Natural Gas Price Act

Natural Gas Price Act 329 1996 Definitions 1 In this Act: acquisition order means an order made under section 2 (1); aggregator means a person who a acquires, after August 1, 1990 under a contract made before or after that date, a supply of natural gas from 2 or more producers for the purpose of selling all or part of that supply, or b sells or agrees to sell all or part of a supply of natural gas acquired as described in paragraph (a); component includes sulphur extracted from natural gas; first title means the title to a volume of natural gas that arises because of the fact that the natural gas becomes a chattel; minister , in relation to a power, function or duty that the minister has delegated under section 12 to another person, includes that other person; natural gas means fluid hydrocarbons, before and after processing, that are recovered through a well in British Columbia, and includes hydrogen sulphide, carbon dioxide and helium recovered with fluid hydrocarbons through a well in British Columbia, but does not include petroleum; petroleum means fluid hydrocarbons, regardless of specific gravity, that are recovered in liquid form through a well in British Columbia that is a petroleum well under the Petroleum and Natural Gas Act ; producer means a person who, whether for that person or on behalf of others, transfers or agrees to transfer first title to a volume of natural gas, but does not include a person who, being the holder of first title, causes that title to be transferred by someone on behalf of that person; resale means a sale by a producer of a volume of natural gas after that volume has been acquired by the minister under section 2 and sold back to the producer under section 4 (1); resale contract means a contract for the resale and delivery of a volume of natural gas; resale price means the price payable to a producer on the resale of a volume of natural gas. 1 Acquisition and Sale of Natural Gas by Government Acquisition of natural gas by government 2 1 The minister may direct, by acquisition order, the producer of the natural gas specified in the order to deliver the natural gas to the minister at a point in British Columbia. 2 Natural gas that is directed to be delivered to the minister under an acquisition order becomes the property of the government when the gas is delivered to the point specified in the order. 3 An acquisition order may be made in respect of natural gas produced after the date the order is issued, even though the natural gas is sold under a contract that was made before the date the order is issued. 4 An acquisition order does not preclude a producer from removing from the natural gas before delivering it to the minister a any component of the natural gas other than methane, and b methane, to the extent that its removal is necessary in order to remove any other component of the natural gas. Price of acquired natural gas 3 1 In an acquisition order, the minister must establish a price for each volume of natural gas acquired under the acquisition order. 2 Subject to subsections (3) and (6), the price established under subsection (1) must equal the resale price of the volume of natural gas minus the costs incurred for gathering, processing and transmitting the natural gas after it is delivered to the point specified in the acquisition order, except to the extent that the resale price is net of those costs. 3 If the minister considers that the resale price of the volume of natural gas is less than its fair market value, the price established under subsection (1) must equal the price the minister considers is fair market value minus the costs referred to in subsection (2). 4 If a volume of natural gas becomes the property of the government under an acquisition order, the government owes the producer from whom the natural gas was acquired an amount equal to the price established in the acquisition order for that volume of natural gas. 5 If an error is made in an acquisition order or the resale price of a volume of natural gas acquired under an acquisition order is changed, the minister may amend any term of the acquisition order, including the price established for a volume of natural gas. 6 If the resale price of a volume of natural gas is net of any cost charged by an aggregator in respect of that gas and the minister determines that that cost is excessive, the minister may amend the price established in an acquisition order issued for that volume of natural gas by adding the excess amount to the amount determined under subsection (2). 7 If the price established for a volume of natural gas in an acquisition order is amended under subsection (5) or (6), a the amendment may be made retroactive to the extent necessary to give it effect on delivery of that volume of natural gas to the point specified in the acquisition order, and b the amended price is deemed for the purposes of subsection (4) and section 4 to be the price established in the acquisition order. Sale of natural gas by government 4 1 After a volume of natural gas is acquired from a producer under an acquisition order, the minister must, on behalf of the government, sell the volume of natural gas back to the producer in accordance with the terms of the acquisition order. 2 A producer to whom a volume of natural gas is sold back under subsection (1) must buy back the natural gas at the price established in the acquisition order and the government may set off from that price the amount owing to the producer under section 3 (4) for that volume of gas. Duty to provide information 5 1 In this section, minister includes a person designated by the minister. 