The rerefinerys close proximity to California and West Coast lubricant markets was appealing, said Jim Buckley, Clean Harbors senior vice president for investor relations and corporate communications, as it is only about 75 miles from the California border. Thats a market where Clean Harbors and Safety-Kleen do a lot of business, and is obviously very receptive to green or recycled products, Buckley told Lube Report.

Another appealing factor was the presence of a lot of tankage and rail access at the facility, he said. As we look to scale our blended capabilities – of which we have none out West currently – the Nevada facility would be a nice option for that. There is not currently a blending facility at the site, but the plant has a huge footprint that gives us a lot of flexibility with whatever we decide to do there.

Buckley said the company knows from its own hazardous waste business that having additional storage, rail and processing capabilities will provide it with greater efficiency throughout its rerefining network, particularly in transportation.

Safety-Kleens purchase does not include the other assets that Vertex acquired from Omega Holdings last year. There is also a swap agreement as part of this transaction where Vertex and Safety-Kleen will swap some collected volumes gathered near each others plants, he said. We did not share what those specific shared volumes will be, but the benefit is that the swapping of locally gathered volumes will lower collection/transportation costs for both of us.

Safety-Kleen did pick up a small number of personnel in the acquisition. Vertex had mothballed the facility, so it was a limited number who were maintaining and securing the facility, Buckley said.

Vertex CEO Benjamin Cowart said in a news release that, While the sale of our rerefinery in Nevada will lessen our footprint in the western U.S., the swap agreement and base oil agreements that were entered into as part of the sale should allow us to improve logistic costs, and provide us with a long-term off-take agreement for base oil and finished lubricants to support our business strategy going forward.

The swap and base oil sales agreements are each for five years, according to Vertexs filings with the Securities and Exchange Commission. The swap agreement would commence on the date that the oil processing facility at Fallon is fully operational, as mutually determined by Vertex and Safety-Kleen.

We intend to put this cash to work both in reducing our long-term debt and in making opportunistic acquisitions, Cowart said. Moving forward, he added, the company intends to expand its street collections of used oil through acquisitions, thereby decreasing its reliance on third-party purchases. We also anticipate seeing an increase in our margins by moving from third-party purchases to our own collections.

In 2014, Houston-based Vertex acquired Heartland Group Holdings – owner of a used oil collection network and a 1,500 barrels per day Group II rerefinery in Columbus, Ohio.

Norwell, Mass.-based Clean Harbors acquired Safety-Kleen for just under $1.3 billion in late 2012. That was followed by the $60 million acquisition of rerefiner Evergreen Oil in California in 2013.

Under the Kleen Performance Products subsidiary name, Clean Harbors operates an East Chicago, Indiana, lubricant blending facility. At the same site, it also operates a base oil rerefinery with 4,200 barrels per day API Group II and 800 b/d Group I capacity. It also has blending operations in Canada alongside its Breslau, Ontario, rerefinery, which has a capacity of 1,200 b/d Group II and 700 b/d Group I capacity. It also has a 1,150 b/d Group II rerefinery in Newark, Calif.

Buckley clarified that while Clean Harbors rerefineries and their related products are now under the Kleen Performance Products name, Safety-Kleen was the legal entity that bought the Nevada refinery from Vertex.