Energy Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Energy Bill

Energy Bill
Part 4 — Provisions relating to oil and gas
63


for the purpose of enabling the gas to be conveyed to
another place (whether inside or outside Great
Britain);”, and
(b)
for subsection (7) substitute—
“(7)
For the purposes of this section “associate”, in relation to the
5
owner of a gas processing facility, is to be construed in
accordance with section 77 of the Energy Act 2008 (and for this
purpose the reference in subsection (1) of that section to the
owner of an oil processing facility is to be read as a reference to
the owner of a gas processing facility).”
10
(3)
In section 26 of the Petroleum Act 1998 (c. 17) (meaning of “pipeline”)—
(a)
in subsection (1) for “any apparatus and works associated with such a
pipe or system” substitute “all apparatus, works and services
associated with the operation of such a pipe or system”, and
(b)
omit subsection (2).
15
(4)
In section 28 of that Act (interpretation of Part 3)—
(a)
in the definition of “gas processing operation”, omit “and” after
paragraph (b) and after paragraph (c) insert—
“(d)
separating, purifying, blending, odorising or
compressing gas, for the purpose of—
20
(i)
converting it into a form in which a purchaser is
willing to accept delivery from a seller, or
(ii)
enabling it to be loaded for conveyance to
another place (whether inside or outside Great
Britain); and
25
(e)
loading gas—
(i)
at a facility which carries out operations of a kind
mentioned in paragraph (d), or
(ii)
piped from such a facility,

for the purpose of enabling the gas to be conveyed to
30
another place (whether inside or outside Great
Britain);”,
(b)
after the definition of “notice” insert—
““oil processing facility” means any facility in Great
Britain, the territorial sea adjacent to the United
35
Kingdom or the sea in any area designated under
section 1(7) of the Continental Shelf Act 1964 which
carries out oil processing operations;
“oil processing operations” means any of the following
operations—
40
(a)
initial blending and such other treatment of
petroleum as may be required to produce
stabilised crude oil and other hydrocarbon
liquids to the point at which a seller could
reasonably make a delivery to a purchaser of
45
such oil and liquids;
(b)
receiving stabilised crude oil and other
hydrocarbon liquids piped from an oil
processing facility carrying out operations of a
kind mentioned in paragraph (a), or storing oil
50

Energy Bill
Part 4 — Provisions relating to oil and gas
64

or other hydrocarbon liquids so received, prior
to their conveyance to another place (whether
inside or outside Great Britain);
(c)
loading stabilised crude oil and other
hydrocarbon liquids piped from a facility
5
carrying out operations of a kind mentioned in
paragraph (a) or (b) for conveyance to another
place (whether inside or outside Great Britain);”,
and
(c)
in the definition of “terminal”, after paragraph (a) insert—
10
“(aa)
oil processing facilities;”.
74
Modification of pipelines
(1)
The Pipe-lines Act 1962 (c. 58) is amended as follows.
(2)
After section 10F (reducing necessity for constructing additional pipelines)
insert—
15
“10G
Compulsory modifications of pipe-lines
(1)
In the case of an upstream petroleum pipe-line, the Secretary of State
may, on the application of a person other than the owner, give a notice
(a “pipe-line modification notice”) to the applicant and the owner.
(2)
The Secretary of State may give a pipe-line modification notice only if
20
the Secretary of State is satisfied—
(a)
that the capacity of the pipe-line can and should be increased by
modifying the apparatus and works associated with the pipe-
line, or
(b)
that the pipe-line can and should be modified by installing in it
25
a junction through which another pipe-line may be connected to
the pipe-line.
(3)
A pipe-line modification notice must—
(a)
specify the modifications which the Secretary of State thinks
should be made,
30
(b)
specify the sums, or the method of determining the sums, which
the Secretary of State thinks should be paid to the owner by the
applicant for the purpose of defraying the cost of the
modifications,
(c)
require the applicant to make such arrangements as the
35
Secretary of State thinks appropriate to secure that those sums
will be paid to the owner if the owner carries out the
modifications or satisfies the Secretary of State that they will be
carried out,
(d)
specify the period within which the applicant must make the
40
arrangements mentioned in paragraph (c),
(e)
require the owner, if the applicant makes the arrangements
mentioned in paragraph (c) within the period specified under
paragraph (d), to carry out the modifications within a period
specified in the notice, and
45
(f)
authorise the owner to recover the sums mentioned in
paragraph (b) from the applicant if the works are carried out or
the Secretary of State is satisfied that they will be carried out.

