Heritage-Crystal Clean plans to build its new 2,000 barrels per day API Group II base oil rerefinery in Indianapolis adjacent to its existing operations. Production will begin in mid 2012.
The project has an estimated capital cost of $40 million. The rerefinery site is recently acquired property in the town of Speedway, within Indianapolis. We purchased it last year because we already had a number of strategic assets at that site including our largest hub operation and our solvent recycling system, Greg Ray, the firms chief financial officer and vice president of business management, told Lube Report.
Elgin, Ill.-based Heritage-Crystal Clean, which provides parts cleaning and waste services, sells the used oil it collects as fuel to electric utilities and asphalt plants. It serves more than 41,000 customers through a network of almost 60 branches. Its management team includes former Safety-Kleen executives and engineers with experience in designing and building rerefineries.
We did a logistics study where we looked at a number of different locations in different states, Ray observed. We found that for our type of activity, where were going to be doing a lot of shipment by rail and some shipment by truck, we modeled that against our branch network where we expect to be collecting the oil. [Indianapolis] was a very cost effective location.
In March, Heritage-Crystal Clean said its new rerefinery in Indiana would process up to 50 million gallons per year of feedstock in the form of used oil and yield about 30 million gallons per year of good-as-new on specification base oil. The refinery will employ vacuum distillation followed by hydrotreating, Ray said then. We still think its a mid 2012 start up for lube production, and it wont start up at capacity, but it will ramp up after that, he added yesterday.
Indiana is well located with good infrastructure and supports the recycling of used oil, said company CEO Joe Chalhoub. Indiana, Indianapolis and Speedway have embraced the project and committed support for the new facility through various incentives, he pointed out.
The Indiana Economic Development Corp. offered Heritage Crystal Clean up to $550,000 in performance-based tax credits based on its job creation plans. The company is in the process of hiring oil route drivers, plant operators, maintenance and supervisory personnel. The city has granted Heritage Crystal-Clean a $2.3 million property tax abatement and $150,000 for additional infrastructure assistance at the request of the Develop Indy agency. The agency helps businesses expanding in or relocating to the city.
Indianas Industrial Development Grant Fund will make up to $100,000 more available to the city of Indianapolis for infrastructure improvements.