Shell Australia

Public submissions to the review of the National Industrial Chemicals Notification and Assessment Scheme.

Page last updated: 20 March 2012

PDF printable version of Shell Australia submission (PDF 285 KB)

Department of Health and Ageing
NICNAS Review
Department of Health and Ageing
MDP88
GPO Box 9848
CANBERRA ACT 2609
14 December 2011

The Shell Company of Australia Limited
Quality Health Safely Security and Environment
GPO Box 872K
Melbourne VIC 3001
Australia
Tel +6138823 3811
Email diane.nelson@shell.com
Internet http://www.shell.com.au

Re: PUBLIC SUBMISSIONS ON BETTER REGULATION OF INDUSTRIAL CHEMICALS

Introduction

The Shell Company of Australia Limited (Shell) is concerned that there appears to be an incongruity in the regulation of complex mixtures as a single entity (such as fuel, gasoline and diesel) while minor additive components present at less than 1000 ppm are treated as individual compounds. This approach complicates and in some cases prevents the importation of fuels that are fully compliant with the Federal Fuel Quality Standards Act 2000 (FQSA) on and for which there is no discernibly different risk to health, safety or environment because of the additive when compared with un-additivated fuel.

Shell proposes that alternative methods for the regulation of additives in imported fuels, specifically diesel CAS 68334-30-5 and Gasoline CAS 8006-61-9, be considered that allows for additives already blended into finished fuels imported from international sources to be recognized as a component of fuel and are not regulated separately as is currently the case. This approach is consistent with the approach taken by New Zealand for imported diesel without loss of adequate regulatory controls for fuels.

The Australian market for liquid hydrocarbon fuels has outstripped its local refining capacity making it structurally dependant on fuel importation. This gap between local production and market demand is projected to grow due to current trends in commercial and retail fuel volume growth and local refineries facing competitive pressure from mega-refineries in Asia (as evidenced by Shell's announcement to convert its Clyde refinery into an import terminal prior to mid 2013).

Diesel and gasoline imports to Australia in 2010-11 were 45% and 15% respectively of total Australian demand. During planned and unplanned shutdowns of Australian refineries, there is also a temporary but significant increase in importing requirements. Closure of refineries will result in a step change of local fuel manufacture versus imported fuel balance. Further, the trend is for an increasing dependence on traded fuel from the Global Trading Network (GTN). Fuel sold in Australia must meet the Fuel Quality Standards Act 2000 (Cth) (FQSA) requirements. The Act also regulates some additive types with controls to prevent the use of lead, phosphorous or ether containing additives for a variety of environmental and equipment operability reasons. However, older additive types are required to ensure fuels meet all legislated specifications.

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It is Shell's submission that additives once incorporated into diesel and gasoline are at low concentrations. ie fuel additives, used by fuel manufacturers in the region, are present in the fuel at very low dose rates, less than 5000 ppm and typically less than 1000 ppm. As such they do not materially increase the health, safety or environmental risks already associated with the storage, handling of fuels that may not have the additives for which separate (ie individual) registration is required.

Under the current process all additives in the imported fuel must be separately registered on the Australian Inventory of Chemical Substances (AICS) registry administered by NICNAS pursuant to the Industrial Chemicals (Notification and Assessment) Act 1999 (Cth) (ICNAA), before the fuel can be imported into Australia. This approach treats the fuel additive as a separate component to the fuel rather than a low concentration integral part of the fuel's complex mixture of chemicals.

It has been Shell's experience that many additives blended into imported fuels have limited technical information available to determine chemical composition. As the exporting country; its refineries and associated traders have little or no incentive to register these additives, it is unlikely that specific additives will have been included on the AICS under their 'brand' name. In many instances when the additive name is known, insufficient information is available to determine the chemistry of the active ingredients as the additive formulations are viewed as proprietary and all details kept confidential In these instances even when the active ingredients are registered in the AICS it is impossible to correlate the additive 'brand' name with the AICS listing and cargoes will be rejected for the Australian market.

Examples of additives are:
  • antistatics & conductivity improvers - incotporated to increase fuel conductivity to prevent static electricity build up and minimise potential explosions / fire during fuel storage and handling;
  • antioxidants - typically hindered phenolic but older types as well are added to prevent gum /particulate formation in fuel during storage and meet legislated oxidation stability requirements;
  • metal deactivators - mainly metal chelation agents to sequester dissolved trace metal in fuel which accelerate fuel oxidation or fatty acids to coat metal surfaces;
  • corrosion inhibitors - often fatty acid barrier type additives that coat metallic surfaces and prevent corrosion and meet legislated corrosion requirements;
  • cold flow improvers - a variety of polymers designed to disrupt wax crystal formation at low temperatures; and
  • lubricity improvers - usually fatty acids or fatty acid esters incorporated to lubricate metal surfaces and meet legislated wear specifications.
All are organic molecules; some may contain simple alkali metal (Sodium or Potassium) salts, but none contain heavy metals, ethers or pose any toxicity or environmental risks not already posed by unadditivated fuel components. The presence of additives in fuel is to economically enhance particular physical properties of a batch of fuel and they are dosed at minimum treat rates defined by manufacturing economics and fuel specification requirements.