2 Before natural gas is produced under a resale contract, the producer of the natural gas must, a if the contract is in writing, provide the minister with a copy of it, and b if the contract is oral, provide the minister with the details, including i the date delivery of natural gas will start, ii the name and address of the buyer, and iii the price of the natural gas under the contract. 3 After a resale contract is amended or an interest in a resale contract is assigned, the producer of the natural gas must immediately notify the minister and provide the terms of the amendment or assignment. 4 Within 30 days after a contract is made for the sale of any component of natural gas other than methane, the producer of the natural gas must, a if the contract is in writing, provide the minister with a copy of it, b if the contract is oral, provide the minister with the details, including i delivery dates, ii the name and address of the buyer, and iii the price of the component under the contract, and c if the contract does not provide for a set price, report to the minister the price received for the component. 5 Within 30 days after the minister requests information from an aggregator or producer respecting any of the following, the person requested must provide the information: a a resale contract; b a contract by which an aggregator sells or agrees to sell netback gas as defined in section 8; c a contract referred to in subsection (4); d a cost charged or to be charged by an aggregator in respect of natural gas; e an amount withheld under a producer aggregator contract as defined in section 8. 6 A person who engages another to gather, process or transmit natural gas on the person's behalf must provide the minister with a copy of the terms of the engagement within 30 days after the date of making it. Failure to provide information 6 1 A person who does not comply with section 5 or with a request made under that section, or who knowingly provides false information under section 5 or to a request made under that section, commits an offence and is liable on conviction to a fine of not more than $100 000. 2 If a producer does not comply with section 5 or with a request made under that section, or knowingly provides false information under section 5 or to the request made under that section, the minister may, after giving 60 days' notice to the producer, cancel a permit, licence or lease granted to the producer under the Petroleum and Natural Gas Act , whether or not the producer is convicted of an offence under subsection (1). 3 If an aggregator does not comply with a request made under section 5 or knowingly provides false information in response to that request, the minister may revoke or may refuse, despite section 9, to issue a finding of producer support in respect of natural gas sold by the aggregator. Appeal 7 1 If the minister cancels a permit, licence or lease under section 6 (2), the holder, not more than 30 days after the date of the cancellation, may appeal the minister's decision to the Supreme Court. 2 An appeal from a decision of the Supreme Court lies to the Court of Appeal with leave of a justice of the Court of Appeal. 2 Producer Pricing Definitions 8 In this Part: finding of producer support means a finding issued by the minister under section 9; netback gas means natural gas that is acquired a by a person in circumstances that make that person an aggregator in respect of that gas, and b for a resale price that is calculated by means of a netback pricing formula in which the price or prices used to calculate the resale price are not subject to the approval of each producer supplying any part of that gas; netback pricing formula means a formula or method by which all or part of the resale price payable by the aggregator for natural gas sold under a producer aggregator contract is calculated by reference to a price or prices the aggregator is entitled to receive on selling the natural gas; producer aggregator contract means a contract for the resale of natural gas to a person who is an aggregator in respect of that gas, and includes a contract that is deemed by the regulations to be a producer aggregator contract for the purposes of this section. Finding of producer support 9 1 A person who is a party to a producer aggregator contract must not cause or permit netback gas to be moved under the contract unless a a finding of producer support has been issued under subsection (2), (4) or (5) for the sale of that gas by the aggregator, and b the gas is moved in connection with its sale by the aggregator in accordance with the terms and conditions respecting price or arbitration on the basis of which the finding of producer support was issued. 2 The minister may issue a finding of producer support in respect of netback gas to be sold by an aggregator after August 1, 1990 under a contract made before that date if the minister is satisfied that the price, or the method for determining the price, for that sale was approved, authorized or otherwise accepted before that date by enough of the producers of that netback gas to constitute support that, in the minister's opinion, is at least equivalent to the prescribed minimum degree of support. 3 If the British Columbia Petroleum Corporation is replaced, by novation, by CanWest Gas Supply Inc. as buyer under a contract referred to in subsection (2), the contract as it existed before the novation and as it exists after the novation is deemed to be one contract for the purpose of this section. 