Energy Bill
Part 4 — Provisions relating to oil and gas
65

(4)
Before giving a pipe-line modification notice, the Secretary of State
must give the owner of the pipe-line an opportunity to be heard.
(5)
References in this section to modifications include, in the case of
apparatus and works, references to changes in, substitutions for and
additions to the apparatus and works.
5
(6)
This section does not apply in relation to a pipe-line if and to the extent
that section 14 of the Petroleum Act 1998 applies in relation to it.
10H
Enforcement
(1)
It is an offence for the owner of a pipe-line to contravene any provision
of a pipe-line modification notice under section 10G in respect of the
10
pipe-line.
(2)
A person guilty of the offence is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, and
(b)
on conviction on indictment, to a fine.
15
(3)
It is a defence, in any proceedings for the offence, to prove that the
accused exercised due diligence to comply with the provisions of the
pipe-line modification notice.
(4)
Proceedings for the offence may not be instituted in England and Wales
except—
20
(a)
by the Secretary of State or by a person authorised to do so by
the Secretary of State, or
(b)
by or with the consent of the Director of Public Prosecutions.
(5)
Where the offence is committed by a body corporate and is proved to
have been committed with the consent or connivance of, or to be
25
attributable to neglect on the part of, an officer of the body corporate,
that officer (as well as the body corporate) is guilty of the offence and is
liable to be proceeded against and dealt with accordingly.
(6)
Where the affairs of a body corporate are managed by its members,
subsection (5) applies in relation to the acts and defaults of a member
30
in connection with the member’s functions of management as it applies
to an officer of the body corporate.
(7)
In this section “officer”, in relation to a body corporate, means—
(a)
any director, secretary or other similar officer of the body
corporate, or
35
(b)
any person who was purporting to act in any such capacity.”
(3)
In section 10E (third party access to upstream petroleum pipelines), in
subsection (1) after “pipe-lines” insert “(but does not apply to a pipe-line if and
to the extent that section 14 of the Petroleum Act 1998 applies in relation to it)”.
(4)
In section 10F (supplemental provision relating to third party access), after
40
subsection (4) add—
“(5)
Before giving a notice under section 10G(1), the Secretary of State must
give the person who applied for that notice—
(a)
particulars of the modifications which it is proposed to specify
in the notice, and
45

Energy Bill
Part 4 — Provisions relating to oil and gas
66

(b)
an opportunity to make applications under section 10E in
respect of the pipeline;

