August 30, 2019, Panhandle filed a general rate proceeding under Section 4 of the NGA.
By an order issued on January 16, 2019, the FERC initiated a review of Panhandle’s then existing rates pursuant to Section 5 of the NGA to determine whether the rates charged by Panhandle are just and reasonable and set the matter for hearing. On August 30, 2019, Panhandle filed a general rate proceeding under Section 4 of the NGA.
In the United States, no comprehensive climate change legislation has been implemented at the federal level to date. However, Canada has implemented a federal carbon pricing regime, and, in the United States, President Biden has announced that he intends to pursue substantial reductions in greenhouse gas emissions, particularly from the oil and gas sector.
In the United States, no comprehensive climate change legislation has been implemented at the federal level to date. However, Canada has implemented a federal carbon pricing regime, and, in the United States, President Biden has announced that he intends to pursue substantial reductions in GHG emissions, particularly from the oil and gas sector.
Certain of our joint ventures also depend on key customers. Citrus has long-term agreements with its top two customers which accounted for 52% of its 2022 revenue. For the Trans-Pecos and Comanche Trail pipelines, a single customer is the primary shipper.
Certain of our joint ventures also depend on key customers. Citrus has long-term agreements with its top two customers which accounted for 52% of its 2023 revenue. For the Trans-Pecos and Comanche Trail pipelines, a single customer is the primary shipper.
Sunoco LP does not own all of the land on which its retail service stations are located. Sunoco LP has rental agreements for approximately 35% of the company, commission agent or dealer operated retail service stations where Sunoco LP currently controls the real estate. Sunoco LP also has rental agreements for certain logistics facilities.
Sunoco LP does not own all of the land on which its retail service stations are located. Sunoco LP has rental agreements for approximately 33% of the company, commission agent or dealer operated retail service stations where Sunoco LP currently controls the real estate. Sunoco LP also has rental agreements for certain logistics facilities.
Accordingly, we cannot guarantee that our subsidiaries, including Sunoco LP and USAC, will have sufficient available cash to pay a specific level of cash distributions to their respective partners. 49 Table of Contents In dex to Financial Statements Furthermore, Unitholders should be aware that the amount of cash that our subsidiaries have available for distribution depends primarily upon cash flow and is not solely a function of profitability, which is affected by non-cash items.
Accordingly, we cannot guarantee that our subsidiaries, including Sunoco LP and USAC, will have sufficient available cash to pay a specific level of cash distributions to their respective partners. 49 Table of Contents Index to Financial Statements Furthermore, Unitholders should be aware that the amount of cash that our subsidiaries have available for distribution depends primarily upon cash flow and is not solely a function of profitability, which is affected by non-cash items.
Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us. In general, our Unitholders are entitled to a deduction for the interest we have paid or accrued on indebtedness properly allocable to our trade or business during our taxable year.
Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us. In general, we are entitled to a deduction for interest paid or accrued on indebtedness properly allocable to our trade or business during our taxable year.
As a result, new facilities may be unable to attract enough throughput or contracted capacity reservation commitments to achieve our expected investment return, which could adversely affect our results of operations and financial condition. The liquefaction project is dependent upon securing long-term contractual arrangements for the off-take of LNG on terms sufficient to support the financial viability of the project.
As a result, new facilities may be unable to attract enough throughput or contracted capacity reservation commitments to achieve our expected investment return, which could adversely affect our results of operations and financial condition. The liquefaction project is dependent upon securing long-term contractual arrangements for the offtake of LNG on terms sufficient to support the financial viability of the project.
The difficulties of integrating past and future acquisitions with our business include, among other things: • operating a larger combined organization in new geographic areas and new lines of business; • hiring, training or retaining qualified personnel to manage and operate our growing business and assets; • integrating management teams and employees into existing operations and establishing effective communication and information exchange with such management teams and employees; • diversion of management’s attention from our existing business; • assimilation of acquired assets and operations, including additional regulatory programs; • loss of customers or key employees; • maintaining an effective system of internal controls in compliance with the Sarbanes-Oxley Act of 2002 as well as other regulatory compliance and corporate governance matters; and • integrating new technology systems for financial reporting.
The difficulties of integrating past and future acquisitions with our business include, among other things: • operating a larger combined organization in new geographic areas and new lines of business; • hiring, training or retaining qualified personnel to manage and operate our growing business and assets; • integrating management teams and employees into existing operations and establishing effective communication and information exchange with such management teams and employees; • diversion of management’s attention from our existing business; • assimilation of acquired assets and operations, including additional regulatory programs; • loss of customers or key employees; 62 Table of Contents Index to Financial Statements • maintaining an effective system of internal controls in compliance with the Sarbanes-Oxley Act of 2002 as well as other regulatory compliance and corporate governance matters; and • integrating new technology systems for financial reporting.
Our fleet currently has a “satisfactory” safety 57 Table of Contents In dex to Financial Statements rating; however, if our safety rating were downgraded to “unsatisfactory,” our business and results of operations could be adversely affected. All federally regulated carriers’ safety ratings are measured through a program implemented by the FMCSA known as the Compliance Safety Accountability (“CSA”) program.
Our fleet currently has a “satisfactory” safety 57 Table of Contents Index to Financial Statements rating; however, if our safety rating were downgraded to “unsatisfactory,” our business and results of operations could be adversely affected. All federally regulated carriers’ safety ratings are measured through a program implemented by the FMCSA known as the Compliance Safety Accountability (“CSA”) program.
Our business, results of operations, cash flows, financial condition, and future growth could be impacted by the following: • increased regulation of hydraulic fracturing or produced water disposal; • legal or regulatory actions related to the Dakota Access Pipeline; • laws, regulations and policies governing the rates, terms and conditions of our services; • failure to recover the full amount of increases in the costs of our pipeline operations; • imposition of regulation on assets not previously subject to regulation; • costs and liabilities resulting from performance of pipeline integrity programs and related repairs; • new or more stringent pipeline safety controls or enforcement of legal requirements; • costs and liabilities associated with environmental and worker health and safety laws and regulations; • climate change legislation or regulations restricting emissions of greenhouse gases, limiting oil and gas leases on federal lands, discouraging oil and gas development or otherwise increasing our or our customers’ costs; • increased attention to environmental, social, and governance (“ESG”) matters and conservation measures; • regulatory provisions of the Dodd-Frank Act and the rules adopted thereunder; • deepwater drilling laws and regulations, delays in the processing and approval of drilling permits and exploration, development, oil spill-response and decommissioning plans, and related developments; and • laws and regulations governing the specifications of products that we store and transport.
Our business, results of operations, cash flows, financial condition, and future growth could be impacted by the following: • increased regulation of hydraulic fracturing or produced water disposal; • legal or regulatory actions related to the Dakota Access Pipeline; 47 Table of Contents Index to Financial Statements • laws, regulations and policies governing the rates, terms and conditions of our services; • failure to recover the full amount of increases in the costs of our pipeline operations; • imposition of regulation on assets not previously subject to regulation; • costs and liabilities resulting from performance of pipeline integrity programs and related repairs; • new or more stringent pipeline safety controls or enforcement of legal requirements; • costs and liabilities associated with environmental and worker health and safety laws and regulations; • climate change legislation or regulations restricting emissions of GHGs, limiting oil and gas leases on federal lands, discouraging oil and gas development or otherwise increasing our or our customers’ costs; • increased attention to environmental, social, and governance (“ESG”) matters and conservation measures; • regulatory provisions of the Dodd-Frank Act and the rules adopted thereunder; • deepwater drilling laws and regulations, delays in the processing and approval of drilling permits and exploration, development, oil spill-response and decommissioning plans, and related developments; and • laws and regulations governing the specifications of products that we store and transport.
In August 2022, President Biden signed the IRA 2022, which contains hundreds of billions in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions. In addition, the IRA 2022 imposes the first-ever federal fee on the emission of greenhouse gases through a methane emissions charge.
In August 2022, President Biden signed the IRA 2022, which contains hundreds of billions in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions. In addition, the IRA 2022 imposes the first-ever federal fee on the emission of GHGs through a methane emissions charge.
Increased regulation of hydraulic fracturing or produced water disposal could result in reductions or delays in crude oil and natural gas production in our areas of operation, which could adversely impact our business and results of operations.
Regulatory Matters Increased regulation of hydraulic fracturing or produced water disposal could result in reductions or delays in crude oil and natural gas production in our areas of operation, which could adversely impact our business and results of operations.
Our business, results of operations, cash flows, financial condition, and future growth could be impacted by the following: • failure to make acquisitions on economically acceptable terms, or to successfully integrate acquired assets; • failure to secure debt and equity financing for capital projects on acceptable terms, including as a result of recent increases in cost of capital resulting from changes in monetary policy by the Federal Reserve and/or changes in financial institutions’ policies or practices concerning businesses linked to fossil fuels; • any increased costs or reduced demand for crude oil and natural gas as a result of the Inflation Reduction Act of 2022 (“IRA 2022”) or otherwise; • failure to construct new pipelines or to do so efficiently; • failure to execute our growth strategy due to increased competition within any of our core businesses; and • failure to attract and retain qualified employees; and • failure of the liquefaction project to secure long-term contractual arrangements or necessary approvals. 47 Table of Contents In dex to Financial Statements Regulatory Matters .
Our business, results of operations, cash flows, financial condition, and future growth could be impacted by the following: • failure to make acquisitions on economically acceptable terms, or to successfully integrate acquired assets; • failure to secure debt and equity financing for capital projects on acceptable terms, including as a result of recent increases in cost of capital resulting from changes in monetary policy by the Federal Reserve and/or changes in financial institutions’ policies or practices concerning businesses linked to fossil fuels; • any increased costs or reduced demand for crude oil and natural gas as a result of the Inflation Reduction Act of 2022 (“IRA 2022”) or otherwise; • failure to construct new pipelines or to do so efficiently; • failure to execute our growth strategy due to increased competition within any of our core businesses; and • failure to attract and retain qualified employees; and • failure of the liquefaction project to secure long-term contractual arrangements or necessary approvals.
Additionally, in March 2022 the SEC released a proposed rule requiring climate disclosures, which is expected to be finalized in early 2023. Although the form and substance of these requirements is not yet known, this may result in additional costs to comply with any such disclosure requirements.
Additionally, in March 2022 the SEC released a proposed rule requiring climate disclosures, which is expected to be finalized in 2024. Although the form and substance of these requirements is not yet known, this may result in additional costs to comply with any such disclosure requirements.
We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. We do not have significant assets other than the partnership interests and the equity in our subsidiaries.
Our Subsidiaries We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets. We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. We do not have significant assets other than the partnership interests and the equity in our subsidiaries.
If regulations become more stringent, additional emission control technologies. Climate change legislation or regulations restricting emissions of greenhouse gases could result in increased operating costs and reduced demand for the services we provide. Climate change continues to attract considerable public, governmental and scientific attention.
If regulations become more stringent, additional emission control technologies. Climate change legislation or regulations restricting emissions of GHGs could result in increased operating costs and reduced demand for the services we provide. Climate change continues to attract considerable public, governmental and scientific attention.
In particular, our Five-Year Credit Facility (as defined herein), limits our and certain of our subsidiaries’ ability to make distributions. If we are unable to obtain funds from our subsidiaries, we may not be able to pay distributions to our Unitholders or to pay interest or principal on our debt when due.
In particular, our Five-Year Credit Facility, limits our and certain of our subsidiaries’ ability to make distributions. If we are unable to obtain funds from our subsidiaries, we may not be able to pay distributions to our Unitholders or to pay interest or principal on our debt when due.
To the extent possible under these rules, our general partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, issue an information statement to each Unitholder and former Unitholder with respect to an audited and adjusted return.
To the extent possible, our general partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, issue an information statement to each Unitholder and former Unitholder with respect to an audited and adjusted return.
Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of or exposure to various products. There can be no assurance that product liability claims against us would not have a material adverse effect on our business or results of operations.
Product liability is a significant commercial risk. Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers based upon claims for injuries caused by the use of or exposure to various products. There can be no assurance that product liability claims against us would not have a material adverse effect on our business or results of operations.
In September 2022, the Federal Reserve announced that six of the United States’ largest banks will participate in a pilot climate scenario analysis exercise, expected to be launched in early 2023, to enhance the ability of firms and supervisors to measure and manage climate-related financial risk.
In September 2022, the Federal Reserve announced that six of the United States’ largest banks will participate in a pilot climate scenario analysis exercise, which launched in early 2023, to enhance the ability of firms and supervisors to measure and manage climate-related financial risk.
These are not all the risks we face, and other factors that we face in the ordinary course of business, that are currently considered immaterial or that are currently unknown to us may impact our future operations. Risk Factor Summary Risks Related to the Partnership’s Business Results of Operations and Financial Condition .
Other factors that we face in the ordinary course of business that are currently considered immaterial or that are currently unknown to us may impact our future operations. Risk Factor Summary Risks Related to the Partnership’s Business Results of Operations and Financial Condition .
These conflicts include, among others, the following: • our general partner is allowed to take into account the interests of parties other than us, including Sunoco LP and USAC, and their respective affiliates and any general partners and limited partnerships acquired in the future, in resolving conflicts of interest, which has the effect of limiting its fiduciary duties to us. 85 Table of Contents In dex to Financial Statements • our general partner has limited its liability and reduced its fiduciary duties under the terms of our Partnership Agreement, while also restricting the remedies available for actions that, without these limitations, might constitute breaches of fiduciary duty.
These conflicts include, among others, the following: • our general partner is allowed to take into account the interests of parties other than us, including Sunoco LP and USAC, and their respective affiliates and any general partners and limited partnerships acquired in the future, in resolving conflicts of interest, which has the effect of limiting its fiduciary duties to us. • our general partner has limited its liability and reduced its fiduciary duties under the terms of our Partnership Agreement, while also restricting the remedies available for actions that, without these limitations, might constitute breaches of fiduciary duty.
The parties’ determination as to the feasibility of the project will be particularly dependent upon the prospects for securing long-term contractual arrangements for the off-take of LNG which in turn will be dependent upon supply and demand factors affecting the price of LNG in foreign markets.
The parties’ determination as to the feasibility of the project will be particularly dependent upon the prospects for securing long-term contractual arrangements for the offtake of LNG which in turn will be dependent upon supply and demand factors affecting the price of LNG in foreign markets.
For the year ended December 31, 2022, sales of refined motor fuels accounted for approximately 98% of Sunoco LP’s total revenues and 72% of gross profit. A significant decrease in demand for motor fuel in the areas Sunoco LP serves could significantly reduce revenues and Sunoco LP’s ability to make distributions to its unitholders, including Energy Transfer.
For the year ended December 31, 2023, sales of refined motor fuels accounted for approximately 98% of Sunoco LP’s total revenues and 69% of gross profit. A significant decrease in demand for motor fuel in the areas Sunoco LP serves could significantly reduce revenues and Sunoco LP’s ability to make distributions to its unitholders, including Energy Transfer.
Risk Relating to the Partnership’s Business Results of Operations and Financial Condition Our cash flow depends primarily on the cash distributions we receive from our subsidiaries, as well as our partnership interests in Sunoco LP and USAC, including the incentive distribution rights in Sunoco LP and, therefore, our cash flow is dependent upon the ability of our subsidiaries, Sunoco LP and USAC to make distributions in respect of those partnership interests.
Risk Relating to the Partnership’s Business Results of Operations and Financial Condition Our cash flow depends primarily on the cash distributions we receive from our subsidiaries, as well as our partnership interests in Sunoco LP and USAC, including the IDRs in Sunoco LP and, therefore, our cash flow is dependent upon the ability of our subsidiaries, Sunoco LP and USAC to make distributions in respect of those partnership interests.
Approximately $3.16 billion of our consolidated debt as of December 31, 2022 bears interest at variable interest rates and the remainder bears interest at fixed rates. To the extent that we have debt with floating interest rates, our results of operations, cash flows and financial condition could be materially adversely affected by increases in interest rates.
Approximately $3.29 billion of our consolidated debt as of December 31, 2023 bears interest at variable interest rates and the remainder bears interest at fixed rates. To the extent that we have debt with floating interest rates, our results of operations, cash flows and financial condition could be materially adversely affected by increases in interest rates.
As of December 31, 2022, approximately 11% of our workforce is covered by a number of collective bargaining agreements with various terms and dates of expiration. There can be no assurances that we will not experience a work stoppage in the future as a result of labor disagreements.
As of December 31, 2023, approximately 10% of our workforce is covered by a number of collective bargaining agreements with various terms and dates of expiration. There can be no assurances that we will not experience a work stoppage in the future as a result of labor disagreements.
If the Energy Transfer Preferred Units were treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions likely would be treated as payments of interest by us to Preferred Unitholders.
If the Energy Transfer Preferred Units (other than Series I Preferred Units) were treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions likely would be treated as payments of interest by us to Preferred Unitholders.
For the year ended December 31, 2022, approximately 29% of USAC’s compression services on a revenue basis were provided on a month-to-month basis to customers who continue to utilize its services following expiration of the primary term of their contracts. These customers can generally terminate their month-to-month compression services contracts on 30-days’ written notice.
For the year ended December 31, 2023, approximately 22% of USAC’s compression services on a revenue basis were provided on a month-to-month basis to customers who continue to utilize its services following expiration of the primary term of their contracts. These customers can generally terminate their month-to-month compression services contracts on 30-days’ written notice.