4 The minister must issue a finding of producer support in respect of netback gas sold by an aggregator under a contract made after August 1, 1990 if the minister has determined that the aggregator has obtained, in accordance with the regulations and before the netback gas was moved, the prescribed minimum degree of support of the producers of the netback gas for the sale of the netback gas by the aggregator a at a specified price, b at or above a minimum price, c at a price determined in accordance with a specified formula or method for the determination of the price, or d at a price to be negotiated by the aggregator. 5 The minister must issue a finding of producer support in respect of netback gas sold by an aggregator under a contract made after August 1, 1990 if the minister has determined a that the price at which the netback gas is to be sold by the aggregator, or the formula or method to be used to calculate the price at which the netback gas is to be sold by the aggregator, i has been determined by arbitration, or ii is in the process of being determined by arbitration, b that, before the arbitration proceedings began, the aggregator obtained in accordance with the regulations the prescribed minimum degree of support of the producers of the netback gas for i the method of conducting the arbitration, ii the arbitration procedures, and iii any criteria or guidelines that are to be followed by the person conducting the arbitration and that are not prescribed under section 15 (2) (j), and c that, if the minister has made a determination under paragraph (a) (i), the arbitration was conducted in accordance with the method and procedures and with the criteria or guidelines in respect of which the prescribed minimum degree of support of the producers has been obtained. 6 If a finding of producer support is issued under subsection (5) on the basis of a determination of the minister under subsection (5) (a) (ii), a the finding is subject to the condition that the arbitration will be conducted in accordance with the method and procedures and with the criteria or guidelines in respect of which the prescribed minimum degree of support of the producers has been obtained, and b the minister, on application by a producer of the netback gas, may hold a hearing to determine if there has been a breach of the condition referred to in paragraph (a). Revocation of finding 10 1 If after a hearing under section 9 (6) (b) the minister determines that there has been a breach of the condition referred to in section 9 (6) (a), the minister may direct the aggregator of the netback gas to conduct a vote of the producers of the natural gas on the question of whether the producers accept the price determined by the arbitration award or the formula or method provided for in the arbitration award for the calculation of the price, as the case may be. 2 If the result of the vote conducted under subsection (1) is that the prescribed minimum degree of producer support is not obtained for that price or that formula or method, as the case may be, the minister may revoke the finding of producer support. 3 If the minister has reason to believe that a finding of producer support may have been obtained by misrepresentation of any fact material to the minister in issuing the finding, the minister may hold a hearing on the matter. 4 If the minister determines after a hearing under subsection (3) that the finding of producer support was obtained by misrepresentation of any fact material to the minister in issuing the finding, the minister may revoke the finding. 5 A revocation of a finding of producer support becomes effective on a date that is specified by order of the minister and is not earlier than a the first day of the month following the month in which the finding is revoked, in the case of a revocation under subsection (2), or b the first day of the month in which the notice of the hearing was given to the aggregator, in the case of a revocation under subsection (4). 6 As soon as possible after revoking a finding of producer support, the minister must serve a notice of the revocation on the aggregator and give the aggregator directions to notify the producers of the netback gas of the revocation. Penalty 11 1 If a person causes or permits netback gas to be moved knowing that its movement is contrary to section 9, the minister may impose a penalty on the person in relation to the volume of netback gas moved at a rate that is specified by the minister and does not exceed the maximum rate prescribed by the regulations. 2 A penalty imposed on a person under subsection (1) may be recovered by action in a court of competent jurisdiction as a debt due to the government. 3 If money is received by the government as a penalty under this section, the minister must a pay out of the consolidated revenue fund an amount, not exceeding the money received, that the minister considers appropriate, and b distribute the amount referred to in paragraph (a), in accordance with the regulations, to the producers of the netback gas in respect of which the penalty was imposed, but a person on whom the penalty is imposed is not entitled to share in the amount distributed. 