and section 10E and subsections (1) to (4) of this section have effect for
this purpose as if references to a pipe-line were references to the pipe-
line as it would be with those modifications.”
5
75
Third party access to oil processing facilities
(1)
A person (“the applicant”) who seeks a right to have petroleum processed by
an oil processing facility must, before making an application to the Secretary of
State under subsection (5), apply to the owner of the facility for the right.
(2)
An application under subsection (1) may be made only in respect of an oil
10
processing facility which is situated in—
(a)
Great Britain,
(b)
the territorial sea adjacent to Great Britain, or
(c)
the sea in any area designated under section 1(7) of the Continental
Shelf Act 1964 (c. 29).
15
(3)
An application under subsection (1) is to be made by notice in writing
specifying the nature of the right which is being sought.
(4)
The notice must, in particular, specify—
(a)
the period during which the petroleum is to be processed by the facility,
(b)
the kind of petroleum to be processed, and
20
(c)
the quantities of petroleum to be processed.
(5)
If the owner and the applicant do not reach agreement on the application, the
applicant may apply to the Secretary of State for directions which would secure
to the applicant the right specified in the notice.
(6)
The Secretary of State may not consider an application under subsection (5)
25
unless satisfied that the parties have had a reasonable time in which to reach
agreement.
(7)
When considering an application under subsection (5) the Secretary of State
must—
(a)
decide whether the application is to be adjourned to enable further
30
negotiations between the parties, considered further or rejected,
(b)
give notice of that decision to the applicant, and
(c)
in the case of a decision to consider the application further, give notice
to the persons mentioned in subsection (8) and give them the
opportunity to be heard in relation to the application.
35
(8)
Those persons are—
(a)
the owner of the oil processing facility,
(b)
any person with a right to have petroleum processed at the facility, and
(c)
the Health and Safety Executive.
(9)
On an application under subsection (5), the Secretary of State may give
40
directions if satisfied that they will not prejudice—
(a)
the efficient operation of the oil processing facility,
(b)
the processing by the facility of the quantities of petroleum which the
owner or an associate of the owner requires or may reasonably be

Energy Bill
Part 4 — Provisions relating to oil and gas
67

expected to require to be processed by the facility for the purposes of
any business carried on by the owner or associate, or
(c)
the processing by the facility of the quantities of petroleum which
another person with a right to have petroleum processed by the facility
requires to be processed in the exercise of that right.
5
76
Directions under section 75: supplemental
(1)
Directions under section 75 may—
(a)
specify the terms on which the Secretary of State considers that the
owner of the oil processing facility should enter into an agreement with
the applicant for all or any of the purposes mentioned in subsection (2);
10
(b)
specify the sums, or the method of determining the sums, which the
Secretary of State considers should be paid by the applicant as
consideration for the right to have petroleum processed at the facility;
(c)
require the owner, if the applicant pays or agrees to pay those sums
within a period specified in the directions, to enter into an agreement
15
with the applicant on the terms specified under paragraph (a).
(2)
The purposes mentioned in subsection (1)(a) are—
(a)
securing to the applicant the right to have petroleum, of the kind and in
the quantities specified in the direction, processed at the oil processing
facility;
20
(b)
securing that the applicant is not prevented or impeded from exercising
that right;
(c)
regulating the charges which may be made for the processing of
petroleum by virtue of that right;
(d)
securing to the applicant such ancillary or incidental rights as the
25
Secretary of State considers necessary or expedient, which may include
the right to have a pipeline connected to the facility by the owner.
(3)
For the purpose of considering an application under section 75(5), the Secretary
of State may by notice require the owner or the applicant to provide such
information relevant to the application as may be specified or described in the
30
notice.
(4)
The information mentioned in subsection (3) may, in particular, include
financial information relevant to the owner’s or the applicant’s activities with
respect to oil processing operations.
(5)
The Secretary of State may not disclose to any person any information obtained
35
under subsection (3) unless—
(a)
the person by or on behalf of whom the information was provided
consents to the disclosure, or
(b)
the disclosure is required by virtue of an obligation imposed on the
Secretary of State by or under an enactment.
40
(6)
Compliance with directions under section 75 is enforceable by civil
proceedings by the Secretary of State for an injunction or interdict or for any
other appropriate relief.
(7)
Civil proceedings under subsection (6) are to be brought—
(a)
in England and Wales, in the High Court, or
45
(b)
in Scotland, in the Court of Session.

