Transformer oil rerefiner Hydrodec is partnering with transformer recovery firm G&S Technologies Group to grow Hydrodecs North American business, including expansion of its rerefinery in Ohio.
Expected to be completed by the end of April, the partnership will create a new entity, Hydrodec of North America LLC. The agreement will over a period of time see G&S Technologies take 49.9 percent of Hydrodec in North America, but initially 25 percent, with a view to building out the Canton facility from its existing 27 million liters [per year] capacity to a capacity somewhere in the region of 65 million liters [per year], going from four processing trains at Canton to 10, Hydrodec Chief Executive Ian Smale told Lube Report. According to Hydrodec, the 65 million liters per year would represent 15 percent of annual U.S. consumption of transformer oil.
Smale said the companies have not yet formally decided where the build-out will happen. Its likely we might add additional capacity in Canton, and we almost certainly will then look to relocate or to build a new facility of a size and scale like Canton, somewhere else in the United States, he noted.
Hydrodec will license its technology to the new Hydrodec of North America entity to manufacture and sell its rerefined Superfine branded oil in North America in return for a five percent royalty on revenues generated by the business.
Smale said the partnership allows us to think with great purpose about how we build the business, and the brand weve been developing with our Superfine oil in the United States, which is the biggest market for this. I think both companies are highly complementary.
G&S will commit used transformer oil from its utility asset recovery service sufficient for the expansion of Hydrodecs production capacity in the U.S.
One of the biggest challenges in any recycling business is always feedstock, Smale said. The combination of our oil processing capability and [G&S Technologies] transformer processing capability will ensure that an expanded Hydrodec is underwritten with feedstock. Im also quite excited by how it will enable the offer to the utility industry to be generally improved – we really can offer between the two of us a one-stop shop.
Family owned and operated G&Ss main facility is in Kearny, N.J. It has additional facilities in Oregon, Alabama and New York, where it also has a small repair operation. G&S has been recycling electrical transformers for 50 years.
Recently, more and more customers have been sending us these transformers full of [transformer] oil, G&S Technologies Vice President George Newmark told Lube Report. Here in N.J., probably about 95 percent of our transformers come in full of oil. We have realized we need a good partner to partner with on the oil, so we can have that flow out of oil. If we dont have the facility to ship our oil to, it would create a tremendous problem for us. Hydrodec needs our oil – we need Hydrodec to take our oil, so its a win-win for everybody.
Hydrodec began commercial production at its transformer oil rerefinery in Canton, Ohio, in October 2008. The 22,000 square foot plant can recycle up to 8 million gallons per year. It uses a proprietary catalyst to remove impurities and produce a rerefined product the company describes as hydrogenation-refined naphthenic mineral transformer oil. The process enables 99 percent or greater recovery of oil for reuse while also eliminating polychlorinated biphenyl (PCB), without environmentally harmful emissions.
The U.S. Environmental Protection Agency last year issued Hydrodec Group a final permit for storage and treatment of used transformer oil contaminated with PCB at the Canton plant. Hydrodec also won permission from Mexicos national electricity utility to process its PCB-contaminated oil at another plant in Australia. Newmark noted that G&S facility in Alabama is one of two in the U.S. that can process high-PCB material.