The NYSE does not require a publicly traded partnership like us to comply with certain corporate governance requirements. Our common and series C, D and E preferred units are listed on the NYSE.
The NYSE does not require a publicly traded partnership like us to comply with certain corporate governance requirements. Our common units, Series E Preferred Units and Series I Preferred Units are listed on the NYSE.
On June 22, 2021, the District Court terminated the consolidated lawsuits and dismissed all remaining outstanding counts without prejudice. On January 20, 2022, the Standing Rock Sioux Tribe withdrew as a cooperating agency on the draft EIS, prompting the USACE to temporarily pause on the draft EIS.
On June 22, 2021, the District Court terminated the consolidated lawsuits and dismissed all remaining outstanding counts without prejudice. On January 20, 2022, the Standing Rock Sioux Tribe withdrew as a cooperating agency on the draft EIS, prompting the USACE to temporarily pause on the draft EIS. On September 8, 2023, the USACE published the Draft EIS.
Unitholders could have unlimited liability for obligations of the Partnership if a court or government agency determined that (i) we were conducting business in a state, but had not complied with that particular state’s partnership statute; or (ii) a Unitholder’s right to act with other Unitholders to remove or replace our general partner, to approve some amendments to our Partnership Agreement or to take other actions under the Partnership Agreement constituted “control” of our business.
Unitholders could have unlimited liability for obligations of the Partnership if a court or government agency determined that (i) we were conducting business in a state, but had not complied with that particular state’s partnership statute; or (ii) a Unitholder’s right to act with other Unitholders to remove or 79 Table of Contents Index to Financial Statements replace our general partner, to approve some amendments to our Partnership Agreement or to take other actions under the Partnership Agreement constituted “control” of our business.
As of February 16, 2023, Mr. Warren’s combined common unit and Energy Transfer Class A Unit ownership results in a voting interest in the Partnership of 27%. As a result of this and other limitations, it may be more difficult to remove the general partner.
As of February 9, 2024, Mr. Warren’s combined common unit and Energy Transfer Class A Unit ownership results in a voting interest in the Partnership of 27%. As a result of this and other limitations, it may be more difficult to remove the general partner.
On December 5, 2019, the FERC granted an extension of time until and including December 16, 2025, to complete construction of the liquefaction project and pipeline facilities modifications and place the facilities into service.
In December 2019, the FERC granted an extension of time until and including December 16, 2025, to complete construction of the liquefaction project and pipeline facilities modifications and place the facilities into service.
For a transfer of interests in a publicly traded partnership that is effected through a broker on or after January 1, 2023, the obligation to withhold is imposed on the transferor’s broker. Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our units.
For a transfer of interests in a publicly traded partnership that is effected through a broker, the obligation to withhold is imposed on the transferor’s broker. Current and prospective non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment in our units.
Our Partnership Agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for U.S. federal, state, local or foreign income tax purposes, the target distribution amounts may be adjusted to reflect the impact of that law or interpretation on us.
Our Partnership Agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for U.S. 88 Table of Contents Index to Financial Statements federal, state, local or foreign income tax purposes, the target distribution amounts may be adjusted to reflect the impact of that law or interpretation on us.
ITEM 1A. RISK FACTORS The following is a summary of important risk factors that are specific to our business, industry and partnership structure that could materially impact our future performance and results of operations. These risk factors should be reviewed when considering an investment in our securities.
ITEM 1A. RISK FACTORS The following is a summary of important risk factors that are specific to our business, industry and partnership structure that could materially impact our future performance and results of operations. These risk factors should be reviewed when considering an investment in our securities. These are not all the risks we face.
We cannot give assurance that our acquisition efforts will be successful or that any acquisition will be completed on terms considered favorable to us. In addition, we are experiencing increased competition for the assets we purchase or contemplate purchasing.
We cannot give assurance that our acquisition efforts will be successful or that any acquisition will be completed on terms considered favorable to us. In addition, we may experience increased competition for the assets we purchase or contemplate purchasing.
Because distributions in excess of a Unitholder’s allocable share of our net taxable income decrease such Unitholder’s tax basis in their units, the amount, if any, of such prior excess distributions with 88 Table of Contents In dex to Financial Statements respect to the units a Unitholder sells will, in effect, become taxable income to a Unitholder if such units are sold at a price greater than their tax basis in those units, even if the price such Unitholder receives is less than their original costs.
Because distributions in excess of a Unitholder’s allocable share of our net taxable income decrease such Unitholder’s tax basis in their units, the amount, if any, of such prior excess distributions with respect to the units a Unitholder sells will, in effect, become taxable income to a Unitholder if such units are sold at a price greater than their tax basis in those units, even if the price such Unitholder receives is less than their original costs.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our cash available to pay our debt securities and for distribution to our Unitholders might be substantially reduced.
If the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our cash available to pay our debt securities and for distribution to our Unitholders might be substantially reduced.
For example, conflicts of interest with Sunoco LP and USAC may arise in the following situations: • the allocation of shared overhead expenses to Sunoco LP, USAC and us; • the interpretation and enforcement of contractual obligations between us and our affiliates, on the one hand, and Sunoco LP and USAC, on the other hand; • the determination of the amount of cash to be distributed to Sunoco LP’s and USAC’s partners and the amount of cash to be reserved for the future conduct of Sunoco LP’s and USAC’s businesses; • the determination whether to make borrowings under Sunoco LP’s and USAC’s revolving credit facilities to pay distributions to their respective partners; • the determination of whether a business opportunity (such as a commercial development opportunity or an acquisition) that we may become aware of independently of Sunoco LP and USAC is made available for Sunoco LP and USAC to pursue; and • any decision we make in the future to engage in business activities independent of Sunoco LP and USAC.
The resolution of these conflicts may not always be in our best interest. 86 Table of Contents Index to Financial Statements For example, conflicts of interest with Sunoco LP and USAC may arise in the following situations: • the allocation of shared overhead expenses to Sunoco LP, USAC and us; • the interpretation and enforcement of contractual obligations between us and our affiliates, on the one hand, and Sunoco LP and USAC, on the other hand; • the determination of the amount of cash to be distributed to Sunoco LP’s and USAC’s partners and the amount of cash to be reserved for the future conduct of Sunoco LP’s and USAC’s businesses; • the determination whether to make borrowings under Sunoco LP’s and USAC’s revolving credit facilities to pay distributions to their respective partners; • the determination of whether a business opportunity (such as a commercial development opportunity or an acquisition) that we may become aware of independently of Sunoco LP and USAC is made available for Sunoco LP and USAC to pursue; and • any decision we make in the future to engage in business activities independent of Sunoco LP and USAC.
Distributions to non-United States Preferred Unitholders will be subject to withholding taxes. If the amount of withholding exceeds the amount of United States federal income tax actually due, non-United States Preferred Unitholders may be required to file United States federal income tax returns in order to seek a refund of such excess.
If the amount of withholding exceeds the amount of United States federal income tax actually due, non-United States Preferred Unitholders may be required to file United States federal income tax returns in order to seek a refund of such excess.
A successful cyberattack or other security incident could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
A successful cyber attack or other security incident could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.
If the obligation was shifted from the importer/refiner to the blender/distributor, the Partnership would potentially have 83 Table of Contents In dex to Financial Statements to utilize the RINs it obtains through its blending activities to satisfy a new obligation and would be unable to sell RINs to other obligated parties, which may cause an impact on the fuel margins associated with Sunoco LP’s sale of gasoline.
If the obligation was shifted from the importer/refiner to the blender/distributor, the Partnership would potentially have to utilize the RINs it obtains through its blending activities to satisfy a new obligation and would be unable to sell RINs to other obligated parties, which may cause an impact on the fuel margins associated with Sunoco LP’s sale of gasoline.
At COP27 in Sharm El-Sheik in November 2022, countries reiterated the agreements from COP26 and were called upon to accelerate efforts toward the phase-out of fossil fuel subsidies.
At the 27th Conference of the Parties in Sharm El-Sheik in November 2022, countries reiterated the agreements from COP26 and were called upon to accelerate efforts toward the phase-out of fossil fuel subsidies.
Failure to comply with these laws, regulations and permits may result in the assessment of significant administrative, civil and criminal penalties, the imposition of investigatory remedial and corrective action obligations, suspension and debarment from federal contracting opportunities, the occurrence of delays in 70 Table of Contents In dex to Financial Statements permitting and completion of projects, and the issuance of injunctive relief.
Failure to comply with these laws, regulations and permits may result in the assessment of significant administrative, civil and criminal penalties, the imposition of investigatory remedial and corrective action obligations, suspension and debarment from federal contracting opportunities, the occurrence of delays in permitting and completion of projects, and the issuance of injunctive relief.
The proposal also revises requirements for fugitive emissions monitoring and repair as well as equipment leaks and the frequency of monitoring surveys, establishes a “super-emitter” response program to timely mitigate emissions events, and provides additional options for the use of advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions.
The December 2023 rule also revises requirements for fugitive emissions monitoring and repair as well as equipment leaks and the frequency of monitoring surveys, establishes a “super-emitter” response program to timely mitigate emissions events, triggering certain response and repair requirements, and provides additional options for the use of advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions.
In addition, different product specifications for different markets impact the fungibility of products transported and stored in our pipeline systems and terminal facilities and could require the construction of additional storage to segregate products with different specifications. We may be unable to recover these costs through increased revenues.
In addition, different product specifications for different markets impact the fungibility of products transported and stored in our pipeline systems and terminal facilities and could require the 76 Table of Contents Index to Financial Statements construction of additional storage to segregate products with different specifications. We may be unable to recover these costs through increased revenues.
Additionally, in November 2021, the EPA issued a proposed rule that, if finalized, would establish OOOOb new source and OOOOc first-time existing source standards of performance for GHG and VOC emissions for crude oil and natural gas well sites, natural gas gathering and boosting compressor stations, natural gas processing plants, and transmission and storage facilities, Owners or operators of affected emission units or processes would have to comply with specific standards of performance that may include leak detection using optical gas imaging and subsequent repair requirements, reduction of emissions by 95% through capture and control systems, zero-emission requirements, operations and maintenance requirements, and so-called “green well” completion requirements.
Additionally, in December 2023, the EPA issued a final rule that established OOOOb new source and OOOOc first-time existing source standards of performance for GHG and VOC emissions for crude oil and natural gas well sites, natural gas gathering and boosting compressor stations, natural gas processing plants, and transmission and storage facilities, Owners or operators of affected emission units or processes will have to comply with specific standards of performance that may include leak detection using optical gas imaging and subsequent repair requirements, reduction of emissions by 95% through capture and control systems, zero-emission requirements, operations and maintenance requirements, and so-called “green well” completion requirements.
The states in which we operate have 68 Table of Contents In dex to Financial Statements ratable take statutes, which generally require gathering pipelines to take, without undue discrimination, production that may be tendered to the gatherer for handling. Similarly, common purchaser statutes generally require gatherers to purchase without undue discrimination as to source of supply or producer.
The states in which we operate have ratable take statutes, which generally require gathering pipelines to take, without undue discrimination, production that may be tendered to the gatherer for handling. Similarly, common purchaser statutes generally require gatherers to purchase without undue discrimination as to source of supply or producer.
The IRA 2022 imposes a methane emissions charge on sources required to report their GHG emissions to the EPA, which would start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025, and be set at $1,500 for 2026 and each year after.
The IRA 2022 imposes a methane emissions charge on sources required to report their GHG emissions to the EPA, which started in calendar year 2024 at $900 per ton of methane, increases to $1,200 in 2025, and will be set at $1,500 for 2026 and each year after.
In addition, our Partnership Agreement permits our general partner to reduce available cash by establishing cash reserves for the proper conduct of our business, to comply with applicable law or agreements to which we are a party or to provide funds for future distributions to partners.
In addition, our Partnership Agreement permits our general partner to reduce available cash by establishing cash reserves for the proper conduct of our business, to comply with applicable law or agreements to which we are a party or to provide funds for future distributions to partners. These cash reserves will affect the amount of cash available for distribution to Unitholders.
In addition, the multiple incentives offered for various clean energy industries referenced above could decrease demand for crude oil and natural gas, increase our compliance and operating costs and consequently adversely affect our business. 60 Table of Contents In dex to Financial Statements If we do not continue to construct new pipelines, our future growth could be limited.
In addition, the multiple incentives offered for various clean energy industries referenced above could decrease demand for crude oil and natural gas, increase our compliance and operating costs and consequently adversely affect our business. If we do not continue to construct new pipelines, our future growth could be limited.
Despite our belief that the income tax return positions taken by these subsidiaries are fully supportable, certain positions may be successfully challenged by the IRS, state or local jurisdictions. 89 Table of Contents In dex to Financial Statements We treat each purchaser of units as having the same tax benefits without regard to the actual units purchased.
Despite our belief that the income tax return positions taken by these subsidiaries are fully supportable, certain positions may be successfully challenged by the IRS, state or local jurisdictions. We treat each purchaser of units as having the same tax benefits without regard to the actual units purchased.
The methane emissions charge would start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025, and be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA 2022.
The methane emissions charge started in calendar year 2024 at $900 per ton of methane, increases to $1,200 in 2025, and will be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA 2022.
Should the FERC determine not to authorize rates equal to or greater than our costs of service, our cash flow would be negatively affected. Our midstream and intrastate gas and oil transportation pipelines and our intrastate gas storage operations are subject to state regulation.
Should the FERC determine not to authorize rates equal to or greater than our costs of service, our cash flow would be negatively affected. 68 Table of Contents Index to Financial Statements Our midstream and intrastate gas and oil transportation pipelines and our intrastate gas storage operations are subject to state regulation.
Our Unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income. Tax gain or loss on disposition of our units could be more or less than expected.
Our Unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income. 89 Table of Contents Index to Financial Statements Tax gain or loss on disposition of our units could be more or less than expected.
While major integrated oil companies have generally continued to divest retail sites and the corresponding wholesale distribution to such sites, such major oil companies could shift from this strategy and decide to distribute their own products in direct competition with Sunoco LP, or large customers could 82 Table of Contents In dex to Financial Statements attempt to buy directly from the major oil companies.
While major integrated oil companies have generally continued to divest retail sites and the corresponding wholesale distribution to such sites, such major oil companies could shift from this strategy and decide to distribute their own products in direct competition with Sunoco LP, or large customers could attempt to buy directly from the major oil companies.
If we determine that any of our goodwill or intangible assets were impaired, 50 Table of Contents In dex to Financial Statements we would be required to take an immediate charge to earnings with a correlative effect on partners’ capital and balance sheet leverage as measured by debt to total capitalization.
If we determine that any of our goodwill or intangible assets were impaired, we would be required to take an immediate charge to earnings with a correlative effect on partners’ capital and balance sheet leverage as measured by debt to total capitalization.
We may be 55 Table of Contents In dex to Financial Statements unable to anticipate, detect or prevent future attacks, particularly as the methodologies used by attackers change frequently or are not recognized until launched, and we may be unable to investigate or remediate incidents because attackers are increasingly using techniques and tools designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
We may be unable to anticipate, detect or prevent future attacks, particularly as the methodologies used by attackers change frequently or are not recognized until launched, and we may be unable to investigate or remediate incidents because attackers are increasingly using techniques and tools designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
In addition, the Colorado Oil and Gas Conservation Commission adopted new rules to cover a variety of matters related to public health, safety, welfare, wildlife, and environmental resources; most significantly, these rule changes establish more stringent setbacks (2,000-foot, instead of the prior 500-foot) on new oil and gas development and eliminate routine flaring and venting of natural gas at new or existing wells across the state, each subject to only limited exceptions.
In addition, the Colorado Energy and Carbon Management Commission (formerly the Colorado Oil and Gas Conservation Commission) adopted new rules to cover a variety of matters related to public health, safety, welfare, wildlife, and environmental resources, and is considering draft rules regarding the cumulative impacts of oil and gas projects; most significantly, these rule changes establish more stringent setbacks (2,000-foot, instead of the prior 500-foot) on new oil and gas development and eliminate routine flaring and venting of natural gas at new or existing wells across the state, each subject to only limited exceptions.
From time to time, we and/or our subsidiaries have sought to reduce our exposure to fluctuations in commodity prices and interest rates by using derivative financial instruments and other risk management mechanisms and by our trading, marketing 56 Table of Contents In dex to Financial Statements and/or system optimization activities.
From time to time, we and/or our subsidiaries have sought to reduce our exposure to fluctuations in commodity prices and interest rates by using derivative financial instruments and other risk management mechanisms and by our trading, marketing and/or system optimization activities.
Indebtedness Our debt level and debt agreements may limit our ability to make distributions to Unitholders and may limit our future financial and operating flexibility. As of December 31, 2022, we had approximately $48.26 billion of consolidated debt, excluding the debt of our unconsolidated joint ventures.
Indebtedness Our debt level and debt agreements may limit our ability to make distributions to Unitholders and may limit our future financial and operating flexibility. As of December 31, 2023, we had approximately $52.39 billion of consolidated debt, excluding the debt of our unconsolidated joint ventures.
Accordingly, a decrease in the price of natural gas or NGLs could have an adverse effect on our revenues and results of operations. Under keep-whole arrangements, we generally sell the NGLs produced from our gathering and processing operations at market prices.
