Sunoco 2015 Annual Report Download - page 84

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8. Investment in Affiliates
The Partnership's ownership percentages in equity ownership interests as of December 31, 2015 and 2014 were as
follows:
December 31,
2015 2014
Explorer Pipeline Company 13.3% 13.3%
Yellowstone Pipe Line Company 14.0% 14.0%
West Shore Pipe Line Company 17.1% 17.1%
Wolverine Pipe Line Company 31.5% 31.5%
Bayview Refining Company, LLC 49.0% 49.0%
SunVit Pipeline LLC 50.0% 50.0%
Bayou Bridge Pipeline LLC 30.0% —%
Bakken Holdings Company LLC ("Bakken HoldCo") (1) 40.0% —%
(1) The investment in Bakken HoldCo provides the Partnership with a 30 percent overall ownership interest in the Bakken pipeline
project through its ownership in the subsidiary companies which will operate the pipeline system.
In October 2015, the Partnership finalized its participation in the Bakken pipeline project with ETP and Phillips 66. The
Partnership obtained a 30 percent economic interest in the project which, combined with ETP's 45 percent interest, will be a
consolidated subsidiary of ETP. The project consists of existing and newly constructed pipelines that are expected to provide
aggregate takeaway capacity of approximately 450 thousand barrels per day of crude oil from the Bakken/Three Forks
production area in North Dakota to key refinery and terminalling hubs in the Midwest and Gulf Coast, including the
Partnership's Nederland terminal. The ultimate takeaway capacity target for the project is 570 thousand barrels per day. The
Partnership expects to reach agreement to become the operator of the pipeline system, which is expected to begin commercial
operations in the fourth quarter of 2016.
In exchange for its 30 percent economic interest in the project, the Partnership issued 9.4 million Class B units to ETP,
representing limited partner interests in the Partnership, and paid $382 million in cash representing the Partnership’s
proportionate share of contributions at the time of closing. Since the interest in the project was acquired from a related party,
the Partnership's investment was recorded at ETP's historical carrying value. Subsequent contributions will be made by the joint
partners in proportion to their respective economic ownership interests. The Partnership's investment in the Bakken Pipeline
project is reflected as an equity method investment within the Crude Oil segment. See Note 12 for additional information on the
issuance of the Class B units.
In July 2015, the Partnership entered into an agreement with ETP and Phillips 66 to participate in the Bayou Bridge
Pipeline project. The Partnership obtained a 30 percent economic interest in the project, which combined with ETP's 30 percent
ownership interest, will be a consolidated subsidiary of ETP. The project consists of a newly constructed pipeline that will
deliver crude oil from Nederland, Texas to refinery markets in Louisiana. Commercial operations are expected to begin in the
first quarter 2016. The Partnership will be the operator of the pipeline and will fund its proportionate share of the cost of the
project, which will be accounted for as an equity method investment within the Partnership’s Crude Oil segment.
In the second quarter 2014, the Partnership entered into a joint agreement for a 49 percent economic and voting interest in
Bayview Refining Company, LLC ("Bayview"). Bayview constructed the facility to process crude oil into intermediate
petroleum products. The entity is a variable interest entity for which the Partnership is not the primary beneficiary. Construction
was completed and the facility commenced operations in the third quarter 2015. The Partnership's investment in Bayview is
reflected as an equity method investment within the Crude Oil segment.
In connection with the formation of Bayview, the joint owners agreed to guarantee the obligations of the entity with
respect to certain third-party operating agreements over a ten-year term. The fair value of the liability recognized in connection
with the guarantee was not material in relation to the Partnership’s financial position at December 31, 2015. The Partnership's
note receivable from the joint owner of Bayview is reflected in other assets in the consolidated balance sheet.
In the first quarter 2014, the Partnership exercised its rights to acquire an additional ownership interest in Explorer
Pipeline Company ("Explorer") from an affiliate of Chevron for $42 million, increasing the Partnership's ownership interest
from 9.4 to 13.3 percent. Explorer owns a refined products pipeline running from the Gulf Coast of the United States to the
Chicago, Illinois area. The fair value of the investment was estimated based on the fair value of the consideration transferred.
The investment continues to be accounted for as an equity method investment within the Partnership's Refined Products
segment, with the equity income recorded based on the Partnership's ownership percentage for each period presented.