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22 August 2014
AICS Consultation
Corporate and Regulatory Strategy Programme
GPO Box 58, Sydney, NSW 2001
By email: [email protected]
Dear Sir/Madam
Comments by Halliburton Australia Pty Ltd on the Revised Draft Guidelines for Applying for
Certain Information to be Exempt from Publication by NICNAS and Establishing a Case for
Confidential Listing of Chemicals on the Australian Inventory of Chemical Substances
Halliburton Australia Pty Ltd (“Halliburton”) appreciates the opportunity to submit these
comments on the revised draft “Guidelines for Applying for Certain Information to be
Exempted from Publication by NICNAS and Establishing a Case for Confidential Listing
of Chemicals on the Australian Inventory of Chemical Substances” (the “Draft
The protection of confidential information from public disclosure is an issue that is of
critical importance to Halliburton. Halliburton is a leading supplier of services to the oil
and gas industry, providing a wide range of products and services to assist in the
development of oil and gas resources in a manner that promotes efficiency while
minimizing potential impacts to the environment. Halliburton has built its reputation
based on bringing leading-edge technologies to bear in addressing the challenges of
exploring for and producing oil and gas in increasingly difficult environments. In order to
maintain its leading position, Halliburton devotes substantial resources to developing
new and innovative technologies. Halliburton has a strong interest in protecting the
proprietary aspects of these new technologies from disclosure to its competitors around
the world.
Halliburton’s principal concern with the Draft Guidelines relates to the proposed
presumption that an application for exempt information will include a quantification of the
loss to the business if confidential information relating to a particular chemical were to be
disclosed to the public. This presumption is evident in a recent notification lodged by
Halliburton for the chemical in Duratone (STD 1525). It was halted by NICNAS at the
screening stage pending the receipt of further information in relation to the exempt
information claim, including quantification of the likely commercial loss and supporting
information to establish this as set out in the Draft Guidelines.
Halliburton believes that the Draft Guidelines do not accurately articulate the test for
determining information to be exempt from disclosure. Moreover, NICNAS must
recognize that in many cases losses will be very difficult to quantify. For this reason
comparable regimes in other countries do not require quantification of the economic
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impacts of disclosure, particularly an assessment of losses in the market for a particular
chemical or product.
The Appropriate Test for Exempt Information
The Industrial Chemicals (Notification and Assessment) Act provides for the exemption
of information from disclosure to the public where the Director of NICNAS is satisfied the
publication of some or all of the chemical’s particulars could reasonably be expected to
prejudice substantially the commercial interests of the applicant and this outweighs the
public interest in the publishing those particulars. The Act itself makes no mention of
any requirement or expectation that potential losses be quantified, requiring only that
there be prejudice in some form to the commercial interests of the party seeking an
Quantification of Expected Economic Losses Is Often Not Possible
Halliburton’s concern about the need to quantify the potential losses associated with the
public disclosure of confidential information stems in part from the fact that such losses
will often be difficult to quantify in practice, particularly if the expectation is that losses
will be quantified at the product level or even the individual chemical level. For example,
if a chemical has not previously been used in a particular application, there will be no
preexisting market for that use of the chemical and therefore no way to determine what
part of the market will be lost if a confidential chemical identity is disclosed.
Moreover, there are indirect losses associated with disclosure of confidential information
that would be inherently difficult to quantify. As noted above, Halliburton’s success is
based in large part on its reputation as a company that is at the forefront of innovation in
the oil and gas industry. Halliburton devotes substantial resources to research and
development effort; the company spent $588 million on research and development in
2013 alone. Its efforts have yielded a wide variety of innovative products that provide
many economic and environmental benefits for well operators. Examples of these
innovative products include the following:
ADPTM Advanced Dry Polymer Blender enables mixing any of Halliburton’s
fracturing fluids using a dry polymer, eliminating the need for liquid gel
concentrates and resulting in conservation of petrochemical materials and
reduced vehicle miles travelled transporting liquid gelled material. During 2012,
the use of ADP blenders and associated dry gel removed over 30 million gallons
of hydro-treated light petroleum distillates from HF fluid in North America.
CleanStim® is an HF fluid system made entirely of ingredients sourced from the
food industry that provides exceptional fracturing and environmental performance
as compared to traditional formulations.