Accordingly, a decrease in the price of natural gas or NGLs could have an adverse effect on our revenues and results of operations. 52 Table of Contents Index to Financial Statements Under keep-whole arrangements, we generally sell the NGLs produced from our gathering and processing operations at market prices.
If the IRS or other state or local jurisdictions were to successfully assert that these corporations have more tax liability than we anticipate or legislation was enacted that increased the corporate tax rate, the cash available for distribution could be further reduced.
If the IRS or other state or local jurisdictions were to successfully assert that these corporations have more tax liability than we anticipate or legislation was enacted that increased the corporate tax rate, the 90 Table of Contents Index to Financial Statements cash available for distribution could be further reduced.
If we propose to change our tariff rates, our proposed rates may be challenged by the FERC or third parties, and the FERC may deny, modify or limit our proposed changes if we are unable to persuade the FERC that changes 65 Table of Contents In dex to Financial Statements would result in just and reasonable rates that are not unduly discriminatory.
If we propose to change our tariff rates, our proposed rates may be challenged by the FERC or third parties, and the FERC may deny, modify or limit our proposed changes if we are unable to persuade the FERC that changes would result in just and reasonable rates that are not unduly discriminatory.
At this time, we cannot predict the ultimate cost of compliance with applicable pipeline integrity management regulations, as the cost will vary significantly depending on the number and extent of any repairs found to be necessary as a result of the 69 Table of Contents In dex to Financial Statements pipeline integrity testing.
At this time, we cannot predict the ultimate cost of compliance with applicable pipeline integrity management regulations, as the cost will vary significantly depending on the number and extent of any repairs found to be necessary as a result of the pipeline integrity testing.
In addition, the actual amount of cash we and our subsidiaries, including Sunoco LP and USAC, will have available for distribution will also depend on other factors, such as: • the level of capital expenditures we and our subsidiaries make; • the level of costs related to litigation and regulatory compliance matters; • the cost of acquisitions, if any; • the levels of any margin calls that result from changes in commodity prices; • our and our subsidiaries’ debt service requirements; • fluctuations in our and our subsidiaries’ working capital needs; • our and our subsidiaries’ ability to borrow under our revolving credit facility; • our and our subsidiaries’ ability to access capital markets; • restrictions on distributions contained in our and our subsidiaries’ debt agreements; and • the amount of cash reserves established by our general partner in its discretion for the proper conduct of our business. 77 Table of Contents In dex to Financial Statements Because of all these factors, we cannot guarantee that in the future we will be able to pay distributions or that any distributions we do make will be at or above our current quarterly distribution.
In addition, the actual amount of cash we and our subsidiaries, including Sunoco LP and USAC, will have available for distribution will also depend on other factors, such as: • the level of capital expenditures we and our subsidiaries make; • the level of costs related to litigation and regulatory compliance matters; • the cost of acquisitions, if any; • the levels of any margin calls that result from changes in commodity prices; • our and our subsidiaries’ debt service requirements; 77 Table of Contents Index to Financial Statements • fluctuations in our and our subsidiaries’ working capital needs; • our and our subsidiaries’ ability to borrow under our revolving credit facility; • our and our subsidiaries’ ability to access capital markets; • restrictions on distributions contained in our and our subsidiaries’ debt agreements; and • the amount of cash reserves established by our general partner in its discretion for the proper conduct of our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we believe that we have, or are in the process of obtaining, all required material approvals, authorizations, orders, licenses, permits, franchises and consents of, and have obtained or made all required material registrations, qualifications and filings with, the various state and local government and regulatory authorities which relate to ownership of our properties or the operations of our business.
Biggest changeIn addition, we believe that 94 Table of Contents Index to Financial Statements we have, or are in the process of obtaining, all required material approvals, authorizations, orders, licenses, permits, franchises and consents of, and have obtained or made all required material registrations, qualifications and filings with, the various state and local government and regulatory authorities which relate to ownership of our properties or the operations of our business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

15 edited+21 added−13 removed24 unchanged
Biggest changeMid Valley received a Notice of Federal Interest regarding the incident and has also supplied PHMSA with information as requested. No other government agency action has occurred at this time.
Biggest changeMid Valley received a Notice of Federal Interest regarding the incident and is awaiting final invoicing from the federal agencies (United States Environmental Protection Agency and United States Fish and Wildlife Service) and their consultants related to the incident. Mid Valley has also supplied PHMSA with information as requested.
On June 29, 2022, near Henderson, Tennessee, a Mid Valley Pipeline Company mowing contractor struck an exposed section of the 22-inch diameter Hornsby to Denver line segment while mowing. The brush cutter mowing implement cut open the pipeline and released an estimated 4,345 barrels of crude oil into the surrounding area.
On June 29, 2022, near Henderson, Tennessee, a Mid Valley mowing contractor struck an exposed section of the 22-inch diameter Hornsby to Denver line segment while mowing. The brush cutter mowing implement cut open the pipeline and released an estimated 4,345 barrels of crude oil into the surrounding area.
On December 16, 2021, FERC issued an Order to Show Cause and Notice of Proposed Penalty (Docket No. IN17-4-000), ordering Rover to show cause why it should not be found to have violated Section 7(e) of the Natural Gas Act, Section 157.20 of FERC’s regulations, and the Rover Pipeline Certificate Order, and assessed civil penalties of $40 million.
On December 16, 2021, FERC issued an Order to Show Cause and Notice of Proposed Penalty (Docket No. IN17-4-000), ordering Rover to show cause why it should not be found to have violated Section 7(e) of the NGA, Section 157.20 of FERC’s regulations, and the Rover Pipeline Certificate Order, and assessed civil penalties of $40 million.
The DOJ, on behalf of United States Department of Interior Fish and Wildlife, and the Ohio Attorney General, on behalf of the Ohio EPA, along with technical representatives from those agencies have resolved in principal the natural resource damage assessment claims related to state endangered species and compensatory restoration.
The DOJ, on behalf of United States Department of Interior Fish and Wildlife, and the Ohio Attorney General, on behalf of the Ohio EPA, along with technical representatives from those agencies have resolved in principal the natural resource damage assessment claims related to state endangered species and compensatory restoration. On February 3, 2022, the State of New Mexico, ex rel.
Rover filed its answer and denial to the order on June 21, 2021 and a surreply on September 15, 2021. FERC issued an order on January 20, 2022 setting the matter for hearing before an administrative law judge.
Rover filed its answer and denial to the order on June 21, 2021 and a surreply on September 15, 2021. FERC issued an order on January 20, 2022 setting the matter for hearing before an administrative law judge. On January 25, 2022, the chief judge assigned an administrative law judge and set a timeline for a prehearing conference.
ITEM 3. LEGAL PROCEEDINGS For information regarding legal proceedings, Note 11 in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 3. LEGAL PROCEEDINGS For information regarding legal proceedings, see Note 11 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for the year ended December 31, 2023.
On May 24, 2022, the District Court ordered a stay of the FERC’s enforcement case and the District Court case pending the resolution of two cases pending before the United States Supreme Court. Arguments were heard in those cases on November 7, 2022. Energy Transfer and Rover intend to vigorously defend this claim.
On May 24, 2022, the District Court ordered a stay of the FERC’s enforcement case and the District Court case pending the resolution of two cases pending before the United States Supreme Court. Arguments were heard in those cases on November 7, 2022.
(now known as Energy Transfer Marketing & Terminals L.P.). It is reasonably possible that a loss may be realized in the remaining cases; however, we are unable to estimate the possible loss or range of loss in excess of amounts accrued.
The actions brought also named as defendants ETO, ETP Holdco and Sunoco Partners Marketing & Terminals L.P., now known as Energy Transfer Marketing & Terminals L.P. It is reasonably possible that a loss may be realized in the remaining cases; however, we are unable to estimate the possible loss or range of loss in excess of amounts accrued.
The plaintiffs seek to recover compensatory damages, and in some cases also seek natural resource damages, injunctive relief, punitive damages, and attorneys’ fees. As of December 31, 2022, Sunoco Defendants are defendants in four cases, including one case each initiated by the States of Maryland, one by the Commonwealth of Pennsylvania and two by the Commonwealth of Puerto Rico.
The plaintiffs seek to recover compensatory damages, and in some cases also seek natural resource damages, injunctive relief, punitive damages and attorneys’ fees. As of March 31, 2023, Sunoco Defendants are defendants in two cases: one case initiated by the State of Maryland and one by the Commonwealth of Pennsylvania.
In mid-2017, FERC Enforcement Staff began a non-public investigation regarding allegations that diesel fuel may have been included in the drilling mud at the Tuscarawas River horizontal directional drilling (“HDD”) operations. Rover and the Partnership are cooperating with the investigation.
The FERC and District Court proceedings remain stayed pending resolution of the case pending before the United States Supreme Court. In mid-2017, FERC Enforcement Staff began a non-public investigation regarding allegations that diesel fuel may have been included in the drilling mud at the Tuscarawas River horizontal directional drilling (“HDD”) operations. Rover and the Partnership are cooperating with the investigation.
On January 25, 2022, the chief judge assigned an administrative law judge and set a timeline for a prehearing conference. 92 Table of Contents In dex to Financial Statements On February 1, 2022, Energy Transfer and Rover filed a Complaint for Declaratory Relief in the United States District Court for the Northern District of Texas seeking an order declaring that FERC must bring its enforcement action in federal district court (instead of before an administrative law judge).
On February 1, 2022, Energy Transfer and Rover filed a Complaint for Declaratory Relief in the United States District Court for the Northern District of Texas seeking an order declaring that FERC must bring its enforcement action in federal district court (instead of before an administrative law judge).
The plea agreement was entered by court on August 12, 2022, and the matter is now closed. 93 Table of Contents In dex to Financial Statements In January 2019, we received notice from the DOJ on behalf of the EPA that a civil penalty enforcement action was being pursued under the Clean Water Act for an estimated 450 barrel crude oil release from the Mid-Valley Pipeline operated by SPLP and owned by Mid-Valley.
In January 2019, we received notice from the DOJ on behalf of the EPA that a civil penalty enforcement action was being pursued under the Clean Water Act for an estimated 450 barrel crude oil release from the Mid Valley Pipeline operated by SPLP and owned by Mid Valley.
Rover and Energy Transfer filed their answer to this order on March 21, 2022, and Enforcement Staff filed a reply on April 20, 2022. Rover and Energy Transfer filed their surreply to this order on May 13, 2022.
Rover and Energy Transfer filed their answer to this order on March 21, 2022, and Enforcement Staff filed a reply on April 20, 2022. Rover and Energy Transfer filed their surreply to this order on May 13, 2022. FERC has taken no further action on the case since that time.
Approximately 3,343 barrels of crude oil were recovered during initial remediation activities with the remaining volume contained within the materials removed and disposed of in accordance with applicable environmental laws and regulations. Corrective action is being completed pursuant to the Tennessee DEC’s Division of Remediation - Voluntary Action Program. No injuries resulted from the incident.
Approximately 3,343 barrels of crude oil were 96 Table of Contents Index to Financial Statements recovered during initial remediation activities with the remaining volume contained within the materials removed and disposed of in accordance with applicable environmental laws and regulations.
For a description of other legal proceedings, see Note 11 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data.” 94 Table of Contents In dex to Financial Statements
This lawsuit is included among the matters described in our discussion of our other environmental remediation matters. Please see Note 11 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data.”
Removed
The more recent Puerto Rico action is a companion case alleging damages for additional sites beyond those at issue in the initial Puerto Rico action. The actions brought by the State of Maryland and Commonwealth of Pennsylvania have also named as defendants ETO, ETP Holdco, and Sunoco Partners Marketing & Terminals L.P.
Added
On April 14, 2023, the United States Supreme Court held against the government in both cases, finding that the federal district courts had jurisdiction to hear those suits and to resolve the parties’ constitutional challenges. The cases were remanded to the federal district courts for further proceedings.
Removed
The motions remain pending before the court. The PA AG commenced an investigation regarding the Incident, and the United States Attorney for the Western District of Pennsylvania issued a federal grand jury subpoena for documents relevant to the Incident. The scope of these investigations is not further known at this time.
Added
On September 13, 2023 the District Court ordered that the District Court case would be stayed pending the resolution of another case pending before the United States Supreme Court and that the FERC enforcement case would remain stayed. Energy Transfer and Rover intend to vigorously defend this claim.
Removed
On February 2, 2022, the PA AG issued a press release related to the Revolution pipeline, and released a Grand Jury Presentment and filed a criminal complaint against ETC Northeast Pipeline, LLC in Magisterial District Court No. 12-2-02 in Dauphin County, Pennsylvania, with respect to nine misdemeanor charges related to various alleged violations of the Clean Streams Law associated with the construction of the Revolution pipeline.
Added
On November 13, 2023, the FERC appealed the District Court order to the United States Court of Appeals for the Fifth Circuit. On December 11, 2023, FERC filed a motion to withdraw that 95 Table of Contents Index to Financial Statements appeal, which the Fifth Circuit granted on December 12, 2023.
Removed
On August 5, 2022, the PA AG held a press conference to announce that the matter had been resolved through an agreement whereby ETC Northeast Pipeline, LLC and SPLP entered a plea of no contest to all charges.
Added
By order issued on October 20, 2023, the trial judge dismissed the Ohio EPA’s Fourth Amended Petition. On November 17, 2023, the State of Ohio appealed the trial judge’s decision to Ohio’s Fifth District Court of Appeals. The State filed its initial brief on January 8, 2024 and Energy Transfer’s and Rover’s responsive brief is currently due February 20, 2024.
Removed
The resolution also included terms that ETC Northeast Pipeline, LLC would pay an approximate $23 thousand fine to the Clean Water Fund at the Pennsylvania Department of Environmental Protection and SPLP would pay a $35 thousand fine to the Clean Water Fund at the Pennsylvania Department of Environmental Protection.
Added
Corrective action was being completed pursuant to the Tennessee DEC’s Division of Remediation - Voluntary Action Program (“VAP”) and on May 23, 2023, Mid Valley received a No Further Action letter from the Tennessee Department of Environment and Conservation (“TN DEC”) for the corrective action work related to the incident.
Removed
Additionally, both companies would jointly establish a fund of approximately $0.4 million to create a Homeowner Well Water Supply Grievance Program and pay $10 million to support water quality improvement projects.
Added
Additional environmental work was completed in late August 2023 along the pipeline right-of-way to address a small oil seep which required soil removal and site restoration. The TN DEC was notified and a follow-up report will be submitted to the agency documenting completion.
Removed
In July 2021, Energy Transfer LP, Energy Transfer R&M and certain of their affiliates were named as parties in a complaint filed by the Ohio Petroleum Underground Storage Tank Release Compensation Board (“PUSTRCB”) to recover over $8.5 million paid by PUSTRCB to Energy Transfer R&M or on Energy Transfer R&M’s behalf due to alleged false, misleading and/or fraudulent representations.
Added
On October 13, 2023, Mid Valley received a Notice of Proposed Safety Order (NOPSO) from PHMSA related to this incident and other historical incidents on the Mid Valley system. Several actions over the next six months are requested in the NOPSO and a response is due within 30 days. No other government agency action has occurred.
Removed
Specifically, in 1996, Energy Transfer R&M filed a lawsuit in the Superior Court of California (Los Angeles City) against its historic Commercial General Liability (“CGL”) insurers, excess and re-insurers entitled Jalisco et al. v. Argonaut et al. (“Jalisco”) - Case No. BC158441 - seeking a declaration of coverage under insurance policies which had been in place before 1986.
Added
Groundwater monitoring wells were abandoned on June 12, 2023, which concluded environmental related activities associated with the incident site. No injuries resulted from the incident.
Removed
The Jalisco action included refineries, Superfund sites, oil fields, pipelines, and service stations, among other sites, and the lawsuit was ultimately settled with the insurers.
Added
On June 26, 2023, Plaintiffs Michael and Cecilia Weinman (collectively, “Plaintiffs”) filed suit in Chester County, Tennessee, against Mid Valley, Energy Transfer Crude Marketing LLC, Energy Transfer Crude Oil Company, LLC, Energy Transfer Employee Management LLC, Energy Transfer Marketing & Terminals L.P., Energy Transfer LP, (collectively, the “Energy Transfer Defendants”) and other unnamed defendants asserting claims for negligence, trespass, and other tort claims and alleging damage to their property stemming from the crude oil release.
Removed
Sunoco, Inc. received reimbursement from PUSTRCB for costs incurred at service stations located in Ohio, and PUSTRCB now claims that Sunoco, Inc. failed to disclose to PUSTRCB the claims asserted against its insurers, the Jalisco action and the settlements and failed to repay the monies received from PUSTRCB.
Added
Plaintiffs alleged actual monetary damages and punitive damages totaling $380 million. The Energy Transfer Defendants were served on or around July 5, 2023, and timely filed a notice of removal of the lawsuit to federal court in the Western District of Tennessee—Eastern Division on August 2, 2023.
Removed
PUSTRCB seeks compensatory damages, restitution and disgorgement, punitive damages, interest and attorney’s fees. A $3.2 million settlement was agreed upon in December 2022, and the matter was resolved and dismissed in January 2023 without admission of responsibility. On February 3, 2022, the State of New Mexico, ex rel.
