What is happening with Used Oil Recycling in North America?

By Bill Briggs

Since the beginning days of automobile usage people have been looking for ways to reuse, recycle, or make use of used oil. Oil does not actually wear out and many failed attempts have been made to find a niche for this commodity. Some of the ways that used oil has been processed in the past has been to filter it, clean it, or distill it. Also people attempted to use clay contact methodologies with it and to chemically process used oils. Most of these procedures were at best only moderately successful. In the early 1960s major oil companies began to use additive packages to make improved oils over the formerly straight weight single grade motor oils. Re-refineries found they could not remove the bound up contaminates from the additives. This change in the manufacturing process was the single greatest factor for the closing down of the old time low tech Rerefiners and stopping the people that were reusing, recycling, and/or cleaning up used oil. These old time processing units were typically small scale, created environmental problems, and required low investment of capital. After this time period it become common for people to do road dust oiling and to just burn used oil in an asphalt paving plant. It also became common for farmers and small shop owners to collect their used oil and burn it for heating purposes. The image of the steel 55-gallon barrel stove utilizing a drip system to fuel the heaters heating out buildings and shops comes readily to mind.

In the early 1980s a number of oil companies became interested in various methods to make use of used oil. Phillips Petroleum was one of the first with their Prop

Solvent Re-refining System. This technology was sold to Mohawk Oil in Vancouver Canada. After spending several millions of dollars it was discovered that it did not work. Mohawk Oil was then able to settle with Phillips Petroleum. Mohawk Oil then took their settlement and reinvested it into the first hydro-treating Re-refining system. This particular process became the forerunner and was followed up with similar systems by Evergreen and Safety Kleen.

Currently in North America it is estimated that less than 18% of the available used oil is being Re-refined. There have been numerous attempts with various methods and most have not been duplicated (the notable exception is the Chevron Gulf Coast unit). Earlier systems, like Mohawk Oils plant, require large investments and large volumes to receive a return on investments. These large major operations require major collection volumes from perhaps 15 to 20 states to bring the used oil to a centralized plant location. Today there are other methods of Re-refining that are attempting to fill these economic gaps. For example, Encore Energy has two units that fit this description. One is in Portland, Oregon and the other is outside Reno, Nevada. Evergreen and its sister company CEP have one such unit about to open in Puerto Rico. Hawaii Diesel Production Co. in Hawaii has a production unit that makes useable off-road diesel fuel. The investment for these types of production systems is under 10 million dollars for lube oil base stock units and roughly as low as 2.5 million dollars for production of a useable off road diesel fuel unit. The volume of used oil necessary to feed these operations is 200,000 gallons per month plus for the diesel fuel unit and 600,000 gallons per month plus for the smaller base oil unit for the systems to be economically successful.

I have personally watched these developments for over a 30-year time period. I have been a part of bringing four Re-refining facilities and over six used oil facilities into existence. I foresee this industry changing over the next five to six years so that Rerefining will be over 50% of the used oil market with a continuing upward trend from there. Having touched on these four types of oil Re-refining systems in North America lets discuss each a bit more. Each has its advantages and disadvantages for the companies involved as well as continuing the necessity of improving our economic sustainability, complying with environmental laws, and addressing the desires of the environmental activist community. It would be hard to make the argument that the larger centralized facilities using hydro-treating and costing over 60 million dollars actually do not make a better top of the line base oil. There appears to be at least one more of these units likely to appear in the next year or two. The major arguments against this type of facility are the massive capital outlay, the large volumes of oil that need to be collected and transported over long distances to make them economically viable, and the effects on the environment that such a major facility would have on the ecological footprint on a given local area. This would include spills, product containment, air, odor, water, and traffic issues to name a few. The second type of Re-fining systems that is currently being developed ranges in price from 7 to 10 million dollars to construct. This methodology allows for a decentralized approach based on local need and demand. It will require 600,000 to 1,000,000 gallons of used oil per month to be effective and competitive. This amount of used oil is more readily available in a localized area. The next type of facility is the small production unit. Its

cost is under 2.5 million dollars and is restricted to making only usable off road diesel fuel. These types of units make great sense in rural and isolated areas with a low volume of used oil and low demand for product. This type of unit would be an environmental improvement over the current used oil burner fuel. The last type of facility to be discussed would be one similar to Chevrons Gulf Coast unit. This style of facility does not require hydro treatment but up grades used oil to remove the contaminates so that most of the product can be used as a High Grade of crude oil to feed a virgin Cat Cracker Refining unit. This then produces various products as they go through the virgin new refinery. Department of Energys new draft report (Used Oil Re-refining Study to Address Energy Policy Act of 2005 Section 1838, July 2006) clearly supports re-refining as the best available environmental choice and is looking for methods to make that a more viable option. All other countries though out the world that have successful re-refining operations have some form of governmental support and backing. The United States does not have this level of support but our neighbor to the North, Canada, does have such a program. Currently environmental rules and governmental studies support Re-Refining as the best methods for handling used oil and support the movement to this technology! Should you desire more information or wish to discuss this issue with me feel free to email me at billb@orrco.biz.