CleanStream® Service treats bacteria present in the water provided at the well
site with ultraviolet light instead of the biocides that are commonly used. In many
cases, the CleanStream process can be 99.9% effective, eliminating the need for
chemical biocides. In 2012, Halliburton treated more than 866 million gallons of
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fluid using this method, allowing for the elimination of more than 129,900 gallons
of biocides.
CleanWave® is a water treatment system that treats wastewater at the well site
to enable recycling and reuse of the wastewater for drilling and fracturing
subsequent wells. CleanWave treated over 31 million gallons of water in 2012 in
the U.S., resulting in an equivalent reduction in the amount of fresh water used in
fluid systems. The recycling and reuse of wastewater kept approximately 5,680
truckloads of water off of roads.
The SandCastle PS-2500 Vertical Storage System is a sand storage unit that can
be raised into a vertical position once it reaches the well site, allowing more
efficient storage and the use of smaller well pads. The unit is powered by both
gravity and solar power, the use of which resulted in a reduction of diesel fuel
consumption of approximately 1.43 million gallons in 2012. The reduction of
diesel fuel consumption resulted in significant emissions reductions of air
pollutants such as CO2, CO, NOx and PM.
Dual fuel technology is being developed for high horsepower pumping equipment
that allows for the blending of two fuel types, namely diesel and natural gas, in
order to reduce the consumption of diesel fuel at the well site, again resulting in
significant emissions reductions. The initial batch of these units are currently
being trial-tested in the field in the U.S.
TergoVis™ I efficiency fluid is a cementing product that contains no hazardous
materials and can be made with reused water, thereby helping reduce
environmental impact (and costs). Importantly, because TergoVis I efficiency
fluid resists intermingling with oil-based drilling fluids, it enables the reclamation
and recycling of oil-based drilling fluids (OBM). By fully displacing OBM from the
annulus, and by enhancing wellbore preparation, TergoVis I efficiency fluid
contributes significantly to annular isolation, which in turn aids environmental
sustainability and helps protect drinking water aquifers.
WellLock Resin is a synthetic thermosetting polymeric material that helps control
and prevent annular flow, thereby protecting against potential migration of gas
and water in the annulus between casings. Unlike other resins, WellLock resin is
non-flammable and tolerates water (i.e. does not react exothermically) and has
been designed to work with aqueous-based fluids (i.e. water-based muds,
cement slurries).
Overall, these and similar products provide significant environmental benefits, including
but not limited to: (1) a reduction in overall chemical use; (2) the use of chemicals that
provide an extra margin of environmental safety; (3) recycling of wastewater to reduce
the use of fresh water and to reduce the amount of wastewater that must be disposed of;
(4) reduced truck traffic; (5) less packaging and storage of materials; (6) less reworking
of fluids at the wellsite; and (7) a smaller well pad footprint. These technologies also
bring significant increases in production efficiency, so less drilling and HF takes place
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with increased production results, thereby further reducing environmental impacts. For
example, improvements in production enhancement processes will reduce emissions
from U.S. fracturing operations by 25% by the end of 2015.
Innovative advanced technology also provides significant economic benefits.
Halliburton’s innovative products have a reputation for being the most effective products
on the market. For example, research shows an average loss in production of 25%
when non-proprietary stimulation fluids are used instead of proprietary stimulation fluids.
The production increases from advanced technology result in maximized economic
benefits, including: (1) increased lease bonuses, royalties, and tax revenue; (2)
reinvestment for further development; and (3) the creation of sustainable economic
stimulus and jobs. Examples of the production benefits associated with Halliburton’s
innovative technologies include the following:
PermStimSM fracturing service is one of Halliburton’s most recent fracturing fluid
innovations. A result of extensive development effort (including numerous field
trials), PermStim replaces guar-based fluid systems and provides a cleaner,
more robust system that results in more cost-effective treatments and improved
well performance through the elimination of guar residues that can impede oil or
gas flow. PermStim results in approximately 25% more production from shale
formations as compared to wells fractured with typical guar-based gels.
CleanStim provides both the environmental advantages described above and
technological benefits, as it exhibits significantly improved fluid efficiency and
increases productivity by helping to clean up after the treatment is performed.