Added
On August 8, 2023, Plaintiffs filed a notice of voluntary dismissal of their lawsuit without prejudice. On November 29, 2023, the United States Coast Guard issued the final invoice for all federal expenses related to the incident response in the amount of $90,000. The expenses have been validated and sent for payment.
Removed
Additionally, we have received notices of violations and potential fines under various federal, state and local provisions relating to the discharge of materials into the environment or protection of the environment.
Added
The Energy Transfer Defendants cannot predict the ultimate outcome of this litigation or the amount of time and expense that will be required to resolve it. On October 13, 2023, Mid Valley received a Notice of Proposed Safety Order (“NOPSO”) from the PHMSA related to various historical accidents and complaints reported to PHMSA on the Mid Valley system.
Removed
While we believe that even if any one or more of the environmental proceedings listed above were decided against us, it would not be material to our financial position, results of operations or cash flows, we are required to report environmental governmental proceedings if we reasonably believe that such proceedings will result in monetary sanctions in excess of $300,000.
Added
The NOPSO requests that Mid Valley perform several proposed corrective measures within six months of receipt of a Safety Order; however, in response, Mid Valley requested that PHMSA engage in informal consultations prior to issuing a Safety Order in an effort for the parties to potentially enter into a Consent Agreement and Order. Informal consultation is underway.
Added
In the event a Consent Agreement and Order is not reached between the parties during this process, Mid Valley may request a Hearing on the NOPSO. It is too early to predict the outcome, timeline, or costs associated with this administrative action.
Added
On June 15, 2023, PHMSA issued a Notice of Probable Violation, Proposed Civil Penalty, and Proposed Compliance Order (collectively “NOPV”), CPF 4-2023-011-NOPV, identifying three probable violations with compliance order actions associated with two of them and civil penalties proposed in an amount totaling $2,473,912.
Added
The NOPV related to a PHMSA Accident Investigation Division investigation of a pigging incident which occurred on March 26, 2020 at the Partnership’s Borcher Station in Kansas and resulted in a fatality.
Added
The Partnership challenged PHMSA’s alleged violations and related civil penalties and compliance order actions contained in the NOPV, and requested an administrative hearing, which is set for April 24, 2024 before a PHMSA Presiding Official.
Added
On August 31, 2023, the United States Department of Justice filed suit in the District Court for the Southern District of Texas (Corpus Christi Division) captioned as United States v. Energy Transfer (R&M), LLC et al.
Added
Civil Action No. 2:23-cv-214, against Sunoco and two other parties seeking to recover past CERCLA response costs allegedly incurred by the EPA in excess of $500,000 and certain declaratory relief related to compliance.
Added
Suntide Refining Company (Sunoco as successor) is alleged to have arranged for the transport and disposal of refinery wastes containing hazardous substances at the Brine Service Company Superfund Site in Corpus Christi, Nueces County, TX.
Added
At this time, we cannot determine the likelihood of any liability in this 97 Table of Contents Index to Financial Statements matter; however, Sunoco intends to defend and dispute the allegations of the lawsuit, including but not limited to the joint and several liability determination sought.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−0 removed7 unchanged
Biggest changeThe total reflected above includes these additional Series G Preferred Units, as well as the 1,100,000 Series G Preferred Units originally issued in the Rollup Mergers. Additional information for each series of outstanding preferred units, including information on distributions and redemption, is available in Note 8 in the notes to our consolidated financial statements included in "Item 8.
Biggest changeAdditional information for each series of outstanding preferred units, including information on distributions and redemption, is available in Note 8 to our consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data." Cash Distribution Policy General.
Common units represent limited partner interests in us that entitle the holders to the rights and privileges specified in Energy Transfer’s Partnership Agreement. As of December 31, 2022, limited partners own an aggregate 99.9% limited partner interest in us. Our General Partner owns an aggregate 0.1% general partner interest in us.
Common units represent limited partner interests in us that entitle the holders to the rights and privileges specified in Energy Transfer’s Partnership Agreement. As of December 31, 2023, limited partners own an aggregate 99.9% limited partner interest in us. Our General Partner owns an aggregate 0.1% general partner interest in us.
Financial Statements and Supplementary Data,” all of ETO’s previously outstanding preferred units were converted to Energy Transfer Preferred Units with identical distribution and redemption rights. 96 Table of Contents In dex to Financial Statements (2) In connection with the Enable Acquisition in December 2021, Energy Transfer issued 384,780 additional Series G Preferred Units.
Financial Statements and Supplementary Data,” all of ETO’s previously outstanding preferred units were converted to Energy Transfer Preferred Units with identical distribution and redemption rights. 99 Table of Contents Index to Financial Statements (2) In connection with the Enable acquisition in December 2021, Energy Transfer issued 384,780 additional Series G Preferred Units.
Financial Statements and Supplementary Data." Cash Distribution Policy General. Energy Transfer will distribute all of its “Available Cash” to its Unitholders and its General Partner within 50 days following the end of each fiscal quarter. Definition of Available Cash.
Energy Transfer will distribute all of its “Available Cash” to its Unitholders and its General Partner within 50 days following the end of each fiscal quarter. Definition of Available Cash.
ITEM 5. MARKET FOR REGISTRANT’S COMMON UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Description of Units As of February 10, 2023, there were approximately 12,000 holders of record of our common units, which number does not separately account for individual participants in securities positions listings.
ITEM 5. MARKET FOR REGISTRANT’S COMMON UNITS, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Description of Units As of February 9, 2024, there were 11,242 holders of record of our common units, which number does not separately account for individual participants in securities positions listings.
The common units are entitled to distributions of Available Cash as described in “Cash Distribution Policy.” Energy Transfer Class A Units As of February 10, 2023, the Partnership had outstanding 765,933,429 Class A units (“Energy Transfer Class A Units”) representing limited partner interests in the Partnership to the General Partner.
The common units are entitled to distributions of Available Cash as described in “Cash Distribution Policy.” Energy Transfer Class A Units As of February 9, 2024, the Partnership had outstanding 833,543,364 Class A units (“Energy Transfer Class A Units”) representing limited partner interests in the Partnership to the General Partner.
Energy Transfer Preferred Units The Partnership currently has the following series of preferred units outstanding: Series of Preferred Units Units Issued and Outstanding Liquidation Preference per Unit Date Issued (1) 6.250% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 950,000 $ 1,000 April 2021 6.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 550,000 1,000 April 2021 7.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 18,000,000 25 April 2021 7.625% Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 17,800,000 25 April 2021 7.600% Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 32,000,000 25 April 2021 6.750% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units 500,000 1,000 April 2021 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units 1,484,780 1,000 April 2021 and December 2021 (2) 6.500% Series H Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units 900,000 1,000 June 2021 (1) In connection with the Rollup Mergers on April 1, 2021, as discussed in Note 1 to our consolidated financial statements in “Item 8.
Energy Transfer Preferred Units As of December 31, 2023, the Partnership had the following series of preferred units outstanding: Series of Preferred Units Units Issued and Outstanding Liquidation Preference per Unit Date Issued (1) Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 950,000 $ 1,000 April 2021 Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 550,000 1,000 April 2021 Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 18,000,000 25 April 2021 Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 17,800,000 25 April 2021 Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units 32,000,000 25 April 2021 Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units 500,000 1,000 April 2021 Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units 1,484,780 1,000 April 2021 and December 2021 (2) Series H Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units 900,000 1,000 June 2021 Series I Fixed Rate Perpetual Preferred Units 41,464,179 9.1273 November 2023 (3) (1) In connection with the Rollup Mergers on April 1, 2021, as discussed in Note 1 to our consolidated financial statements included in “Item 8.
Added
The total reflected above includes these additional Series G Preferred Units, as well as the 1,100,000 Series G Preferred Units originally issued in the Rollup Mergers. (3) The Series I Preferred Units were issued in connection with the Crestwood acquisition in November 2023.
Added
In February 2024, the Partnership redeemed all of the Series C Preferred Units and Series D Preferred Units. The Partnership expects to redeem all of the Series E Preferred Units in May 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

124 edited+54 added−35 removed112 unchanged
Biggest changeEnergy Transfer Common Unit Distributions Distributions declared and paid with respect to Energy Transfer common units were as follows: Quarter Ended Record Date Payment Date Rate December 31, 2020 February 8, 2021 February 19, 2021 $ 0.1525 March 31, 2021 May 11, 2021 May 19, 2021 0.1525 June 30, 2021 August 6, 2021 August 19, 2021 0.1525 September 30, 2021 November 5, 2021 November 19, 2021 0.1525 December 31, 2021 February 8, 2022 February 18, 2022 0.1750 March 31, 2022 May 9, 2022 May 19, 2022 0.2000 June 30, 2022 August 8, 2022 August 19, 2022 0.2300 September 30, 2022 November 4, 2022 November 21, 2022 0.2650 December 31, 2022 February 7, 2023 February 21, 2023 0.3050 The total amounts of distributions declared and paid during the periods presented (all from Available Cash from Energy Transfer’s operating surplus and are shown in the period to which they relate) are as follows: Years Ended December 31, 2022 2021 Limited Partners $ 3,089 $ 1,777 General Partner interest 3 2 Total Energy Transfer distributions $ 3,092 $ 1,779 Energy Transfer Preferred Unit Distributions As discussed in Note 8 to the consolidated financial statements in “Item 8.
Biggest changeEnergy Transfer Common Unit Distributions Distributions declared and paid with respect to Energy Transfer common units were as follows: Quarter Ended Record Date Payment Date Rate December 31, 2020 February 8, 2021 February 19, 2021 $ 0.1525 March 31, 2021 May 11, 2021 May 19, 2021 0.1525 June 30, 2021 August 6, 2021 August 19, 2021 0.1525 September 30, 2021 November 5, 2021 November 19, 2021 0.1525 December 31, 2021 February 8, 2022 February 18, 2022 0.1750 March 31, 2022 May 9, 2022 May 19, 2022 0.2000 June 30, 2022 August 8, 2022 August 19, 2022 0.2300 September 30, 2022 November 4, 2022 November 21, 2022 0.2650 December 31, 2022 February 7, 2023 February 21, 2023 0.3050 March 31, 2023 May 8, 2023 May 22, 2023 0.3075 June 30, 2023 August 14, 2023 August 21, 2023 0.3100 September 30, 2023 October 30, 2023 November 20, 2023 0.3125 December 31, 2023 February 7, 2024 February 20, 2024 0.3150 The total amounts of distributions declared and paid during the periods presented (all from Available Cash from Energy Transfer’s operating surplus and are shown in the period to which they relate) are as follows: Years Ended December 31, 2023 2022 Limited Partners $ 3,984 $ 3,089 General Partner interest 3 3 Total Energy Transfer distributions $ 3,987 $ 3,092 122 Table of Contents Index to Financial Statements Energy Transfer Preferred Unit Distributions Distributions on Energy Transfer’s preferred units declared and/or paid by Energy Transfer were as follows: Period Ended Record Date Payment Date Series A (1) Series B (1) Series C Series D Series E Series F (1) Series G (1) Series H (1) Series I March 31, 2021 May 3, 2021 May 17, 2021 $— $— $0.4609 $0.4766 $0.4750 $33.75 $35.63 $— $— June 30, 2021 August 2, 2021 August 16, 2021 31.25 33.125 0.4609 0.4766 0.4750 — — — — September 30, 2021 November 1, 2021 November 15, 2021 — — 0.4609 0.4766 0.4750 33.75 35.63 27.08 * — December 31, 2021 February 1, 2022 February 15, 2022 31.25 33.125 0.4609 0.4766 0.4750 — — — — March 31, 2022 May 2, 2022 May 16, 2022 — — 0.4609 0.4766 0.4750 33.75 35.63 32.50 — June 30, 2022 August 1, 2022 August 15, 2022 31.25 33.125 0.4609 0.4766 0.4750 — — — — September 30, 2022 November 1, 2022 November 15, 2022 — — 0.4609 0.4766 0.4750 33.75 35.63 32.50 — December 31, 2022 February 1, 2023 February 15, 2023 31.25 33.125 0.4609 0.4766 0.4750 — — — — March 31, 2023 May 1, 2023 May 15, 2023 21.98 — 0.4609 0.4766 0.4750 33.75 35.63 32.50 — June 30, 2023 August 1, 2023 August 15, 2023 23.89 33.125 0.6294 0.4766 0.4750 — — — — September 30, 2023 November 1, 2023 November 15, 2023 24.67 — 0.6489 0.6622 0.4750 33.75 35.63 32.50 — December 31, 2023 February 1, 2024 February 15, 2024 24.71 33.125 0.6075 0.6199 0.4750 — — — 0.2111 * Represents prorated initial distribution.
Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates.
Although these amounts are excluded from Adjusted EBITDA related to unconsolidated affiliates, such exclusion should not be understood to imply that we have control over the operations and resulting revenues and expenses of such affiliates. We do not control our unconsolidated affiliates; therefore, we do not control the earnings or cash flows of such affiliates.
LIQUIDITY AND CAPITAL RESOURCES Our ability to satisfy our obligations and pay distributions to Unitholders will depend on our future performance, which will be subject to prevailing economic, financial, business and weather conditions, and other factors, many of which are beyond management’s control.
LIQUIDITY AND CAPITAL RESOURCES Our ability to satisfy our obligations and pay distributions to Unitholders will depend on our future performance, which will be subject to prevailing economic, financial, business, weather conditions and other factors, many of which are beyond management’s control.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Tabular dollar and unit amounts, except per unit data, are in millions) Energy Transfer LP is a Delaware limited partnership whose common units are publicly traded on the NYSE under the ticker symbol “ET.” The following discussion of our consolidated financial condition and results of operations for the years ended December 31, 2022 and 2021 should be read in conjunction with our consolidated financial statements and accompanying notes thereto included in “Item 8.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Tabular dollar and unit amounts, except per unit data, are in millions) Energy Transfer LP is a Delaware limited partnership whose common units are publicly traded on the NYSE under the ticker symbol “ET.” The following discussion of our consolidated financial condition and results of operations for the years ended December 31, 2023 and 2022 should be read in conjunction with our consolidated financial statements and accompanying notes thereto included in “Item 8.
Even without application of the FERC’s recent rate making-related policy statements and rulemakings, the FERC or our shippers may challenge the cost-of-service rates we charge.
Even without application of the FERC’s rate making-related policy statements and rulemakings, the FERC or our shippers may challenge the cost-of-service rates we charge.
By an order issued January 16, 2019, the FERC initiated a review of Panhandle’s existing rates pursuant to Section 5 of the NGA to determine whether the rates currently charged by Panhandle are just and reasonable and set the matter for hearing. On August 30, 2019, Panhandle filed a general rate proceeding under Section 4 of the NGA.
By an order issued on January 16, 2019, the FERC initiated a review of Panhandle’s then existing rates pursuant to Section 5 of the NGA to determine whether the rates charged by Panhandle are just and reasonable and set the matter for hearing. On August 30, 2019, Panhandle filed a general rate proceeding under Section 4 of the NGA.
In response to the recent market volatility and uncertainties, we have reduced growth capital spending in recent years, and we expect to continue to maintain a prudent level of growth capital spending going forward. See “Liquidity and Capital Resources” for additional information on our capital expenditures over the last two years and our forecasted capital expenditures for 2023.
In response to the recent market volatility and uncertainties, we have reduced growth capital spending in recent years, and we expect to continue to maintain a prudent level of growth capital spending going forward. See “Liquidity and Capital Resources” for additional information on our capital expenditures over the last two years and our forecasted capital expenditures for 2024.
In September 2021, FERC issued a Notice of Technical Conference on Greenhouse Gas Mitigation related to natural gas infrastructure projects authorized under Sections 3 and 7 of the Natural Gas Act. A technical conference was held on November 19, 2021, and post-technical conference comments were submitted to the FERC on January 7, 2022.
In September 2021, FERC issued a Notice of Technical Conference on Greenhouse Gas Mitigation related to natural gas infrastructure projects authorized under Sections 3 and 7 of the NGA. A technical conference was held on November 19, 2021, and post-technical conference comments were submitted to the FERC on January 7, 2022.
We define Segment Adjusted EBITDA and consolidated Adjusted EBITDA as total Partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items.
We define Segment Adjusted EBITDA and consolidated Adjusted EBITDA as total Partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items, as well as certain non-recurring gains and losses.
The Partnership’s obligations under its long-term debt agreements are described below under “Description of Indebtedness,” and information on the maturities and interest rates related to the Partnership’s long-term debt is available in Note 6 to the consolidated financial statements in “Item 8.
The Partnership’s obligations under its long-term debt agreements are described below under “Description of Indebtedness,” and information on the maturities and interest rates related to the Partnership’s long-term debt is available in Note 6 to our consolidated financial statements included in “Item 8.
The Partnership also received distributions of $212 million from unconsolidated affiliates. Investing Activities Cash flows from investing activities primarily consist of cash amounts paid for acquisitions, capital expenditures, cash distributions from our joint ventures, and cash proceeds from sales or contributions of assets or businesses.
The Partnership also received distributions of $232 million from unconsolidated affiliates. Investing Activities Cash flows from investing activities primarily consist of cash amounts paid for acquisitions, capital expenditures, cash distributions from our joint ventures, and cash proceeds from sales or contributions of assets or businesses.
