New Rerefinery Rises


Heritage-Crystal Clean has constructed the front end of its API Group II 2,000 barrels per day rerefinery in Indianapolis, and begun operational testing. It remains on schedule to stream base oil near the end of 2011, the company recently stated.

The testing phase for the front end of our rerefinery has started off well, Greg Ray, the companys chief financial officer and vice president of business management, said during a quarterly earnings conference call last month. We hope to begin producing some marketable intermediate products in the third quarter.

More importantly, we have remained on track with the overall project and are still targeting around the end of 2011 to begin lube oil production, Ray continued. With the rerefinery coming along nicely, and our branches growing the customer base and building collection volumes of used oil, this is an exciting time in our company.

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 67 branches. Its management team includes former Safety-Kleen executives and engineers with experience in designing and building rerefineries.

Ray noted that the companys vice president of lubricant base oil sales, Cary Palulis, has been doing a canvassing of market opportunities. Hes quite optimistic, and has been going through the exercise of trying to determine how to allocate the production that well have, Ray said during the conference call. And so implicitly he believes theres a strong market out there, and he doesnt currently feel hes going to have any difficulty moving the lube oil product that we make.

The overall base oil market remains tight in the United States, according to Ray. There continue to be occasional reports about customers who are having difficulty getting as much lube base oil as they want to continue producing their products, he pointed out. The situation is very good in terms of a new entrant coming into this market, we feel. Were quite pleased it has worked out that way, and that we seem to have had lucky timing in terms of this development.

During the earnings call, President and CEO Joseph Chalhoub said the refinerys front end is producing some intermediate products, and samples are in the hands of Heritage-Crystal Clean customers for evaluation. The company is also looking at building some inventory of this product, so that when the second half of the rerefinery is ready to go, we can get this processed into lubricants. This is due to the pretty strong demand and pricing were seeing in the market today with the lube oil business.

Ray said the big question the company has had about the intermediate products is whether the nature of product were going to make is going to neatly fit the specifications that our customers would have for this material. There are large volumes of these kinds of materials traded typically between major refineries. Our product may or may not be within the range of what these customers are looking for.

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