It must be noted that additives blended into fuels cannot be separated from the fuel and there is no commercial reason to attempt to try to separate the additives from the fuel Additives that have been shown to be a cause for health, safety or environmental concern have been banned under the Fuel Quality Standards Act 2000, such as Methyl Tertiary Butyl Ether (MTBE) - a common gasoline additive in Asia.

Treatment as a separate entity under the current process increases complexity and reduces supply options yet delivers no discernable benefit to consumers or the environment.
Australia imports approximately 45% of diesel and 15% of gasoline from the Asian region, notably Japan, Singapore, South Korea and Taiwan. The majority of the imports are sourced under term contracts where the additives are identified and we can be assured that the additives are listed on the AlCS database.

The key spot market is the ''Platts Window" in Singapore where loads are freely traded to Platts specifications with some cargoes meeting Australian fuel quality standards. There is generally no identification of the additives by proprietary name, only by annotation on the certificate of quality that a particular class off additive (e.g. metal deactivator) is present and its concentration. The provenance of the fuel and identity of the additive can be difficult to determine because it may have passed through the hands of a number of traders in Singapore who will not communicate commercially sensitive details of sales and purchases.

Therefore, faced with these circumstances, Shell will either not purchase the load and risk shorting the market, or take-the risk that the additive may not be identified clearly enough to allow review of the AlCS. This decision will be taken in a rime critical environment over a period of days. In Shell's submission the advantages, intention and benefit of the registration process is not well weighted against the broader risks associated with either option

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Adherence to present NlCNAS requirements is resulting in reduced levels of available supply and consequent exposure to increased costs caused by:
- A reduced pool of potential suppliers;
- Delayed shipments while waiting for exemptions and/or permits; and
- Rejected or missed cargoes when additive data cannot be validated in a timely manner.

The frequency of this problem for the industry, already a significant issue for fuel importers, will only increase as Australia's reliance on imports increases and is further exacerbated during periods of planned or unplanned temporary refinery shut down or permanent closure;

Proposed local Alternative Approach

Shell proposes that NlCNAS consider the creation of a new group within the Low Regulatory Concern Chemicals category to continue regulation of fuel additives present in imported fuel as a blended component but recognize them as an acceptable component within the registered definition of gasoline and fuels. The basis for this approach would be the recognition that fuel additives present at less than 5000 ppm do not discernibly alter the risk to health, safety or environment already posed by the base fuel composition.

This approach would relieve the current complexity and incremental difficulty associated with the management of NlCNAS requirements concerning fuel imports however would maintain the current regulation of neat fuel additives potentially imported into Australia.

International Alternative Approaches

Shell is aware of other countries in the region, specifically New Zealand, who conduct chemical assessments of fuel additives and have identified the following:

New Zealand recognises that diesel with additive is a discrete product and does not require that the additives (or components of the additives) are registered. This process recognises that the additives in diesel are:
  1. Required to meet legislated standards;
  2. Are present in amounts of less than 5000 mg/kg (0.5%);
  3. Are an essential part of the formulation of low sulphur diesel fuel; and
  4. Are subject to supplier confidentiality which makes assessing them difficult.
Both New Zealand and Australia import fuels from the same supply sources in Asia and therefore face the same issues with additives. From the time New Zealand commenced importing diesel, there has been no reported health, safety or environmental issues which could be attributed to the presence of additives. It is recognised that there is very little if any additional· risk to health or the environment
caused by the presence of these fuel additives and the risk management procedures in place for handling of bulk fuel are already adequate to address the presence of additives in the fuel at typical dose rates.

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Proposed Change

The only comprehensive solution identified requires legislative change. One option that should be considered as part of the current review is the following:
  1. Alignment of the Australian model to one similar to that operated in New Zealand. New Zealand operates in a similar regulatory environment and has an operational solution to address this issue:
    • New Zealand HSNO (Hazardous Substances and New Organisms) legislation (administered by ERMA - Environmental Risk Management Authority) covers importation and handling of hazardous chemicals.
    • HSNO legislation: fuel additives are allowed and recognised in the fuel descriptions (i.e. separate registration/reporting of additives is not required).
    • Additives falling within these classes are allowed in fuel at dose rates of up to 5000 mg/kg.

Shell does not propose that this change be adopted for all chemicals but only for those that are to be used as fuel additives.

Shell is available to provide further information and clarification to help facilitate consideration of any proposed change to the regulation of fuel additives present in imported blended fuels.

The implementation of the above solution would provide benefits to Australia's supply and trade interests and help ensure continuity of fuel supply for the Australian public and commercial customers.

Furthermore, the proposed change would not weaken controls over imported chemicals for industrial use and maintains health, safety and environmental risks at current accepted levels.

Contact Details

Product Quality Excellence Senior Lead
Dr Mark Tabone
Ph 07 3364 546
Mob 0417 541 409
Email: mark.tabone@shell.com

Product Stewardship Lead and Major Hazard Facility CoOrdinator
Diane Nelson
Ph 03 8823 3811
Email: diane.nelson@shell.com

Yours sincerely,

The Shell Company of Australia Limited
Diane Nelson
Product Stewardship Lead & Major Hazard Facility CoOrdinator