In addition, we own investments in other businesses, including Sunoco LP and USAC, both of which are publicly traded master limited partnerships. Energy Transfer derives cash flows from distributions related to its investment in its subsidiaries, including Sunoco LP and USAC.
In addition, we own investments in other businesses, including Sunoco LP and USAC, both of which are master limited partnerships. Energy Transfer derives cash flows from distributions related to its investment in its subsidiaries, including Sunoco LP and USAC.
Any differences between estimated results and actual results are recognized in the following month’s financial statements. Management believes that the operating results estimated for the year ended December 31, 2022 represent the actual results in all material respects.
Any differences between estimated results and actual results are recognized in the following month’s financial statements. Management believes that the operating results estimated for the year ended December 31, 2023 represent the actual results in all material respects.
Discussion and analysis of matters pertaining to the year ended December 31, 2020 and year-to-year comparisons between the years ended December 31, 2021 and 2020 are not included in this Form 10-K, but can be found under Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2021 that was filed with the SEC on February 18, 2022.
Discussion and analysis of matters pertaining to the year ended December 31, 2021 and year-to-year comparisons between the years ended December 31, 2022 and 2021 are not included in this Form 10-K, but can be found under Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2022 that was filed with the SEC on February 17, 2023.
The Five-Year Credit Facility contains covenants that limit (subject to certain exceptions) the Partnership’s and certain of the Partnership’s subsidiaries’ ability to, among other things: • incur indebtedness; • grant liens; • enter into mergers; • dispose of assets; • make certain investments; • make Distributions (as defined in the Five-Year Credit Facility) during certain Defaults (as defined in the Five-Year Credit Facility) and during any Event of Default (as defined in the Five-Year Credit Facility); • engage in business substantially different in nature than the business currently conducted by the Partnership and its subsidiaries; • engage in transactions with affiliates; and • enter into restrictive agreements.
The Five-Year Credit Facility contains covenants that limit (subject to certain exceptions) the Partnership’s and certain of the Partnership’s subsidiaries’ ability to, among other things: • incur indebtedness; • grant liens; • enter into mergers; • dispose of assets; • make certain investments; 120 Table of Contents Index to Financial Statements • make Distributions (as defined in the Five-Year Credit Facility) during certain Defaults (as defined in the Five-Year Credit Facility) and during any Event of Default (as defined in the Five-Year Credit Facility); • engage in business substantially different in nature than the business currently conducted by the Partnership and its subsidiaries; • engage in transactions with affiliates; and • enter into restrictive agreements.
Changes in capital expenditures between periods primarily result from increases or decreases in our growth capital expenditures to fund our construction and expansion projects. Following is a summary of investing activities by period: Year Ended December 31, 2022 Cash used in investing activities in 2022 was $4.02 billion.
Changes in capital expenditures between periods primarily result from increases or decreases in our growth capital expenditures to fund our construction and expansion projects. Following is a summary of investing activities by period: Year Ended December 31, 2023 Cash used in investing activities in 2023 was $4.33 billion.
Distributions on USAC’s units declared and/or paid by USAC were as follows: Quarter Ended Record Date Payment Date Rate December 31, 2020 January 25, 2021 February 5, 2021 $ 0.5250 March 31, 2021 April 26, 2021 May 7, 2021 0.5250 June 30, 2021 July 26, 2021 August 6, 2021 0.5250 September 30, 2021 October 25, 2021 November 5, 2021 0.5250 December 31, 2021 January 24, 2022 February 4, 2022 0.5250 March 31, 2022 April 25, 2022 May 6, 2022 0.5250 June 30, 2022 July 25, 2022 August 5, 2022 0.5250 September 30, 2022 October 24, 2022 November 4, 2022 0.5250 December 31, 2022 January 23, 2023 February 3, 2023 0.5250 The total amount of distributions to the Partnership from USAC for the periods presented below is as follows: Years Ended December 31, 2022 2021 Distributions from USAC Limited Partner interests $ 97 $ 97 Total distributions from USAC $ 97 $ 97 Critical Accounting Estimates The selection and application of accounting policies is an important process that has developed as our business activities have evolved and as the accounting rules have developed.
Distributions on USAC’s units declared and/or paid by USAC were as follows: Quarter Ended Record Date Payment Date Rate December 31, 2020 January 25, 2021 February 5, 2021 $ 0.5250 March 31, 2021 April 26, 2021 May 7, 2021 0.5250 June 30, 2021 July 26, 2021 August 6, 2021 0.5250 September 30, 2021 October 25, 2021 November 5, 2021 0.5250 December 31, 2021 January 24, 2022 February 4, 2022 0.5250 March 31, 2022 April 25, 2022 May 6, 2022 0.5250 June 30, 2022 July 25, 2022 August 5, 2022 0.5250 September 30, 2022 October 24, 2022 November 4, 2022 0.5250 December 31, 2022 January 23, 2023 February 3, 2023 0.5250 March 31, 2023 April 24, 2023 May 5, 2023 0.5250 June 30, 2023 July 24, 2023 August 4, 2023 0.5250 September 30, 2023 October 23, 2023 November 3, 2023 0.5250 December 31, 2023 January 22, 2024 February 2, 2024 0.5250 124 Table of Contents Index to Financial Statements The total amount of distributions to the Partnership from USAC for the periods presented below is as follows: Years Ended December 31, 2023 2022 Distributions from USAC Limited Partner interests $ 97 $ 97 Total distributions from USAC $ 97 $ 97 Critical Accounting Estimates The selection and application of accounting policies is an important process that has developed as our business activities have evolved and as the accounting rules have developed.
Distributions to partners increased between the periods as a result of increases in the number of common units outstanding or increases in the distribution rate. Following is a summary of financing activities by period: Year Ended December 31, 2022 Cash used in financing activities was $5.11 billion in 2022.
Distributions to partners increased between the periods as a result of increases in the number of common units outstanding or increases in the distribution rate. Following is a summary of financing activities by period: Year Ended December 31, 2023 Cash used in financing activities was $5.33 billion in 2023.
Financial Statements and Supplementary Data.” Management does not believe that any of the Partnership’s goodwill balances, long-lived assets or investments in unconsolidated affiliates is currently at significant risk of a material impairment; however, of the $2.57 billion of goodwill on the Partnership’s consolidated balance sheet as of December 31, 2022, approximately $368 million is recorded in reporting units for which the estimated fair value exceeded the carrying value by less than 20% in the most recent quantitative test.
Financial Statements and Supplementary Data.” Management does not believe that any of the Partnership’s goodwill balances, long-lived assets or investments in unconsolidated affiliates is currently at significant risk of a material impairment; however, of the $4.02 billion of goodwill on the Partnership’s consolidated balance sheet as of December 31, 2023, approximately $368 million is recorded in reporting units for which the estimated fair value exceeded the carrying value by approximately 20% or less in the most recent quantitative test.
The amount also included a $300 million impairment related to Energy Transfer Canada’s assets recorded in March 2022 based on the anticipated proceeds from the expected sale of those assets. The remainder of the impairment losses were from USAC’s recognition of impairment losses related to its compression equipment.
The amount also included a $300 million impairment related to Energy Transfer Canada’s assets recorded in March 2022 based on the anticipated proceeds from the expected sale of those assets. The remainder of the impairment losses were from USAC’s recognition of impairment losses related to its compression equipment. Gains on Interest Rate Derivatives.
These are the unrealized amounts that are included in cost of products sold to calculate segment margin. These amounts are not included in Segment Adjusted EBITDA; therefore, the unrealized losses are added back and the unrealized gains are subtracted to calculate the segment measure. 104 Table of Contents In dex to Financial Statements • Non-cash compensation expense .
These are the unrealized amounts that are included in cost of products sold to calculate segment margin. These amounts are not included in Segment Adjusted EBITDA; therefore, the unrealized losses are added back and the unrealized gains are subtracted to calculate the segment measure. 108 Table of Contents Index to Financial Statements • Non-cash compensation expense .
Interstate Common Carrier Regulation The FERC utilizes an indexing rate methodology which, as currently in effect, allows common carriers to change their rates within prescribed ceiling levels that are tied to changes in the Producer Price Index for Finished Goods, or PPI-FG. Many existing pipelines utilize the FERC liquids index to change transportation rates annually.
Under the ICA, the FERC utilizes an indexing rate methodology which, as currently in effect, allows common carriers to change their rates within prescribed ceiling levels that are tied to changes in the Producer Price Index for Finished Goods, or PPI-FG. Many existing pipelines utilize the FERC liquids index to change transportation rates annually.
Among the key risk factors that may have a direct bearing on our results of operations and financial condition are: • the ability of our subsidiaries to make cash distributions to us, which is dependent on their results of operations, cash flows and financial condition; • the actual amount of cash distributions by our subsidiaries to us; • the volumes transported on our subsidiaries’ pipelines and gathering systems; • the level of throughput in our subsidiaries’ processing and treating facilities; • the fees our subsidiaries charge and the margins they realize for their gathering, treating, processing, storage and transportation services; • the prices and market demand for, and the relationship between, natural gas and NGLs; • energy prices generally; • impacts of world health events, including the COVID-19 pandemic; • the prices of natural gas and NGLs compared to the price of alternative and competing fuels; • the general level of petroleum product demand and the availability and price of NGL supplies; • the level of domestic oil, natural gas and NGL production; • the availability of imported oil, natural gas and NGLs; • actions taken by foreign oil and gas producing nations; • the political and economic stability of petroleum producing nations; • the effect of weather conditions on demand for oil, natural gas and NGLs; • availability of local, intrastate and interstate transportation systems; • the continued ability to find and contract for new sources of natural gas supply; • availability and marketing of competitive fuels; • the impact of energy conservation efforts; • energy efficiencies and technological trends; • governmental regulation and taxation; • changes to, and the application of, regulation of tariff rates and operational requirements related to our subsidiaries’ interstate and intrastate pipelines; • hazards or operating risks incidental to the gathering, treating, processing and transporting of natural gas and NGLs; • competition from other midstream companies and interstate pipeline companies; • loss of key personnel; • loss of key natural gas producers or the providers of fractionation services; • reductions in the capacity or allocations of third-party pipelines that connect with our subsidiaries pipelines and facilities; • the effectiveness of risk-management policies and procedures and the ability of our subsidiaries liquids marketing counterparties to satisfy their financial commitments; 125 Table of Contents In dex to Financial Statements • the nonpayment or nonperformance by our subsidiaries’ customers; • regulatory, environmental, political and legal uncertainties that may affect the timing and cost of our subsidiaries’ internal growth projects, such as our subsidiaries’ construction of additional pipeline systems; • risks associated with the construction of new pipelines and treating and processing facilities or additions to our subsidiaries’ existing pipelines and facilities, including difficulties in obtaining permits and rights-of-way or other regulatory approvals and the performance by third-party contractors; • the availability and cost of capital and our subsidiaries’ ability to access certain capital sources; • a deterioration of the credit and capital markets; • risks associated with the assets and operations of entities in which our subsidiaries own a noncontrolling interests, including risks related to management actions at such entities that our subsidiaries may not be able to control or exert influence; • the ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to our financial results and to successfully integrate acquired businesses; • changes in laws and regulations to which we are subject, including tax, environmental, transportation and employment regulations or new interpretations by regulatory agencies concerning such laws and regulations; and • the costs and effects of legal and administrative proceedings.
Among the key risk factors that may have a direct bearing on our results of operations and financial condition are: • the ability of our subsidiaries to make cash distributions to us, which is dependent on their results of operations, cash flows and financial condition; • the actual amount of cash distributions by our subsidiaries to us; • the volumes transported on our subsidiaries’ pipelines and gathering systems; • the level of throughput in our subsidiaries’ processing and treating facilities; • the fees our subsidiaries charge and the margins they realize for their gathering, treating, processing, storage and transportation services; • the prices and market demand for, and the relationship between, natural gas and NGLs; • energy prices generally; • impacts of world health events; • the possibility of cyber and malware attacks; • the prices of natural gas and NGLs compared to the price of alternative and competing fuels; • the general level of petroleum product demand and the availability and price of NGL supplies; • the level of domestic oil, natural gas and NGL production; • the availability of imported oil, natural gas and NGLs; • actions taken by foreign oil and gas producing nations; • the political and economic stability of petroleum producing nations; • the effect of weather conditions on demand for oil, natural gas and NGLs; • availability of local, intrastate and interstate transportation systems; • the continued ability to find and contract for new sources of natural gas supply; • availability and marketing of competitive fuels; • the impact of energy conservation efforts; • energy efficiencies and technological trends; 128 Table of Contents Index to Financial Statements • governmental regulation and taxation; • changes to, and the application of, regulation of tariff rates and operational requirements related to our subsidiaries’ interstate and intrastate pipelines; • hazards or operating risks incidental to the gathering, treating, processing and transporting of natural gas and NGLs; • competition from other midstream companies and interstate pipeline companies; • loss of key personnel; • loss of key natural gas producers or the providers of fractionation services; • reductions in the capacity or allocations of third-party pipelines that connect with our subsidiaries pipelines and facilities; • the effectiveness of risk-management policies and procedures and the ability of our subsidiaries liquids marketing counterparties to satisfy their financial commitments; • the nonpayment or nonperformance by our subsidiaries’ customers; • risks related to the development of new infrastructure projects or other growth projects, including failure to make sufficient progress to justify continued development, delays in obtaining customers, increased costs of financing and regulatory, environmental, political and legal uncertainties that may affect the timing and cost of these projects; • risks associated with the construction of new pipelines, treating and processing facilities or other facilities, or additions to our subsidiaries’ existing pipelines and their facilities, including difficulties in obtaining permits and rights-of-way or other regulatory approvals and the performance by third-party contractors; • the availability and cost of capital and our subsidiaries’ ability to access certain capital sources; • a deterioration of the credit and capital markets; • risks associated with the assets and operations of entities in which our subsidiaries own a noncontrolling interests, including risks related to management actions at such entities that our subsidiaries may not be able to control or exert influence; • the ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to our financial results and to successfully integrate acquired businesses; • changes in laws and regulations to which we are subject, including tax, environmental, transportation and employment regulations or new interpretations by regulatory agencies concerning such laws and regulations; • the costs and effects of legal and administrative proceedings; and • risks associated with a potential failure to successfully combine our business with that of Crestwood.
Financial Statements and Supplementary Data.” In addition, information on the Partnership’s obligations under its lease arrangements is included in Note 13 to the consolidated financial statements in Item 8.
Financial Statements and Supplementary Data.” In addition, information on the Partnership’s obligations under its lease arrangements is included in Note 13 to our consolidated financial statements included in “Item 8.
The applicable margin for eurodollar rate loans under the Five-Year Credit Facility ranges from 1.125% to 2.000% and the applicable margin for base rate loans ranges from 0.125% to 1.000%.
The applicable margin for eurodollar rate loans under the Five-Year Credit Facility ranges from 1.125% to 2.000% and the applicable margin for base rate loans ranges from 0.125% to 1.000%. The applicable rate for commitment fees under the Five-Year Credit Facility ranges from 0.125% to 0.300%.
The indexing methodology is applicable to existing rates, with the exclusion of market-based rates. The FERC’s indexing methodology is subject to review every five years. On December 17, 2020, FERC issued an order establishing a new index of PPI-FG plus 0.78%.
The 103 Table of Contents Index to Financial Statements indexing methodology is applicable to existing rates, with the exclusion of market-based rates. The FERC’s indexing methodology is subject to review every five years. On December 17, 2020, FERC issued an order establishing a new index of PPI-FG plus 0.78%.
Marginal Percentage Interest in Distributions Total Quarterly Distribution Target Amount Common Unitholders Holder of IDRs Minimum Quarterly Distribution $0.4375 100% —% First Target Distribution $0.4375 to $0.503125 100% —% Second Target Distribution $0.503125 to $0.546875 85% 15% Third Target Distribution $0.546875 to $0.656250 75% 25% Thereafter Above $0.656250 50% 50% 120 Table of Contents In dex to Financial Statements Distributions on Sunoco LP’s units declared and/or paid by Sunoco LP were as follows: Quarter Ended Record Date Payment Date Rate December 31, 2020 February 8, 2021 February 19, 2021 $ 0.8255 March 31, 2021 May 11, 2021 May 19, 2021 0.8255 June 30, 2021 August 6, 2021 August 19, 2021 0.8255 September 30, 2021 November 5, 2021 November 19, 2021 0.8255 December 31, 2021 February 8, 2022 February 18, 2022 0.8255 March 31, 2022 May 9, 2022 May 19, 2022 0.8255 June 30, 2022 August 8, 2022 August 19, 2022 0.8255 September 30, 2022 November 4, 2022 November 18, 2022 0.8255 December 31, 2022 February 7, 2023 February 21, 2023 0.8255 The total amount of distributions to the Partnership from Sunoco LP for the periods presented below is as follows: Years Ended December 31, 2022 2021 Distributions from Sunoco LP Limited Partner interests $ 94 $ 94 General Partner interest and IDRs 72 71 Total distributions from Sunoco LP $ 166 $ 165 USAC Cash Distributions Energy Transfer owns approximately 46.1 million USAC common units.