Energy Bill
Part 4 — Provisions relating to oil and gas
68

(8)
In this section and section 75—
“oil processing facility” means any facility which carries out oil processing
operations;
“oil processing operations” means any of the following operations—
(a)
initial blending and such other treatment of petroleum as may
5
be required to produce stabilised crude oil and other
hydrocarbon liquids to the point at which a seller could
reasonably make a delivery to a purchaser of such oil and
liquids;
(b)
receiving stabilised crude oil and other hydrocarbon liquids
10
piped from an oil processing facility carrying out operations of
a kind mentioned in paragraph (a), or storing oil or other
hydrocarbon liquids so received, prior to their conveyance to
another place (whether inside or outside Great Britain);
(c)
loading stabilised crude oil and other hydrocarbon liquids
15
piped from a facility carrying out operations of a kind
mentioned in paragraph (a) or (b) for conveyance to another
place (whether inside or outside Great Britain);
“owner”, in relation to an oil processing facility, includes a lessee and any
person occupying or controlling the facility;
20
“petroleum” has the meaning given by section 1 of the Petroleum Act 1998
(c. 17) and includes petroleum which has undergone any processing.
77
Meaning of “associate”
(1)
For the purposes of section 75(9) a person is an associate of the owner of an oil
processing facility if—
25
(a)
either or both of them is a body corporate, and
(b)
one of them controls the other, or both are controlled by the same
person or persons,

and subsections (2) to (6) set out the circumstances in which one person (“A”)
controls another (“B”).
30
(2)
Where B is a company, A controls B if A possesses or is entitled to acquire—
(a)
one half or more of the issued share capital of B,
(b)
such rights as would entitle A to exercise one half or more of the votes
exercisable in general meetings of B,
(c)
such part of the issued share capital of B as would entitle A to one half
35
or more of the amount distributed if the whole of the income of B were
in fact distributed among the shareholders, or
(d)
such rights as would, in the event of the winding up of B or in any other
circumstances, entitle it to receive one half or more of the assets of B
which would then be available for distribution among the
40
shareholders.
(3)
Where B is a limited liability partnership, A controls B if A—
(a)
holds a majority of the voting rights in B,
(b)
is a member of B and has a right to appoint or remove a majority of
other members, or
45
(c)
is a member of B and controls alone, or pursuant to an agreement with
other members, a majority of the voting rights in B.

Energy Bill
Part 5 — Miscellaneous
69

(4)
In subsection (3)(a) and (c) the references to “voting rights” are to the rights
conferred on members in respect of their interest in a limited liability
partnership to vote on those matters which are to be decided on by a vote of
the members of the limited liability partnership.
(5)
In any case, A controls B if A has the power, directly or indirectly, to secure that
5
the affairs of B are conducted in accordance with A’s wishes.
(6)
In determining whether, by virtue of subsections (2) to (5), A controls B, A shall
be taken to possess—
(a)
any rights and powers possessed by a person as nominee for it, and
(b)
any rights and powers possessed by a body corporate which it controls
10
(including rights and powers which such a body corporate would be
taken to possess by virtue of this paragraph).
Part 5
Miscellaneous
Energy reports
15
78
Energy reports
(1)
In section 1 of the Sustainable Energy Act 2003 (c. 30) (annual reports on
progress towards sustainable energy aims)—
(a)
in subsection (1) omit—
(i)
“, beginning with 2004,”, and
20
(ii)
“in the reporting period”,
(b)
in subsection (1A) omit—
(i)
paragraphs (a), (b) and (c), and
(ii)
in paragraphs (ba), (bb) and (d), “during that period”,
(c)
in subsection (1AA), omit “in the reporting period”,
25
(d)
omit subsections (1B) to (3), and
(e)
after subsection (4) insert—
“(4A)
A report or part of a report published under this section must
specify the period to which it relates.”
(2)
In section 5 of the Climate Change and Sustainable Energy Act 2006 (c. 19)
30
(national microgeneration targets: modification of section 1 of the Sustainable
Energy Act 2003)—
(a)
in subsection (2)—
(i)
for “(1B)” substitute “(1AA)”,
(ii)
in the inserted subsection (1BA) omit “during the reporting
35
period”, and
(iii)
omit “and as if” to the end, and
(b)
in subsection (3)—
(i)
in paragraph (a) omit “reporting”,
(ii)
omit paragraph (c), and
40
(iii)
in paragraph (d) for “that section” substitute “section 1 of the
Sustainable Energy Act 2003”.