Provisions regarding Asset Stewardship, the third of the Supporting Obligations, are stated in Paragraphs 15 to 17 of the Strategy. Limited by the Safeguards, the intention and effect of the Supporting Obligations is to expand on the Central Obligation.

Paragraph 15

 "The owners and operators of infrastructure must ensure that it is maintained in such a condition and operated in such a manner that it will achieve optimum levels of performance, including production efficiency [1] and cost efficiency, for the expected duration of production, taking into consideration the stage of field and asset development, technology and geological constraints".

Paragraph 15 provides that "owners and operators of infrastructure" must maintain and operate it so as to achieve optimum performance, production efficiency and cost efficiency for the expected productive life of the field. This approach to infrastructure management must take into account "the stage of field and asset development, technologies and geological constraints". Compliance under Paragraph 15 thus involves a balancing process.

The Paragraph 15 obligation is laid on "owners and operators of infrastructure"; "infrastructure" is a defined term whose meaning is: "… terminals and, upstream of a terminal, equipment, pipelines, platforms, production installations and subsea and subsurface facilities". The word "terminal" is not defined, but its use in the definition can arguably apply to onshore terminals. On the other hand, it can be argued that the scope of the MER Strategy is limited to the Territorial Sea and Continental Shelf[2].

Paragraph 15 does not include any specific duty to undertake reservoir operations to maximise ERP, and neither does the rest of the MER Strategy, though such a duty is probably implicit in the Central Obligation itself.

Paragraph 16

"Owners and operators of infrastructure must ensure that it is operated in a way that facilitates the recovery of the maximum value of economically recoverable petroleum from (as applicable):

  1. the region in which it is situated; and
  2. where the infrastructure is used by or for the benefit of others, the regions in which those others are situated".

Paragraph 17

"The obligation in paragraph 16 includes:

  1. allowing access to infrastructure on fair and reasonable terms; and
  2. where the infrastructure is not able to cope with demand for its use, prioritising access which maximises the value of economically recoverable petroleum".

Paragraphs 16 and 17 essentially deal with maximising the production of economically recoverable petroleum (ERP) from a region and, most importantly, third party access (TPA) to infrastructure. Consistent with MER, owners and operators of infrastructure must operate it to maximise ERP in the region in which it is located, and the regions (if different) from where third party petroleum throughput is sourced. The word "region" is broadly defined to mean an area in relevant UK waters (ie Territorial Sea and Continental Shelf) where "collaborative action" could advance the fulfilment of the Central Obligation.

Paragraph 17 further expands on Paragraph 16, emphasising that inherent in the Paragraph 16 obligation is the requirement to offer third party access on "fair and reasonable terms" and, if necessary, to prioritise access for petroleum throughputs which will maximise ERP.

The current statute law on TPA is contained in Energy Act 2011, Sections 82 – 91. The statute law is supported by guidance issued by DECC on access disputes. See Guidance on Disputes over Third Party Access to Infrastructure (15 July 2013) ("Guidance"). An important informal code, the Infrastructure Code of Practice, is also used to facilitate the access process.

There is nothing in this body of TPA law which requires owners or operators of infrastructure to offer access based on the Central Obligation. On the contrary, the rights of infrastructure owners to throughput their own petroleum is a factor which the OGA must consider in an access decision. The rights of owners to reserve ullage for their own future use and the need to respect the rights of ullage already contracted to third parties is referenced in both Guidance and ICOP [3].

Conclusion

The Asset Stewardship Paragraphs in the MER Strategy will have a major impact on how infrastructure is operated on the UKCS. Paragraphs 16 and 17, which crucially affect TPA, are quite radical in content. It will be most interesting to see how Paragraphs 16 and 17 "mesh" with existing TPA law.