Marginal Percentage Interest in Distributions Total Quarterly Distribution Target Amount Common Unitholders Holder of IDRs Minimum Quarterly Distribution $0.4375 100% —% First Target Distribution $0.4375 to $0.503125 100% —% Second Target Distribution $0.503125 to $0.546875 85% 15% Third Target Distribution $0.546875 to $0.656250 75% 25% Thereafter Above $0.656250 50% 50% 123 Table of Contents Index to Financial Statements Distributions on Sunoco LP’s units declared and/or paid by Sunoco LP were as follows: Quarter Ended Record Date Payment Date Rate December 31, 2020 February 8, 2021 February 19, 2021 $ 0.8255 March 31, 2021 May 11, 2021 May 19, 2021 0.8255 June 30, 2021 August 6, 2021 August 19, 2021 0.8255 September 30, 2021 November 5, 2021 November 19, 2021 0.8255 December 31, 2021 February 8, 2022 February 18, 2022 0.8255 March 31, 2022 May 9, 2022 May 19, 2022 0.8255 June 30, 2022 August 8, 2022 August 19, 2022 0.8255 September 30, 2022 November 4, 2022 November 18, 2022 0.8255 December 31, 2022 February 7, 2023 February 21, 2023 0.8255 March 31, 2023 May 8, 2023 May 22, 2023 0.8420 June 30, 2023 August 14, 2023 August 21, 2023 0.8420 September 30, 2023 October 30, 2023 November 20, 2023 0.8420 December 31, 2023 February 7, 2024 February 20, 2024 0.8420 The total amount of distributions to the Partnership from Sunoco LP for the periods presented below is as follows: Years Ended December 31, 2023 2022 Distributions from Sunoco LP Limited Partner interests $ 96 $ 94 General Partner interest and IDRs 77 72 Total distributions from Sunoco LP $ 173 $ 166 USAC Cash Distributions Energy Transfer owns approximately 46.1 million USAC common units.
Unless the context requires otherwise, references to “we,” “us,” “our,” the “Partnership” and “Energy Transfer” mean Energy Transfer LP and its consolidated subsidiaries. 97 Table of Contents In dex to Financial Statements OVERVIEW The primary activities in which we are engaged, which are in the United States, and the operating subsidiaries through which we conduct those activities are as follows: • natural gas operations, including the following: • natural gas midstream and intrastate transportation and storage; • interstate natural gas transportation and storage; and • crude oil, NGL and refined products transportation, terminalling services and acquisition and marketing activities, as well as NGL storage and fractionation services.
Unless the context requires otherwise, references to “we,” “us,” “our,” the “Partnership” and “Energy Transfer” mean Energy Transfer LP and its consolidated subsidiaries. 100 Table of Contents Index to Financial Statements OVERVIEW The primary activities in which we are engaged, which are located in the United States, are as follows: • natural gas operations, including the following: • natural gas midstream and intrastate transportation and storage; • interstate natural gas transportation and storage; and • crude oil, NGL and refined products transportation, terminalling and acquisition and marketing activities as well as NGL storage and fractionation services.
Specifically, the policy statement adopted the proposal in the FERC’s earlier Notice of Inquiry issued on March 25, 2020 to eliminate the “Substantially Exacerbate Test” as the preliminary screen applied to complaints against index rate 100 Table of Contents In dex to Financial Statements increases and instead adopt the proposal to apply the “Percentage Comparison Test” as the preliminary screen for both protests and complaints against index rate increases.
Specifically, the policy statement adopted the proposal in the FERC’s earlier Notice of Inquiry issued on March 25, 2020 to eliminate the “Substantially Exacerbate Test” as the preliminary screen applied to complaints against index rate increases and instead adopt the proposal to apply the “Percentage Comparison Test” as the preliminary screen for both protests and complaints against index rate increases.
Our Leverage Ratio was 3.32 to 1.00 at December 31, 2022, as calculated in accordance with the credit agreement.
Our Leverage Ratio was 3.31 to 1.00 at December 31, 2023, as calculated in accordance with the credit agreement.
We generally fund maintenance capital expenditures and distributions with cash flows from operating activities. We generally expect to funds growth capital expenditures with proceeds of borrowings under our credit facilities, along with cash from operations. Sunoco LP expects to invest at least $60 million in growth capital expenditures and approximately $150 million in maintenance capital expenditures in 2023.
We generally fund maintenance capital expenditures and distributions with cash flows from operating activities. We generally expect to funds growth capital expenditures with proceeds of borrowings under our credit facilities, along with cash from operations. Sunoco LP expects to invest at least $200 million in growth capital expenditures and approximately $70 million in maintenance capital expenditures in 2024.
We make every effort to properly comply with all applicable rules, and we believe the proper implementation and consistent application of the accounting rules are critical. Our critical accounting policies are discussed below. For further details on our accounting policies see Note 2 to our consolidated financial statements. Use of Estimates .
We make every effort to properly comply with all applicable rules, and we believe the proper implementation and consistent application of the accounting rules are critical. Our critical accounting policies are discussed below. For further details on our accounting policies see Note 2 to our consolidated financial statements included in “Item 8.
Under the guideline company method, the Partnership determines the estimated fair value of each of our reporting units by applying valuation multiples of comparable publicly-traded companies to each reporting unit’s 122 Table of Contents In dex to Financial Statements projected EBITDA and then averaging that estimate with similar historical calculations using a multi-year average.
Under the guideline company method, the Partnership determines the estimated fair value of each of our reporting units by applying valuation multiples of comparable publicly-traded companies to each reporting unit’s projected EBITDA and then averaging that estimate with similar historical calculations using a multi-year average.
In addition, the U.S. economy has experienced rising inflation in 2022, which has resulted in higher costs for labor, services, and materials. Our suppliers and customers also face inflationary pressures, and our throughput volumes may be impacted if producers are constrained.
In addition, the U.S. economy has experienced higher-than-average inflation in recent years, which has resulted in higher costs for labor, services, and materials. Our suppliers and customers also face inflationary pressures, and our throughput volumes may be impacted if producers are constrained.
We define a purchase commitment as an agreement to purchase goods or services that is enforceable and legally binding (unconditional) on us that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, 112 Table of Contents In dex to Financial Statements minimum or variable price provisions; and the approximate timing of the transactions.
Financial Statements and Supplementary Data.” 115 Table of Contents Index to Financial Statements We define a purchase commitment as an agreement to purchase goods or services that is enforceable and legally binding (unconditional) on us that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions.
Total capital expenditures (excluding the allowance for equity funds used during construction and net of contributions in aid of construction costs) were $2.78 billion. Additional detail related to our capital expenditures is provided in the following table. We received $45 million of cash proceeds from the sale of assets. The Partnership also received distributions of $167 million from unconsolidated affiliates.
Total capital expenditures (excluding the allowance for equity funds used during construction and net of contributions in aid of construction costs) were $3.09 billion. Additional detail related to our capital expenditures is provided in the following table. We received $38 million of cash proceeds from the sale of assets. The Partnership also received distributions of $63 million from unconsolidated affiliates.
We expect to satisfy our working capital needs through cash generated by our operations. As of December 31, 2022, we had cash and cash equivalents of $257 million and availability under our revolving credit facility of $4.18 billion. The Partnership’s material contractual obligations include long-term debt service, payments under operating leases and purchase commitments.
We expect to satisfy our working capital needs through cash generated by our operations. As of December 31, 2023, we had cash and cash equivalents of $161 million and availability under our revolving credit facility of $3.56 billion. The Partnership’s material contractual obligations include long-term debt service, payments under operating leases and purchase commitments.
The non-cash activity in 2022 consisted primarily of depreciation, depletion and amortization of $4.16 billion, impairment losses of $386 million, non-cash compensation expense of $115 million, equity in earnings of unconsolidated affiliates of $257 million, inventory valuation adjustments of $5 million, and deferred income taxes of $187 million. The Partnership also received distributions of $232 million from unconsolidated affiliates.
The non-cash activity in 2022 consisted primarily of depreciation, depletion and amortization of $4.16 billion, impairment losses of $386 million , non-cash compensation expense of $115 million, equity in earnings of unconsolidated affiliates of $257 million, favorable inventory valuation adjustments of $5 million, and deferred income taxes of $187 million.
Accordingly, the low end of the range often represents the amount of loss which has been recorded. The Partnership’s consolidated balance sheet reflected $282 million and $293 million in environmental accruals as of December 31, 2022 and 2021, respectively.
Accordingly, the low end of the range often represents the amount of loss which has been recorded. The Partnership’s consolidated balance sheets reflected $277 million and $282 million in environmental accruals as of December 31, 2023 and 2022, respectively.
Many of our interstate pipelines, such as Tiger, Midcontinent Express and Fayetteville Express, have negotiated market rates that were 99 Table of Contents In dex to Financial Statements agreed to by customers in connection with long-term contracts entered into to support the construction of the pipelines.
Many of our interstate pipelines, such as Tiger Pipeline, Midcontinent Express Pipeline and Fayetteville Express Pipeline, have negotiated market rates that were agreed to by customers in connection with long-term contracts entered into to support the construction of the pipelines.
Accounting rules generally do not involve a selection among alternatives, 121 Table of Contents In dex to Financial Statements but involve an implementation and interpretation of existing rules, and the use of judgment applied to the specific set of circumstances existing in our business.
Accounting rules generally do not involve a selection among alternatives, but involve an implementation and interpretation of existing rules, and the use of judgment applied to the specific set of circumstances existing in our business.
We have material purchase commitments for crude oil; as of December 31, 2022, those purchase commitments totaled an estimated $39.65 billion (of which $16.17 billion would be due in 2023) based on either the current market price for variable price contracts or the contracted price for fixed price contracts.
We have material purchase commitments for crude oil; as of December 31, 2023, those purchase commitments totaled an estimated $65.27 billion (of which $21.80 billion would be due in 2024) based on either the current market price for variable price contracts or the contracted price for fixed price contracts.
Changes in operating assets and liabilities between periods result from factors such as the changes in the value of derivative assets and liabilities, timing of 113 Table of Contents In dex to Financial Statements accounts receivable collection, payments on accounts payable, the timing of purchases and sales of inventories, and the timing of advances and deposits received from customers.
Changes in operating assets and liabilities between periods result from factors such as the changes in the value of derivative assets and liabilities, timing of accounts receivable collection, payments on accounts payable, the timing of purchases and sales of inventories, and the timing of advances and deposits received from customers.
USAC currently plans to spend approximately $26 million in maintenance capital expenditures and currently has budgeted between $260 million and $270 million in expansion capital expenditures in 2023. Cash Flows Our cash flows may change in the future due to a number of factors, some of which we cannot control.
USAC currently plans to spend approximately $32 million in maintenance capital expenditures and currently has budgeted between $115 million and $125 million in expansion capital expenditures in 2024. Cash Flows Our cash flows may change in the future due to a number of factors, some of which we cannot control.
In 2022, we had a net decrease in our debt level of $843 million. During 2022, we paid distributions of $3.05 billion to our partners, we paid distributions of $1.55 billion to noncontrolling interests, and we paid distributions of $49 million to our redeemable noncontrolling interests. In addition, we received capital contributions of $405 million in cash from noncontrolling interests.
During 2022, we paid distributions of $3.05 billion to our partners, we paid distributions of $1.55 billion to noncontrolling interests, and we paid distributions of $49 million to our redeemable noncontrolling interests. In addition, we received capital contributions of $405 million in cash from noncontrolling interests.
Following is a summary of operating activities by period: Year Ended December 31, 2022 Cash provided by operating activities in 2022 was $9.05 billion and net income was $5.87 billion.
Following is a summary of operating activities by period: Year Ended December 31, 2023 Cash provided by operating activities in 2023 was $9.56 billion and net income was $5.29 billion.
In the first quarter of 2023, the Partnership redeemed $350 million aggregate principal amount of its 3.45% Senior Notes due January 2023 and $800 million aggregate principal amount of its 3.60% Senior Notes due February 2023 with proceeds from its Five-Year Credit Facility.
In the first quarter of 2023, the Partnership redeemed $350 million aggregate principal amount of its 3.45% Senior Notes due January 2023, $800 million aggregate principal amount of its 3.60% Senior Notes due February 2023 and $1.00 billion aggregate principal amount of its 4.25% Senior Notes due March 2023 using proceeds from its Five-Year Credit Facility.
As of December 31, 2022, USAC had approximately 98.2 million common units outstanding. USAC currently has a non-economic general partner interest and no outstanding IDRs.
As of December 31, 2023, USAC had approximately 101.0 million common units outstanding. USAC currently has a non-economic general partner interest and no outstanding IDRs.
Adjusted EBITDA Related to Unconsolidated Affiliates and Equity in Earnings of Unconsolidated Affiliates. See additional information in “Supplemental Information on Unconsolidated Affiliates” and “Segment Operation Results” below. Other, net.
Adjusted EBITDA Related to Unconsolidated Affiliates and Equity in Earnings of Unconsolidated Affiliates. See additional information in “Supplemental Information on Unconsolidated Affiliates” and “Segment Operation Results” below. Non-Operating Litigation-Related Loss.
During the years ended December 31, 2022, 2021 and 2020, the Partnership recorded total assets of $1.38 billion, $8.58 billion and $12 million, respectively, in connection with business combinations.
During the years ended December 31, 2023, 2022 and 2021, the Partnership recorded total assets of $9.71 billion, $1.38 billion and $8.58 billion, respectively, in connection with business combinations. During the years ended December 31, 2023, 2022 and 2021, the Partnership recorded impairments totaling $12 million, $386 million and $21 million, respectively.
Other systems, such as FGT, Transwestern and Panhandle, have a mix of tariff rate, discount rate, and negotiated rate agreements.
Other systems, such as Florida Gas Transmission Pipeline, Transwestern and Panhandle, have a mix of tariff rate, discount rate and negotiated rate agreements.
Moreover, we receive revenues from our pipelines based on a variety of rate structures, including cost-of-service rates, negotiated rates, discounted rates and market-based rates.
Moreover, we receive revenues from our pipelines based on a variety 102 Table of Contents Index to Financial Statements of rate structures, including cost-of-service rates, negotiated rates, discounted rates and market-based rates.
The weighted average interest rate on the total amount outstanding as of December 31, 2022 was 5.12%. Sunoco LP Credit Facility As of December 31, 2022, the Sunoco LP Credit Facility had $900 million of outstanding borrowings and $7 million in standby letters of credit and matures in July 2023.
The weighted average interest rate on the total amount outstanding as of December 31, 2023 was 5.87%. Sunoco LP Credit Facility As of December 31, 2023, the Sunoco LP Credit Facility had $411 million of outstanding borrowings and $5 million in standby letters of credit and matures in April 2027.
As of December 31, 2022 and 2021, accruals of $200 million and $144 million, respectively, were reflected in our consolidated balance sheets related to these contingent obligations. For more information on our litigation and contingencies, see Note 11 to our consolidated financial statements included in “Item 8.
As of December 31, 2023 and 2022, accruals of $285 million and $200 million, respectively, were reflected in our consolidated balance sheets related to these contingent obligations. For more information on our litigation and contingencies, see Note 11 to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” in this annual report. Environmental Remediation Activities.
Deferred income tax assets attributable to state and federal NOLs and federal excess business interest expense carryforwards totaling $603 million have been included in Energy Transfer’s consolidated balance sheet as of December 31, 2022.
Deferred income tax assets attributable to state and federal NOLs and federal excess business interest expense carryforwards 127 Table of Contents Index to Financial Statements totaling $371 million have been included in Energy Transfer’s consolidated balance sheet as of December 31, 2023.
These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. When used in this annual report, words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “estimate,” “intend,” “could,” “believe,” “may,” “will” and similar expressions and statements regarding our plans and objectives for future operations, are intended to identify forward-looking statements.
When used in this annual report, words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “estimate,” “intend,” “could,” “believe,” “may,” “will” and similar expressions and statements regarding our plans and objectives for future operations, are intended to identify forward-looking statements.
We currently have ample liquidity to fund our business, and we do not anticipate any liquidity concerns in the immediate future (see “Liquidity and Capital Resources”). In addition, we continue to have access to the debt capital markets on generally favorable terms.
We currently have ample liquidity to fund our business, and we do not anticipate any liquidity concerns in the immediate future (see “Liquidity and Capital Resources”). In addition, we continue to have access to the debt capital markets on generally favorable terms. We will continue to evaluate growth projects and acquisitions as such opportunities may be identified in the future.
As of December 31, 2022, Sunoco LP had approximately 84.1 million common units outstanding. The following table illustrates the percentage allocations of available cash from operating surplus between Sunoco LP’s common unitholders and the holder of its IDRs based on the specified target distribution levels, after the payment of distributions to Class C unitholders.
The following table illustrates the percentage allocations of available cash from operating surplus between Sunoco LP’s common unitholders and the holder of its IDRs based on the specified target distribution levels, after the payment of distributions to Class C unitholders.
The amount available for future borrowings was $593 million at December 31, 2022. The weighted average interest rate on the total amount outstanding as of December 31, 2022 was 6.17%. USAC Credit Facility As of December 31, 2022, USAC had $646 million of outstanding borrowings and no outstanding letters of credit under the credit agreement.
The amount available for future borrowings was $1.08 billion at December 31, 2023. The weighted average interest rate on the total amount outstanding as of December 31, 2023 was 7.54%. USAC Credit Facility As of December 31, 2023, USAC had $872 million of outstanding borrowings and no outstanding letters of credit under the credit agreement.
