For many farms and businesses, fuel security is now a strategic priority. To manage supply volatility, many operations are storing diesel on site for business continuity. But unless it’s handled correctly, it can introduce material fire, environmental, theft and liability exposures if not managed correctly.
Why operational risk management is so important for fuel storage
Storing diesel in bulk quantities increases exposure to several risks. These include:
- Fire and explosion risk due to increased fire loading
- Fuel spills and leaks leading to soil and groundwater contamination
- Theft of a high-value, easily resalable commodity
- Equipment damage and operational disruption
- Potential regulatory and insurance consequences where storage is non-compliant.
Fuel security should be treated as part of a structured risk-management approach, not a short-term operational fix.
Is it okay to store fuel inside my premises?
Don’t store large amounts of fuel inside buildings. Where indoor storage is unavoidable, quantities should be minimal and contained in designated fuel cabinets or containment areas. The legislated limit is often governed by municipal bylaws and may vary from region to region.
If you’re storing fuel for electricity use, you should also read up on safe operations for generators.
Follow our guidelines for safe fuel handling
Take note of the following core principles for safe storage - and make sure your health and safety procedures are in order too.
Use approved diesel fuel storage containers only
Diesel must only be stored in fuel-rated containers, designed specifically for hydrocarbon storage. These include fuel-grade HDPE containers (often cross-linked or multi-layered), and steel drums or bulk tanks.
Fuel containers differ fundamentally from water containers. They are chemically resistant to hydrocarbons and designed to limit vapour permeation. They are also either anti-static or capable of controlling static build-up. If you examine them, you will see they are structurally thicker and more impact-resistant, with fuel-tight, vented closures.
Using non-fuel-rated containers - like water containers - can result in plastic degradation, vapour leakage and increased fire risk.
When storing fuel, location matters
Diesel should be stored:
- In well-ventilated, dedicated fuel storage areas;
- Away from ignition sources, electrical equipment, welding areas and direct heat;
- Away from hay, straw, feed and other combustible materials;
- Away from livestock water and feed sources.
- Don’t store large volumes inside buildings. If this is unavoidable, have a designated on-site fuel storage area.
Watch out for spills
All bulk diesel storage must include spill containment to prevent environmental damage. These can include bunded storage areas - which are designed with a “bund” or secondary container to prevent fuel from leaking into the environment in the event of a spill. Spill pallets, concrete containment walls, and drip trays under drums and pumps should also be used.
Containment capacity should be at least 110% of the largest container, ensuring that leaks or failures do not result in soil or groundwater contamination.
Take extra care during transfers
Fuel incidents often occur during refuelling or transfer - so take extra care. Here’s what good practice looks like:
- Use manual or electric transfer pumps (never open pouring)
- Ensure hoses, fittings and seals are fuel-rated
- Ground metal containers during transfer
- Prohibit smoking and open flames near fuel areas
- Never leave fuel transfer operations unattended
- Always use appropriate personal protection, including chemical-resistant gloves, safety glasses, and protective clothing. Clean any exposed skin promptly.
Spill prevention and emergency preparedness
Fuel storage areas should be kept clean, inspected regularly and equipped with spill kits, containing absorbent pads, granules, containment socks and disposal bags. Even minor spills should be dealt with immediately to prevent escalation.
Fire protection measures should include:
- Class B fire extinguishers
- Sand buckets or absorbent material
- Clear emergency exits and signage
- Regular training for all staff involved in fuel handling
Consider fuel theft prevention measures
During supply shortages, diesel becomes a prime theft target. You can keep your fuel safe by including lockable valves on tanks, controlling access to refuelling points, and basic monitoring or surveillance. Make sure fuel storage areas are fenced and well-let.
Regularly reconciling fuel levels, together with accurate record-keeping of fuel purchases, storage quantities, inspections, and incidents will help prevent theft while also making any insurance claims smoother.
The best way to handle fuel security
The most effective and defensible approach to fuel security is to:
- Store only the minimum quantity necessary
- Use approved, fuel-rated containers
- Store fuel in designated areas with appropriate fire separation
- Implement secondary containment, safe handling and theft controls
Insurance can respond to fuel-related losses only if the risk is correctly disclosed, insured and managed. Poor storage practices, non-approved containers or negligent handling materially increase the likelihood of uninsured losses. You should also confirm with your local municipality or regional authority the maximum quantity of diesel permitted inside any enclosed building, in above tanks or underground tanks, and whether permits or approvals are required above prescribed limits.
Take a holistic view of your risk management practices
Risk management goes beyond having insurance for your business. It’s also about assessing your unique risk profile, understanding the cover that’s appropriate, and also taking steps to minimise your chances of an adverse incident in the first place.
At Santam, we have over 108 years’ experience in providing insurance that’s good and proper. We offer specialist products including agriculture insurance and sector-specific products because we understand each business sector has its own context. Talk to your broker - or contact us directly - to find out how we can help.