This has been shown to improve well productivity over non-proprietary
formulations by more than 10%.
Halliburton’s proprietary proppant technologies have been shown to result in
production increases of 20 to 25% or more compared to the use of conventional
proppants in hydraulic fracturing.
Moreover, proppant coating technology
developments have resulted in faster, more effective well clean-up after
stimulation and have drastically reduced the number of workovers for treated
Micro-emulsion surfactants in fracturing fluids mitigate fracture face damage and
return greater volumes of fracture fluids to the surface and increase well
productivity and reserves.
In case studies, the use of these microemulsion
surfactants developed by Halliburton have been found to result in long-term
increases in oil and gas production of as much as 50% as compared to wells
hydraulically fractured with conventional fluids.
If the identities of chemical ingredients in Halliburton products were disclosed to the
public – and to Halliburton’s competitors – Halliburton would no longer be the exclusive
source for these innovative products, and its success in the markets for these particular
products would be undermined. However, the impacts on Halliburton’s business would
go beyond particular markets because the company’s overall reputation and market
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position would also be eroded. These types of impacts would be very difficult to
Equally if not more important is the impact that disclosure of confidential information
would have on incentives for innovation. One of the main purposes of protecting
confidential commercial information is to foster innovation, and countries in all corners of
the globe today recognize the critical role that such protection plays in creating
incentives for innovative efforts in a variety of fields that over the years have resulted in a
wide range of benefits for people around the world.
The importance of innovation has certainly been seen in the field of oil and gas
development. Halliburton and other service companies have spent years and millions of
dollars developing new and innovative products used in drilling, cementing and
stimulating wells that provide significant environmental and economic benefits. Any
failure to provide adequate protections to prevent the public dissemination of the
valuable details of these technologies would create substantial disincentives to
continued innovation and the use of innovative products because the risk of losing the
value of the investment in innovation is too great. In the absence of protections for
confidential information, Halliburton would find it much more difficult to justify the
resource investments required to maintain a leadership position in the oilfield services
industry in the introduction of innovative products. In the absence of such investments,
Halliburton’s overall reputation and market position would suffer in ways that would be
difficult to quantify but would be no less significant for the company.
Similar programs in Australia do not require quantification of losses
Other regimes in Australia for the protection of confidential information do not require
quantification of losses to business if information were to be disclosed publicly. We have
set out three relevant examples below.
AgVet Chemicals
Pesticides and veterinary medicines are regulated by the Australian Pesticides and
Veterinary Medicines Authority (APVMA) pursuant to the Agricultural and Veterinary
Chemicals (Code) Act 1994 (AgVet Code). Any confidential commercial information
cannot be made publicly available on the Record of Approved Active Constituents for
Chemical Products or Register of Agricultural and Veterinary Chemical Products.
Confidential commercial information is defined in s 3 as:
a trade secret relating to the active constituent or chemical product, or other
information about them that has a commercial value that would be, or could
reasonably be expected to be, destroyed or diminished if the information were
disclosed; or
information other than trade secrets including information that concerns the lawful
commercial or financial affairs of a person, organisation or undertaking and
relates to the manufacture, distribution or supply of the active constituent or
chemical product that if disclosed could unreasonably affect the owner of the
information in an adverse manner.
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In both cases, a quantification of business loss is not expressly or impliedly required for
protection of confidential information.
Therapeutic Goods Administration
The Therapeutic Goods Administration (TGA) is responsible for regulating therapeutic
goods, which include prescription medicines, vaccines, sunscreens, vitamins and
minerals, medical devices, blood and blood products. Almost any product for which
therapeutic claims are made must be entered in the Australian Register of Therapeutic
Goods (ARTG) before it can be supplied in Australia.
The Therapeutic Goods Act 1989 does not prescribe any confidentiality requirements.
Instead, the TGA has obligations under a Government Directive: the Protective Security
Policy Framework (PSPF). The TGA sets out its approach to commercially confidential
information in a guideline document (updated in May 2014), “TGA Approach to
disclosure of commercially confidential information” (TGA Guideline).