During 2022, we incurred debt issuance costs of $27 million. Year Ended December 31, 2021 Cash used in financing activities was $8.42 billion in 2021. In 2021, we had a net decrease in our debt level of $6.05 billion.
During 2023, we incurred debt issuance costs of $45 million. Year Ended December 31, 2022 Cash used in financing activities was $5.11 billion in 2022. In 2022, we had a net decrease in our debt level of $843 million.
Gains on Interest Rate Derivatives. Our interest rate derivatives are not designated as hedges for accounting purposes; therefore, changes in fair value are recorded in earnings each period.
Our interest rate derivatives are not designated as hedges for accounting purposes; therefore, changes in fair value are recorded in earnings each period. Gains on interest rate derivatives resulted from changes in forward interest rates, which caused our forward-starting swaps to change in value.
Cash flows from operating activities also differ from earnings as a result of non-cash charges that may not be recurring such as impairment charges and allowance for equity funds used during construction. The allowance for equity funds used during construction increases in periods when Energy Transfer has a significant amount of interstate pipeline construction in progress.
Cash flows from operating activities also differ from earnings as a result of non-cash charges that may not be recurring such as impairment charges and allowance for equity funds used during construction.
As of December 31, 2022, the Five-Year Credit Facility had $793 million of outstanding borrowings, of which $750 million consisted of commercial paper. The amount available for future borrowings was $4.18 billion, after accounting for outstanding letters of credit in the amount of $32 million.
As of December 31, 2023, the Five-Year Credit Facility had $1.41 billion of outstanding borrowings, $1.37 billion of which consisted of commercial paper. The amount available for future borrowings was $3.56 billion, after accounting for outstanding letters of credit in the amount of $29 million.
In 2021, we paid $205 million in cash for acquisitions, net of cash received. 114 Table of Contents In dex to Financial Statements The following is a summary of the Partnership’s capital expenditures (including only our proportionate share of the Bakken, Rover, Bayou Bridge and Orbit Gulf Coast NGL Exports joint ventures, net of contributions in aid of construction costs) by period: Capital Expenditures Recorded During Period Growth Maintenance Total Year Ended December 31, 2022: Intrastate transportation and storage $ 132 $ 47 $ 179 Interstate transportation and storage 456 188 644 Midstream 812 192 1,004 NGL and refined products transportation and services 376 131 507 Crude oil transportation and services 120 126 246 Investment in Sunoco LP 132 54 186 Investment in USAC 145 24 169 All other (including eliminations) 32 59 91 Total capital expenditures $ 2,205 $ 821 $ 3,026 Year Ended December 31, 2021: Intrastate transportation and storage $ 17 $ 35 $ 52 Interstate transportation and storage 35 124 159 Midstream 365 119 484 NGL and refined products transportation and services 637 114 751 Crude oil transportation and services 250 93 343 Investment in Sunoco LP 135 39 174 Investment in USAC 40 20 60 All other (including eliminations) 98 37 135 Total capital expenditures $ 1,577 $ 581 $ 2,158 Financing Activities Changes in cash flows from financing activities between periods primarily result from changes in the levels of borrowings and equity issuances, which are primarily used to fund our acquisitions and growth capital expenditures.
In 2022, we received $302 million in cash from the sale of our interest in Energy Transfer Canada. 117 Table of Contents Index to Financial Statements The following is a summary of the Partnership’s capital expenditures (including only our proportionate share of the Bakken, Rover, Bayou Bridge and Orbit Gulf Coast NGL Exports joint ventures, net of contributions in aid of construction costs) by period: Capital Expenditures Recorded During Period Growth Maintenance Total Year Ended December 31, 2023: Intrastate transportation and storage $ 54 $ 39 $ 93 Interstate transportation and storage 219 164 383 Midstream 586 246 832 NGL and refined products transportation and services 551 128 679 Crude oil transportation and services 143 123 266 Investment in Sunoco LP 145 70 215 Investment in USAC 275 25 300 All other (including eliminations) 38 62 100 Total capital expenditures $ 2,011 $ 857 $ 2,868 Year Ended December 31, 2022: Intrastate transportation and storage $ 132 $ 47 $ 179 Interstate transportation and storage 456 188 644 Midstream 812 192 1,004 NGL and refined products transportation and services 376 131 507 Crude oil transportation and services 120 126 246 Investment in Sunoco LP 132 54 186 Investment in USAC 145 24 169 All other (including eliminations) 32 59 91 Total capital expenditures $ 2,205 $ 821 $ 3,026 Financing Activities Changes in cash flows from financing activities between periods primarily result from changes in the levels of borrowings and equity issuances, which are primarily used to fund our acquisitions and growth capital expenditures.
Other, net primarily includes amortization of regulatory assets and other income and expense amounts. 103 Table of Contents In dex to Financial Statements Supplemental Information on Unconsolidated Affiliates The following table presents financial information related to unconsolidated affiliates: Years Ended December 31, 2022 2021 Change Equity in earnings (losses) of unconsolidated affiliates: Citrus $ 141 $ 157 $ (16) MEP 10 (17) 27 White Cliffs (1) (8) — (8) Explorer 25 24 1 Other 89 82 7 Total equity in earnings of unconsolidated affiliates $ 257 $ 246 $ 11 Adjusted EBITDA related to unconsolidated affiliates (2) : Citrus $ 326 $ 327 $ (1) MEP 45 18 27 White Cliffs 20 19 1 Explorer 41 39 2 Other 133 120 13 Total Adjusted EBITDA related to unconsolidated affiliates $ 565 $ 523 $ 42 Distributions received from unconsolidated affiliates: Citrus $ 133 $ 235 $ (102) MEP 27 12 15 White Cliffs 19 29 (10) Explorer 27 26 1 Other 88 77 11 Total distributions received from unconsolidated affiliates $ 294 $ 379 $ (85) (1) For the year ended December 31, 2022, equity in earnings (losses) of unconsolidated affiliates includes the impact of non-cash impairments recorded by White Cliffs, which reduced the Partnership’s equity in earnings by $9 million.
Other, net primarily includes amortization of regulatory assets and other income and expense amounts. 107 Table of Contents Index to Financial Statements Supplemental Information on Unconsolidated Affiliates The following table presents financial information related to unconsolidated affiliates: Years Ended December 31, 2023 2022 Change Equity in earnings (losses) of unconsolidated affiliates: Citrus $ 146 $ 141 $ 5 MEP 87 10 77 White Cliffs (1) 10 (8) 18 Explorer 37 25 12 Other 103 89 14 Total equity in earnings of unconsolidated affiliates $ 383 $ 257 $ 126 Adjusted EBITDA related to unconsolidated affiliates (2) : Citrus $ 335 $ 326 $ 9 MEP 121 45 76 White Cliffs 29 20 9 Explorer 57 41 16 Other 149 133 16 Total Adjusted EBITDA related to unconsolidated affiliates $ 691 $ 565 $ 126 Distributions received from unconsolidated affiliates: Citrus $ 135 $ 133 $ 2 MEP 115 27 88 White Cliffs 25 19 6 Explorer 38 27 11 Other 103 88 15 Total distributions received from unconsolidated affiliates $ 416 $ 294 $ 122 (1) For the year ended December 31, 2022, equity in earnings (losses) of unconsolidated affiliates included the impact of non-cash impairments recorded by White Cliffs, which reduced the Partnership’s equity in earnings by $9 million.
The Natural Gas Act Section 5 and Section 4 proceedings were consolidated by order of the Chief Judge on October 1, 2019. The initial decision by the administrative law judge was issued on March 26, 2021. On April 26, 2021, Panhandle filed its brief on exceptions to the initial decision.
The NGA Section 5 and Section 4 proceedings were consolidated by order of the Chief Judge on October 1, 2019. The initial decision by the administrative law judge was issued on March 26, 2021, and on December 16, 2022, the FERC issued its order on the initial decision.
The components of our intrastate transportation and storage segment margin were as follows: Years Ended December 31, 2022 2021 Change Transportation fees $ 828 $ 740 $ 88 Natural gas sales and other (excluding unrealized gains and losses) 639 1,267 (628) Retained fuel revenues (excluding unrealized gains and losses) 186 180 6 Storage margin, including fees (excluding unrealized gains and losses) 98 1,569 (1,471) Unrealized gains on commodity risk management activities 67 46 21 Total segment margin $ 1,818 $ 3,802 $ (1,984) Segment Adjusted EBITDA.
The components of our intrastate transportation and storage segment margin were as follows: Years Ended December 31, 2023 2022 Change Transportation fees $ 852 $ 828 $ 24 Natural gas sales and other (excluding unrealized gains and losses) 392 639 (247) Retained fuel revenues (excluding unrealized gains and losses) 64 186 (122) Storage margin, including fees (excluding unrealized gains and losses) 104 98 6 Unrealized gains (losses) on commodity risk management activities (66) 67 (133) Total segment margin $ 1,346 $ 1,818 $ (472) Segment Adjusted EBITDA.
Such estimates and assumptions include revenue growth rates, operating margins, weighted average costs of capital and future market conditions, among others.
Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include revenue growth rates, operating margins, weighted average costs of capital and future market conditions, among others.
During 2021, we received $889 million from the issuance of preferred units. 115 Table of Contents In dex to Financial Statements Description of Indebtedness Our outstanding consolidated indebtedness was as follows: December 31, 2022 2021 Energy Transfer Indebtedness: Notes and Debentures (1)(2) $ 39,468 $ 37,733 Five-Year Credit Facility 793 2,937 Subsidiary Indebtedness: Transwestern Senior Notes 250 400 Panhandle Notes and Debentures (2) — 235 Bakken Senior Notes (3) 1,850 2,500 Sunoco LP Senior Notes and lease-related obligations 2,694 2,700 USAC Senior Notes 1,475 1,475 HFOTCO Tax Exempt Notes 225 225 Revolving Credit Facilities: Sunoco LP Credit Facility 900 581 USAC Credit Facility 646 516 Energy Transfer Canada facilities (4) — 398 Other long-term debt 3 3 Net unamortized premiums, discounts and fair value adjustments 183 238 Deferred debt issuance costs (225) (239) Total debt 48,262 49,702 Less: current maturities of long-term debt 2 680 Long-term debt, less current maturities $ 48,260 $ 49,022 (1) As of December 31, 2022, this balance included a total of $3.25 billion aggregate principal amount of senior notes due on or before December 31, 2023 which were classified as long-term as management has the intent and ability to refinance the borrowings on a long-term basis.
During 2022, we incurred debt issuance costs of $27 million. 118 Table of Contents Index to Financial Statements Description of Indebtedness Our outstanding consolidated indebtedness was as follows: December 31, 2023 2022 Energy Transfer Indebtedness: Notes and Debentures (1)(2) $ 43,016 $ 39,468 Five-Year Credit Facility (2) 1,412 793 Subsidiary Indebtedness: Transwestern Senior Notes (1) 250 250 Bakken Project Senior Notes 1,850 1,850 Sunoco LP Senior Notes and lease-related obligations (2) 3,194 2,694 USAC Senior Notes 1,475 1,475 HFOTCO Tax Exempt Notes (2) — 225 Sunoco LP Credit Facility (2) 411 900 USAC Credit Facility 872 646 Other long-term debt 18 3 Net unamortized premiums, discounts and fair value adjustments 127 183 Deferred debt issuance costs (237) (225) Total debt 52,388 48,262 Less: current maturities of long-term debt (3) 1,008 2 Long-term debt, less current maturities $ 51,380 $ 48,260 (1) As of December 31, 2023, these balances included a total of $3.67 billion aggregate principal amount of senior notes due on or before December 31, 2024 which were classified as long-term as management has the intent and ability to refinance the borrowings on a long-term basis.
Segment Adjusted EBITDA, as reported for each segment in the following table, is analyzed in the section titled “Segment Operating Results.” Adjusted EBITDA is a non-GAAP measure used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of the Partnership’s fundamental business activities and should not be considered in isolation or as a substitution for net income, income from operations, cash flows from operating activities or other GAAP measures. 101 Table of Contents In dex to Financial Statements Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Consolidated Results Years Ended December 31, 2022 2021 Change Segment Adjusted EBITDA: Intrastate transportation and storage $ 1,396 $ 3,483 $ (2,087) Interstate transportation and storage 1,753 1,515 238 Midstream 3,210 1,868 1,342 NGL and refined products transportation and services 3,025 2,828 197 Crude oil transportation and services 2,187 2,023 164 Investment in Sunoco LP 919 754 165 Investment in USAC 426 398 28 All other 177 177 — Adjusted EBITDA (consolidated) $ 13,093 $ 13,046 $ 47 Years Ended December 31, 2022 2021 Change Reconciliation of net income to Adjusted EBITDA: Net income $ 5,868 $ 6,687 $ (819) Depreciation, depletion and amortization 4,164 3,817 347 Interest expense, net of interest capitalized 2,306 2,267 39 Income tax expense 204 184 20 Impairment losses and other 386 21 365 Gains on interest rate derivatives (293) (61) (232) Non-cash compensation expense 115 111 4 Unrealized gains on commodity risk management activities (42) (162) 120 Inventory valuation adjustments (Sunoco LP) (5) (190) 185 Losses on extinguishments of debt — 38 (38) Adjusted EBITDA related to unconsolidated affiliates 565 523 42 Equity in earnings of unconsolidated affiliates (257) (246) (11) Other, net 82 57 25 Adjusted EBITDA (consolidated) $ 13,093 $ 13,046 $ 47 Net Income.
Segment Adjusted EBITDA, as reported for each segment in the following table, is analyzed in the section titled “Segment Operating Results.” Adjusted EBITDA is a non-GAAP measure used by industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of the Partnership’s fundamental business activities and should not be considered in isolation or as a substitution for net income, income from operations, cash flows from operating activities or other GAAP measures. 105 Table of Contents Index to Financial Statements Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Consolidated Results Years Ended December 31, 2023 2022 Change Segment Adjusted EBITDA: Intrastate transportation and storage $ 1,111 $ 1,396 $ (285) Interstate transportation and storage 2,009 1,753 256 Midstream 2,525 3,210 (685) NGL and refined products transportation and services 3,894 3,025 869 Crude oil transportation and services 2,681 2,187 494 Investment in Sunoco LP 964 919 45 Investment in USAC 512 426 86 All other 2 177 (175) Adjusted EBITDA (consolidated) $ 13,698 $ 13,093 $ 605 Years Ended December 31, 2023 2022 Change Reconciliation of net income to Adjusted EBITDA: Net income $ 5,294 $ 5,868 $ (574) Depreciation, depletion and amortization 4,385 4,164 221 Interest expense, net of interest capitalized 2,578 2,306 272 Income tax expense 303 204 99 Impairment losses and other 12 386 (374) Gains on interest rate derivatives (36) (293) 257 Non-cash compensation expense 130 115 15 Unrealized gains on commodity risk management activities (3) (42) 39 Inventory valuation adjustments (Sunoco LP) 114 (5) 119 Gains on extinguishments of debt (2) — (2) Adjusted EBITDA related to unconsolidated affiliates 691 565 126 Equity in earnings of unconsolidated affiliates (383) (257) (126) Non-operating litigation-related loss 627 — 627 Other, net (12) 82 (94) Adjusted EBITDA (consolidated) $ 13,698 $ 13,093 $ 605 Net Income.
Additional information on the impairments recorded during these periods is available in “Item 8.
Additional information on the impairments recorded during these periods is available in Note 2 to our consolidated financial statements included in “Item 8.
For the year ended December 31, 2022 compared to the prior year, Segment Adjusted EBITDA related to our interstate transportation and storage segment increased due to the net impacts of the following: • an increase of $396 million in segment margin primarily due to a $433 million increase from recently acquired assets, a $93 million increase in transportation revenue from several of our interstate pipeline systems due to higher contracted volumes and higher rates, and a $13 million increase in parking revenue.
For the year ended December 31, 2023 compared to the prior year, Segment Adjusted EBITDA related to our interstate transportation and storage segment increased due to the net impacts of the following: • an increase of $143 million in segment margin primarily due to a $141 million increase resulting from our Gulf Run system being placed in service in December 2022, a $47 million increase in transportation revenue from several of our interstate pipeline systems due to higher contracted volumes and higher rates, an $18 million increase related to a shipper bankruptcy, a $20 million increase in parking and storage revenue and a $5 million increase in interruptible utilization.
We currently expect capital expenditures in 2023 to be within the following ranges (excluding capital expenditures related to our investments in Sunoco LP and USAC): Growth Maintenance Low High Low High Intrastate transportation and storage $ 25 $ 50 $ 50 $ 60 Interstate transportation and storage 275 300 175 185 Midstream 825 900 190 200 NGL and refined products transportation and services (1) 325 375 120 130 Crude oil transportation and services (1) 100 125 125 130 All other (including eliminations) 25 50 65 70 Total capital expenditures $ 1,575 $ 1,800 $ 725 $ 775 (1) Includes capital expenditures related to the Partnership’s proportionate ownership of the Bakken, Rover and Bayou Bridge pipeline joint ventures, as well as the Orbit Gulf Coast NGL Exports joint venture.