3 General Delegation of powers 12 The minister may delegate, in writing, to any person or persons, either generally or conditionally, any or all of the powers, functions and duties conferred on the minister by this Act, including the functions of making acquisition orders and price orders and of issuing findings of producer support. Examination of records 13 1 A person authorized by the minister may enter at any reasonable time any premises of an aggregator or of a producer for the purpose of auditing or examining any records relating to a resale price or the determination of a resale price. 2 A person occupying premises entered under subsection (1) must produce, in the manner requested by a person authorized to conduct the audit or examination, any records requested by the authorized person. Confidentiality 14 1 A person who has custody of or access to documents or information provided under section 5 or records produced under section 13 must not disclose the documents, information or records to any other person except a if the disclosure is necessary for the purposes of this Act or the Petroleum and Natural Gas Act , b in a court proceeding relating to this Act or the Petroleum and Natural Gas Act , or c for the purpose of the compilation and publication of statistical information by the government. 2 A person who contravenes subsection (1) commits an offence and is liable on conviction to a fine of not more than $10 000. Power to make regulations 15 1 The Lieutenant Governor in Council may make regulations referred to in section 41 of the Interpretation Act . 2 Without limiting subsection (1), the Lieutenant Governor in Council may make regulations as follows: a prescribing standard methods for conversion of volumetric measurements of natural gas to their energy equivalents for any purpose related to this Act; b for the purpose of limiting the amount that may be withheld by an aggregator under a producer aggregator contract, including regulations authorizing the minister to revoke or to refuse to issue, despite section 9, a finding of producer support if the amount that is withheld or is to be withheld exceeds a limit provided for in the regulations; c for the purpose of recovering expenses arising out of the administration of an enactment governing the production, sale, transportation or removal from British Columbia of natural gas, including regulations i requiring producers to pay a levy, ii establishing the amount, or the method of determining the amount, of the levy, iii designating any person as the collector of the levy and providing for its collection, and iv providing for imposition of penalties to enforce payment of the levy, including cancellation of a permit, licence or lease granted under the Petroleum and Natural Gas Act ; d respecting the circumstances in which a gas contract is deemed to be a producer aggregator contract for the purposes of section 9; e prescribing what constitutes the minimum degree of support of producers for the purposes of sections 9 and 10 and respecting the manner in which that minimum degree of support is to be determined; f requiring, for the purposes of sections 9 and 10, aggregators to provide to producers of netback gas, at the time and in the manner and form specified in the regulations, the information relating to sales of netback gas that is specified in the regulations; g respecting the voting procedures and other requirements to be complied with by an aggregator in obtaining the prescribed minimum degree of support of producers under sections 9 and 10; h empowering the minister to issue a finding of producer support for the purposes of section 9 if i enough of the producers of a supply of netback gas to constitute the prescribed minimum degree of support have approved, in accordance with the regulations, a redefinition of what constitutes the minimum degree of support for that gas, and ii the minister determines that the aggregator has obtained, in accordance with the regulations, the redefined minimum degree of producer support for the sale of the netback gas by the aggregator at a price referred to in section 9 (4) (a), (b), (c) or (d); i specifying the circumstances in which the minister may revoke a finding of producer support issued under paragraph (h); j prescribing criteria or guidelines that, unless the parties to the contract agree otherwise, are to be followed by a person conducting an arbitration respecting the determination of the price, or the formula or method for calculating the price, at which natural gas is to be sold by an aggregator under a contract made before or after this section or the regulations come into force; k prescribing a maximum rate for the purposes of section 11; l respecting the obligations of the minister in relation to the distribution under section 11 of all or part of the money recovered as penalties under that section; m declaring that a provision of this Act or the regulations or that all of this Act and the regulations do not apply to a person or a class of person or in respect of specified natural gas or a specified natural gas contract, and prescribing the circumstances in which or the conditions subject to which the provision, this Act or the regulations do not apply; n for any other purpose contemplated by this Act. 3 A regulation under this section may delegate to the minister or to a person designated by the minister any powers or functions that the Lieutenant Governor in Council considers desirable. 4 If a limit is imposed under subsection (2) (b) on the amount that may be withheld under a producer aggregator contract, the minister may increase or decrease the limit in respect of contracts entered into by one or more aggregators or in respect of one or more contracts.