Safety-Kleen Systems will begin preliminary engineering for its third North American base oil rerefinery, and is analyzing potential sites in the U.S. Southeast and Gulf Coast regions.
We have several locations under evaluation, each of which makes good sense in terms of used oil availability, existing infrastructure and logistics, said Dave Sprinkle, Safety-Kleens executive vice president for oil rerefining. Now we have to determine which site makes the most economic sense.
The company said the rerefinery could expand its overall processing capacity by 45 million gallons to 200 million gallons of used oil feedstock annually. Safety-Kleens Breslau, Ontario, plant is undergoing a 10-million gallon per year processing capacity expansion.
Safety-Kleen CEO and President Robert Craycraft noted its existing rerefineries in Ontario and Indiana have already processed more than 2.5 billion gallons of used oil into high-quality lubricants and byproducts. Acceptance of our rerefined products, particularly EcoPower [motor oil], is well established and growing among corporate fleets, consumers and government agencies, and we want to extend our leadership in this important market, Craycaft said.
We will be primarily focused on internal use to make and sell fully-formulated lubricants, but will be selling some base oil from the new rerefinery, Curt Knapp, Safety-Kleens senior vice president and chief marketing officer, told Lube Report.
Knapp said the used oil feedstock would come primarily through Safety-Kleens own collection and secondarily from third party waste oil collectors. In the southern U.S., there is far more oil collected than what is sent for rerefining, unlike the Northeast and upper Midwest, he noted. In terms of logistics for the new rerefinery, rail is a must, he said, adding that ideally, the site would also have a barge or ship capability.
According to Knapp, the new facility will use the same catalyst technology used in Safety-Kleens two existing rerefineries. The company has not yet issued a base oil production capacity estimate for the third rerefinery. Safety-Kleens Breslau rerefinery has 700 barrels per day of API Group I and 1,200 b/d of Group II capacity. Its East Chicago, Ind., rerefinery has 800 b/d of Group I and 4,200 b/d of Group II capacity.
Our 70N is the only grade still Group I, and our 120N and 240N are Group II, he said. We may be able to make Group II+ 120N.
Several U.S. rerefinery projects in North America are expected to begin production from later this year through 2013, all claiming they will produce Group II quality base oil. We question whether all announced new rerefinery builds will see the light of day, Knapp said. And if they do, they will have major challenges due to high operating costs, limited scale and/or ability to obtain sufficient quantity of good quality, cost effective used oil feedstock. And our new, large rerefinery will be very formidable competition.