We currently expect capital expenditures in 2024 to be within the following ranges (including capitalized interest and overhead, but excluding capital expenditures related to our investments in Sunoco LP and USAC): Growth Maintenance Low High Low High Intrastate transportation and storage $ 115 $ 125 $ 50 $ 55 Interstate transportation and storage 45 55 190 195 Midstream 590 645 220 225 NGL and refined products transportation and services (1) 1,400 1,500 135 140 Crude oil transportation and services (1) 195 215 175 180 All other (including eliminations) 55 60 65 70 Total capital expenditures $ 2,400 $ 2,600 $ 835 $ 865 (1) Includes capital expenditures related to the Partnership’s proportionate ownership of the Bakken, Rover and Bayou Bridge pipeline joint ventures as well as the Orbit Gulf Coast NGL Exports joint venture.
We do not expect that any change in these policy statements would affect us in a materially different manner than any other natural gas pipeline company operating in the United States.
We do not expect that any change in these policy statements would affect us in a materially different manner than any other natural gas pipeline company operating in the United States. Interstate Common Carrier Regulation Liquids pipelines transporting in interstate commerce are regulated by FERC as common carriers under the Interstate Commerce Act (“ICA”).
The state NOL carryforward benefits of $104 million ($82 million net of federal benefit) began expiring in 2023 with a substantial portion expiring between 2033 and 2039. Energy Transfer’s corporate subsidiaries have federal NOLs of $2.4 billion ($496 million in benefits) of which $645 million will expire between 2036 and 2037.
The state NOL carryforward benefits of $96 million ($75 million net of federal benefit) began expiring in 2023 with a substantial portion expiring between 2033 and 2039. Energy Transfer’s corporate subsidiaries have federal NOLs of $1.4 billion ($291 million in benefits), all of which was generated in 2018 or later.
For the year ended December 31, 2022 compared to the prior year, NGL transportation volumes increased p rimarily due to higher volumes from the Permian and Eagle Ford regions and higher volumes on our export pipelines into our Nederland Terminal.
For the year ended December 31, 2023 compared to the prior year, NGL transportation volumes increased p rimarily due to higher volumes from the Permian region, on our Mariner East pipeline system and on our Gulf Coast export pipelines.
The components of our NGL and refined products transportation and services segment margin were as follows: Years Ended December 31, 2022 2021 Change Fractionators and refinery services margin $ 850 $ 712 $ 138 Transportation margin 2,126 2,016 110 Storage margin 284 271 13 Terminal Services margin 699 642 57 Marketing margin 58 (16) 74 Unrealized gains (losses) on commodity risk management activities (16) 88 (104) Total segment margin $ 4,001 $ 3,713 $ 288 Segment Adjusted EBITDA.
The components of our NGL and refined products transportation and services segment margin were as follows: Years Ended December 31, 2023 2022 Change Fractionators and refinery services margin $ 888 $ 850 $ 38 Transportation margin 2,399 2,126 273 Storage margin 319 284 35 Terminal services margin 892 699 193 Marketing margin 318 58 260 Unrealized gains (losses) on commodity risk management activities 38 (16) 54 Total segment margin $ 4,854 $ 4,001 $ 853 Segment Adjusted EBITDA.
Depreciation, depletion and amortization expense increased primarily due to additional depreciation from assets recently placed in service and recent acquisitions. 102 Table of Contents In dex to Financial Statements Interest Expense, Net of Interest Capitalized.
Depreciation, depletion and amortization expense increased primarily due to additional depreciation and amortization from assets recently placed in service and recent acquisitions. Interest Expense, Net of Interest Capitalized. Interest expense, net of interest capitalized, increased primarily due to higher interest rates on floating rate debt. Income Tax Expense.
Investment in USAC Years Ended December 31, 2022 2021 Change Revenues $ 705 $ 633 $ 72 Cost of products sold 111 85 26 Segment margin 594 548 46 Operating expenses, excluding non-cash compensation expense (123) (109) (14) Selling, general and administrative, excluding non-cash compensation expense (45) (41) (4) Segment Adjusted EBITDA $ 426 $ 398 $ 28 The investment in USAC segment reflects the consolidated results of USAC.
Investment in USAC Years Ended December 31, 2023 2022 Change Revenues $ 846 $ 705 $ 141 Cost of products sold 137 111 26 Segment margin 709 594 115 Operating expenses, excluding non-cash compensation expense (147) (123) (24) Selling, general and administrative, excluding non-cash compensation expense (51) (45) (6) Other, net 1 — 1 Segment Adjusted EBITDA $ 512 $ 426 $ 86 The investment in USAC segment reflects the consolidated results of USAC.
Year Ended December 31, 2021 Cash provided by operating activities in 2021 was $11.16 billion and net income was $6.69 billion . The difference between net income and cash provided by operating activities in 2021 primarily consisted of non-cash items totaling $3.80 billion offset by net changes in operating assets and liabilities of $515 million.
The difference between net income and cash provided by operating activities in 2023 primarily consisted of non-cash items totaling $4.43 billion offset by net changes in operating assets and liabilities of $451 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

15 edited+6 added−4 removed15 unchanged
Biggest changeDecember 31, 2022 December 31, 2021 Notional Volume Fair Value Asset (Liability) Effect of Hypothetical 10% Change Notional Volume Fair Value Asset (Liability) Effect of Hypothetical 10% Change Mark-to-Market Derivatives (Trading) Natural Gas (BBtu): Fixed Swaps/Futures 145 $ — $ — 585 $ — $ — Basis Swaps IFERC/NYMEX (1) (39,563) 54 3 (66,665) (5) 1 Power (Megawatt): Forwards — 1 — 653,000 2 — Futures (21,384) — — (604,920) 2 2 Options – Puts 119,200 — — (7,859) — — Options – Calls — — — (30,932) — — (Non-Trading) Natural Gas (BBtu): Basis Swaps IFERC/NYMEX 42,440 (41) 4 6,738 1 1 Swing Swaps IFERC (202,815) 63 7 (106,333) 32 31 Fixed Swaps/Futures (15,758) 51 7 (63,898) (24) 38 Forward Physical Contracts 2,423 8 1 (5,950) 1 — NGL (MBbls) – Forwards/Swaps 6,934 (41) 63 8,493 12 19 Crude (MBbls) – Forwards/Swaps 795 26 22 3,672 13 2 Refined Products (MBbls) – Futures (3,547) (39) 37 (3,349) (15) 32 Fair Value Hedging Derivatives (Non-Trading) Natural Gas (BBtu): Basis Swaps IFERC/NYMEX (37,448) 22 2 (40,533) 1 — Fixed Swaps/Futures (37,448) 58 17 (40,533) 41 14 (1) Includes aggregate amounts for open positions related to Houston Ship Channel, Waha Hub, NGPL TexOk, West Louisiana Zone and Henry Hub locations.
Biggest changeDecember 31, 2023 December 31, 2022 Notional Volume Fair Value Asset (Liability) Effect of Hypothetical 10% Change Notional Volume Fair Value Asset (Liability) Effect of Hypothetical 10% Change Mark-to-Market Derivatives (Trading) Natural Gas (BBtu): Fixed Swaps/Futures (1,878) $ 4 $ — 145 $ — $ — Basis Swaps IFERC/NYMEX (1) (171,185) 16 4 (39,563) 54 3 Swing Swaps (900) — — — — — Options – Puts 1,900 (2) — — — — Option - Calls 250 — — — — — Power (Megawatt): Forwards 155,600 1 — — 1 — Futures (464,897) — 1 (21,384) — — Options – Puts 136,000 — — 119,200 — — Options – Calls — — — — — — Crude (MBbls): Option - Puts (15) — — — — — Option - Calls (20) — — — — — NGL/Refined Products (MBbls): Option - Puts 121 (1) — — — — Option - Calls (43) (1) — — — — (Non-Trading) Natural Gas (BBtu): Basis Swaps IFERC/NYMEX 124,210 4 1 42,440 (41) 4 Swing Swaps IFERC (96,828) 18 1 (202,815) 63 7 Fixed Swaps/Futures 7,125 12 2 (15,758) 51 7 Forward Physical Contracts (1,751) 8 1 2,423 8 1 NGL (MBbls) – Forwards/Swaps (13,870) 20 43 6,934 (41) 63 Crude (MBbls) – Forwards/Swaps (2,674) 8 5 795 26 22 Refined Products (MBbls) – Futures (4,548) 17 38 (3,547) (39) 37 Fair Value Hedging Derivatives (Non-Trading) Natural Gas (BBtu): Basis Swaps IFERC/NYMEX (39,013) 1 1 (37,448) 22 2 Fixed Swaps/Futures (39,013) 45 9 (37,448) 58 17 (1) Includes aggregate amounts for open positions related to Houston Ship Channel, Waha Hub, NGPL TexOk, West Louisiana Zone and Henry Hub locations.
These contracts are not designated as hedges for accounting purposes. We utilize swaps, futures and other derivative instruments to mitigate the risk associated with market movements in the price of natural gas, refined products and NGLs to manage our storage facilities and the purchase and sale of purity NGL.
These contracts are not designated as hedges for accounting purposes. We utilize swaps, futures and other derivative instruments to mitigate the risk associated with market movements in the price of natural gas, refined products and NGLs to manage our storage facilities and the purchase and sale of purity NGL. These contracts are not designated as hedges for accounting purposes.
A hypothetical change of 100 basis points would result in a maximum potential change to interest expense of $32 million annually; however, our actual change in interest expense may be less in a given period due to interest rate floors included in our variable rate debt instruments.
A hypothetical change of 100 basis points would result in a maximum potential change to interest expense of $33 million annually; however, our actual change in interest expense may be less in a given period due to interest rate floors included in our variable rate debt instruments.
In the event of an actual 10% change in prompt month natural gas prices, the fair value of our total derivative portfolio may not change by 10% due to factors such as when the financial instrument settles and the location to which the financial instrument is tied (i.e., basis swaps) and the relationship between prompt month and forward months.
In the event of an actual 10% change in prompt month 131 Table of Contents Index to Financial Statements natural gas prices, the fair value of our total derivative portfolio may not change by 10% due to factors such as when the financial instrument settles and the location to which the financial instrument is tied (i.e., basis swaps) and the relationship between prompt month and forward months.
Our overall exposure may be affected positively or negatively by macroeconomic or regulatory changes that impact our counterparties to one extent or another. Currently, management does not anticipate a material adverse effect in our financial position or results of operations as a consequence of counterparty non-performance.
Our overall exposure may be affected 132 Table of Contents Index to Financial Statements positively or negatively by macroeconomic or regulatory changes that impact our counterparties to one extent or another. Currently, management does not anticipate a material adverse effect in our financial position or results of operations as a consequence of counterparty non-performance.
These contracts are not designated as hedges for accounting purposes. 126 Table of Contents In dex to Financial Statements We use futures and swaps to achieve ratable pricing of crude oil purchases, to convert certain expected refined product sales to fixed or floating prices, to lock in margins for certain refined products and to lock in the price of a portion of natural gas purchases or sales.
We use futures and swaps to achieve ratable pricing of crude oil purchases, to convert certain expected refined product sales to fixed or floating prices, to lock in margins for certain refined products and to lock in the price of a portion of natural gas purchases or sales. These contracts are not designated as hedges for accounting purposes.
For financial instruments, failure of a counterparty to perform on a contract could result in our inability to realize amounts that have been recorded on our consolidated balance sheets and recognized in net income or other comprehensive income. 128 Table of Contents In dex to Financial Statements ITEM 8.
For financial instruments, failure of a counterparty to perform on a contract could result in our inability to realize amounts that have been recorded on our consolidated balance sheets and recognized in net income or other comprehensive income.
These contracts are not designated as hedges for accounting purposes. We use financial commodity derivatives to take advantage of market opportunities in our trading activities which complement our intrastate transportation and storage segment’s operations and are netted in cost of products sold in our consolidated statements of operations.
We use financial commodity derivatives to take advantage of market opportunities in our trading activities which complement our intrastate transportation and storage segment’s operations and are netted in cost of products sold in our consolidated statements of operations.
A hypothetical change of 100 basis points in interest rates for these interest rate swaps would result in a net change in the fair value of interest rate derivatives and earnings (recognized in gains (losses) on interest rate derivatives) of $73 million as of December 31, 2022.
A hypothetical change of 100 basis points in interest rates for USAC’s interest rate swap would result in a net change in the fair value of interest rate derivatives and earnings (recognized in gains on interest rate derivatives) of $15 million as of December 31, 2023.
Interest Rate Risk As of December 31, 2022, our subsidiaries had $3.16 billion of floating rate debt outstanding.
Interest Rate Risk As of December 31, 2023, we and our subsidiaries had $3.29 billion of floating rate debt outstanding.
The following table summarizes our interest rate swaps outstanding, none of which were designated as hedges for accounting purposes (dollar amounts presented in millions): Term Type (1) Notional Amount Outstanding December 31, 2022 December 31, 2021 July 2022 (2) Forward-starting to pay a fixed rate of 3.80% and receive a floating rate $ — $ 400 July 2023 (2)(3) Forward-starting to pay a fixed rate of 3.845% and receive a floating rate — 200 July 2024 (2) Forward-starting to pay a fixed rate of 3.512% and receive a floating rate 400 200 (1) Floating rates are based on either SOFR or three-month LIBOR.
The following table summarizes our interest rate swaps outstanding (including USAC’s), none of which were designated as hedges for accounting purposes (dollar amounts presented in millions): Term Type Notional Amount Outstanding December 31, 2023 December 31, 2022 Energy Transfer July 2024 (1) Forward-starting to pay a fixed rate of 3.388% and receive a floating rate based on SOFR $ — $ 400 USAC December 2025 Pay a fixed rate of 3.9725% and receive a floating rate based on SOFR 700 — (1) The July 2024 interest rate swaps were terminated and settled in August 2023.
For the forward-starting interest rate swaps, a hypothetical change of 100 basis points in interest rates would not affect cash flows until the swaps are settled. Credit Risk and Customers Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to the Partnership.
For the forward-starting interest rate swaps, a hypothetical change of 100 basis points in interest rates would not affect cash flows until the swaps are settled.
Price-risk sensitivities were calculated by assuming a theoretical 10% change (increase or decrease) in price regardless of term or historical relationships between the 127 Table of Contents In dex to Financial Statements contractual price of the instruments and the underlying commodity price.
Price-risk sensitivities were calculated by assuming a theoretical 10% change (increase or decrease) in price regardless of term or historical relationships between the contractual price of the instruments and the underlying commodity price. Results are presented in absolute terms and represent a potential gain or loss in net income or in other comprehensive income.
At hedge inception, we lock in a margin by purchasing gas in the spot market or off-peak season and entering into a financial contract. Changes in the spreads between the forward natural gas prices and the physical inventory spot price result in unrealized gains or losses until the underlying physical gas is withdrawn and the related designated derivatives are settled.
Changes in the spreads between the forward natural gas prices and the physical inventory spot price result in unrealized gains or losses until the underlying physical gas is withdrawn and the related designated derivatives are 129 Table of Contents Index to Financial Statements settled.
We attempt to manage this volatility through the use of daily position and profit and loss reports provided to our risk oversight committee, which includes members of senior management, and the limits and authorizations set forth in our commodity risk management policy.
We attempt to manage this volatility through the use of daily position and profit and loss reports provided to our risk oversight committee, which includes members of senior management, and the limits and authorizations set forth in our commodity risk management policy. 130 Table of Contents Index to Financial Statements The following tables summarize commodity-related financial derivative instruments, fair values and the effect of an assumed hypothetical 10% change in the underlying price of the commodity as of December 31, 2023 and 2022 for the Partnership and its consolidated subsidiaries.
Removed
The following tables summarize commodity-related financial derivative instruments, fair values and the effect of an assumed hypothetical 10% change in the underlying price of the commodity as of December 31, 2022 and 2021 for the Partnership and its consolidated subsidiaries. Dollar amounts are presented in millions.
Added
At hedge inception, we lock in a margin by purchasing gas in the spot market or off-peak season and entering into a financial contract.
Removed
Results are presented in absolute terms and represent a potential gain or loss in net income or in other comprehensive income.
Added
As of December 31, 2023, the Partnership also had outstanding Series A Preferred Units, Series C Preferred Units and Series D Preferred Units with aggregate liquidation preferences of $950 million, $450 million and $445 million, respectively, for which distributions are based on a floating rate.
Removed
(2) Represents the effective date. These forward-starting swaps have terms of 30 years with a mandatory termination date the same as the effective date. (3) This interest rate swap was terminated and settled in 2022.
Added
A hypothetical change of 100 basis points in interest rates would result in a net change in preferred unit distributions of $18 million annually for the Series A Preferred Units, Series C Preferred Units and Series D Preferred Units in the aggregate.
Removed
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements starting on page F-1 of this report are incorporated by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Added
Excluding the Series C Preferred Units and the Series D Preferred Units (both of which were redeemed in February 2024), a hypothetical change of 100 basis point would result in a net change of $10 million in Series A Preferred Unit distributions only.
Added
As of December 31, 2023, the Partnership had $600 million of Floating Rate Junior Subordinated Notes outstanding, as well as the Series A Preferred Units, Series C Preferred Units and Series D Preferred Units, the floating rates for each of which were based on the three-month SOFR rate plus a 0.26161% tenor spread adjustment.
Added
Such tenor spread adjustment will be in addition to the applicable spread for each series of Preferred Units and Floating Rate Junior Subordinated Notes. Credit Risk and Customers Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to the Partnership.

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