The TGA Guideline states that the TGA’s “basic rule” is that it does not release
“commercially confidential information”, but notes that this is subject to any overriding
legal requirements. The TGA Guideline defines “commercially confidential information”
Any information which is not in the public domain or publicly available,
and where disclosure may undermine the economic interest or
competitive position of the owner of the information.
Again, there is no requirement for a quantification of the competitive position or
economic interest of the owner of the information to be quantified, nor is it implicit to do
so to meet the threshold required for the information to be held confidential.
Food Standards Australia and New Zealand
The use of chemicals in food and food additives is subject to standards set by Food
Standards Australia New Zealand (FSANZ) and enforced by the Food Standards
Australia New Zealand Act 1991 (Cth) (FSANZ Act). Section 114 of the FSANZ Act
prohibits the FSANZ from disclosing any “confidential commercial information”. Section
4 of the FSANZ Act defines confidential commercial information as:
a trade secret relating to food; or
any other information relating to food that has a commercial value that would be,
or could reasonably be expected to be, destroyed or diminished if the information
were disclosed.
There is no express or implied requirement that there be a quantifiable diminution of
commercial value to qualify for this protection; it is enough that the information be a trade
secret or have a commercial value which is diminished to qualify for protection as
confidential information,
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Similar programs in other countries do not require quantification of losses
For these reasons among others, the regimes in other countries for protection of
confidential information do not require the quantification of losses to the business that
would occur if information were to be disclosed publicly, particularly quantification on a
per-product or per-chemical basis. For example, under applicable law in most states in
the U.S., information is protected from public disclosure if it qualifies as a trade secret.
There are two different definitions of trade secret that are principally used: the definition
set forth in the Restatement of Torts § 757, and the definition used in the Uniform Trade
Secrets Act (“UTSA”). The Restatement of Torts definition covers “information which is
used in one’s business and which gives him an opportunity to obtain an advantage over
competitors who do not know or use it.” The UTSA definition focuses on information that
“derives independent economic value, actual or potential, from not being generally
known to and not being readily ascertainable by proper means by other persons who
can obtain economic value from its disclosure or use.” In both cases, all that is required
is that the owner of the information obtain some commercial benefit from keeping the
information confidential, and quantification of potential losses is generally not required to
establish that information qualifies as a trade secret.
Quantification of losses is contrary to the Productivity Commission Report
Quantification of commercial impacts also misconstrues the recommendations of the
Australian Government Productivity Research Report into Chemical and Plastics
Regulation dated July 2008 (Report). The Report found the existing NICNAS
confidentiality arrangements were sound but did suggest that better guidance could be
provided on how the competing commercial and public interests are quantified and
compared in the hope this would lead to improved transparency and efficiency. One
suggested method of achieving this was to include in the Guidelines examples of
hypothetical successful, unsuccessful and borderline applications.
The Report urges that guidance be provided on how NICNAS will measure and compare
commercial and public interests. This does not require either interest to be quantified,
particularly when the commercial interests are very difficult to quantify and the public
interest can’t be quantified. Rather, it requires the criteria to be applied by NICNAS in
assessing and comparing these interests be made clearer. This is apparent from the one
method suggested in the Guidelines to achieve such an outcome, namely the use of
hypothetical examples to indicate what is likely to meet the exempt information criteria.
Given the inherent difficulties in trying to quantify economic impacts relevant to both the
commercial and public interest criteria, these examples should include acceptable
demonstrations that do not involve quantification of potential losses or other economic
impacts. Another way to achieve this might be to establish some form of weighting
system for various relevant factors NICNAS will take into account.
Halliburton appreciates the efforts of NICNAS to provide further guidance to companies
that seek to protect their confidential information from public disclosure. However,
Halliburton believes that the Draft Guidelines establish expectations for satisfying the
commercial interest criteria that are not appropriate. Halliburton urges to reassess its
approach to establishing a basis for information to be considered exempt from
publication. At a minimum, Halliburton requests that the Guidelines when finalized
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included examples of successful applications that do not include quantification of losses
to the business, particularly on a per-product or per-chemical basis.
Halliburton again appreciates the opportunity to provide comments on the Draft
Guidelines. We would be happy to discuss our concerns further with NICNAS.
Yours sincerely
Country Manager
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