Enterprise Products Partners L.P.

SEC Filings

10-K
ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018
Entire Document
 


See Note 14 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report for additional information regarding our derivative instruments and hedging activities.

Commodity Hedging Activities

The prices of natural gas, NGLs, crude oil, petrochemicals and refined products are subject to fluctuations in response to changes in supply and demand, market conditions and a variety of additional factors that are beyond our control.  In order to manage such price risks, we enter into commodity derivative instruments such as physical forward contracts, futures contracts, fixed-for-float swaps, basis swaps and option contracts.  The following table summarizes our portfolio of commodity derivative instruments outstanding at December 31, 2017 (volume measures as noted):

 
Volume (1)
 
Accounting
Derivative Purpose
Current (2)
 
Long-Term (2)
 
Treatment
Derivatives designated as hedging instruments:
 
 
 
 
 
Octane enhancement:
             
Forecasted purchase of NGLs (MMBbls)
1.1
 
n/a
 
Cash flow hedge
Forecasted sales of octane enhancement products (MMBbls)
1.0
 
n/a
 
Cash flow hedge
Natural gas marketing:
 
 
 
 
 
 
 
Forecasted purchases of natural gas for fuel (Bcf)
1.0
 
n/a
 
Cash flow hedge
Natural gas storage inventory management activities (Bcf)
3.9
 
n/a
 
Fair value hedge
NGL marketing:
 
 
 
 
 
 
 
Forecasted purchases of NGLs and related hydrocarbon products (MMBbls)
49.0
 
n/a
 
Cash flow hedge
Forecasted sales of NGLs and related hydrocarbon products (MMBbls)
64.6
 
n/a
 
Cash flow hedge
NGLs inventory management activities (MMBbls)
0.5
 
n/a
 
Fair value hedge
Refined products marketing:
 
 
 
 
 
 
 
Forecasted purchases of refined products (MMBbls)
0.6
 
n/a
 
Cash flow hedge
Forecasted sales of refined products (MMBbls)
1.3
 
n/a
 
Cash flow hedge
Refined products inventory management activities (MMBbls)
0.5
 
n/a
 
Fair value hedge
Crude oil marketing:
 
 
 
 
 
 
 
Forecasted purchases of crude oil (MMBbls)
3.7
 
3.3
 
Cash flow hedge
Forecasted sales of crude oil (MMBbls)
6.9
 
3.3
 
Cash flow hedge
Petrochemical marketing:
             
Forecasted purchases of NGLs for propylene marketing activities (MMBbls)
0.8
 
n/a
 
Cash flow hedge
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Natural gas risk management activities (Bcf) (3,4)
67.3
 
9.0
 
Mark-to-market
NGL risk management activities (MMBbls) (4)
18.3
 
n/a
 
Mark-to-market
Refined products risk management activities (MMBbls) (4)
0.6
 
n/a
 
Mark-to-market
Crude oil risk management activities (MMBbls) (4)
104.0
 
12.2
 
Mark-to-market
 
(1)   Volume for derivatives designated as hedging instruments reflects the total amount of volumes hedged whereas volume for derivatives not designated as hedging instruments reflects the absolute value of derivative notional volumes.
(2)   The maximum term for derivatives designated as cash flow hedges, derivatives designated as fair value hedges and derivatives not designated as hedging instruments is December 2020, May 2018 and December 2020, respectively.
(3)   Current and long-term volumes include 21.1 Bcf and 5.3 Bcf, respectively, of physical derivative instruments that are predominantly priced at a marked-based index plus a premium or minus a discount related to location differences.
(4)   Reflects the use of derivative instruments to manage risks associated with transportation, processing and storage assets.

At December 31, 2017, our predominant commodity hedging strategies consisted of (i) hedging anticipated future purchases and sales of commodity products associated with transportation, storage and blending activities, (ii) hedging natural gas processing margins and (iii) hedging the fair value of commodity products held in inventory.  

§
The objective of our anticipated future commodity purchases and sales hedging program is to hedge the margins of certain transportation, storage, blending and operational activities by locking in purchase and sale prices through the use of derivative instruments and related contracts.

§
The objective of our natural gas processing hedging program is to hedge an amount of earnings associated with these activities.  We achieve this objective by executing fixed-price sales for a portion of our expected equity NGL production using derivative instruments and related contracts.  For certain natural gas processing contracts, the hedging of expected equity NGL production also involves the purchase of natural gas for shrinkage, which is hedged using derivative instruments and related contracts.
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