Owners of a former waste management company are upgrading a dormant used oil rerefinery that would become the only source of rerefined base oil in the United Kingdom. Whelan Refining Ltd. plans to open its 50,000-metric-ton plant in Stoke-on-Trent during the first quarter of next year.
Managing Director John Whelan said his company decided to revive the facility in view of a shift in the nations supply-demand balance for base oils. Traditionally a net exporter, the United Kingdom became a net importer this year after BP closed its Coryton plant.
Whelan Refining will provide stable and valuable additional base oil capacity to the United Kingdom lubricant manufacturing industry at a time when supplies remain tight, Whelan said.
Whelans former company, Whelan Environmental Services, first opened the plant in 1996 but closed it three years later after crude oil and base oil prices bottomed out. Now Group I base oils are selling for around 500 per ton (more than U.S. $900 per ton) even though crude prices have retreated from summers record levels.
When crude dropped below $10 per barrel in the late 1990s, it simply was not profitable to operate, Whelan said. But with prices where they are today, it doesnt take a mathematics degree to see that it is economically feasible again, even with our products selling at a discount to virgin base oils.
Whelan Refining is spending 2 million to reengineer and modernize the plant, as well as for non-equipment steps necessary to reestablish the business. Whelan said the plant is scheduled to come online during the first quarter. He said the facility will produce high quality Group I oils, and that he expects them to be used in a wide variety of lubricant and process oil applications. He added that a significant portion of the plants capacity has been pre-sold.
According to Whelan, the United Kingdom collects approximately 300,000 tons of used lubricating oil per year. OSS Group operates a rerefinery in Stourbridge, but it currently produces fuel oil.