Global Trade Restrictions and Related Compliance Issues Pertaining to Oil and Gas Production Chemicals
Authors: Jacoby David Steven 
Published: May 2011

Compliance and regulatory issues are driving not only the cost of oil and gas production chemicals, but also the underlying technology, the pace of innovation, and the industry structure. Suppliers' response to the competitive, economic, and regulatory environment will determine their ability to supply innovative chemicals safely and legally in the future. A proper understanding of the industry dynamics is essential for executives and procurement professionals in the industry. The paper provides an overview of the history and current state of legislation and regulatory frameworks that affect the trade of oil and gas production chemicals such as demulsifiers, corrosion inhibitors, biocides, and scale inhibitors. It will explore and explain global compliance restrictions and issues such as the impact of legislation such as Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), harmonized tariffs, labeling requirements, and regulations on Persistent Organic Pollutants. Based on this foundation, it provides discrete conclusions and guidance to help users and buyers of oil and gas production chemicals establish stable and high-value supply chain relationships while complying with applicable regulations.

A New Era of Environmental Awareness and Regulation

The hazardous chemical supply chain has become an issue over the last 10 years as a broad trend toward sustainable development that extends several major legislative landmarks of the 1970s and 1980s.

In the 1970s and 1980s, a body of environmental legislation established the US Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA), and laws such as SARA (Superfund Amendments and Reauthorization Act of 1986), RCRA (Resource Conservation and Recovery Act (RCRA), enacted in 1976), CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act of 1980), and the Right-to-Know laws.

More recently, the United Nations (UN)'s Sustainable Development division has led a charge toward a sustainable life-cycle approach to government policy-making. Other more recent movements reflecting societal consciousness around care for the environment have included the Waste Electrical and Electronic Equipment (WEEE) Directive (2003), the International Restriction of Hazardous Substances Directive (2006), and the UN's Year of Biodiversity (2010), among other initiatives such as organic local agriculture and widespread focus on climate change.

In 2010, two high-profile incidents, combined with deadlines on the earlier legislation, intensified scrutiny of safety and security in the oil and gas production supply chain. First, the Macondo disaster heightened public sensitivity to environmental issues at about at the same time as the first major deadline for registration of chemical substances affected by Registration, Evaluation, Authorisation of Chemicals (REACH). Second, a public outcry over possible health risks due to the fracturing fluids used heavily in shale plays resulted in an EPA subpoena that invoked TSCA, the Clean Water Act, and the RCRA to force public disclosure of certain formulations that would have previously been considered "trade secrets" or "proprietary ingredients." The convergence of long-term and near-term trends is resulting in a greater sense of the importance of public oversight and regulation, and in a drive to purge loopholes and exemptions from environmental legislation, for example by removing " grandfather?? clauses and exemptions on the basis of business-sensitive confidential information.