In terms of the types of oil we currently collect, we primarily collect used lubricating oils. Those are coming from either automotive sources like car dealerships and quick lubes, or coming from industrial manufacturing plants where the lubricants are used as machine oils, cutting oils and coolants as well, Ray told Lube Report.

Heritage-Crystal Clean expects to spend some of the $5 million on high-level engineering, related permit initiatives and site evaluation for a possible rerefinery project, he noted. Ray emphasized the company has not yet committed to construction, and isnt far enough along in discussions to know whether it would be an API Group I or Group II rerefinery.

Were actually evaluating multiple locations as we speak, Ray told Lube Report. We dont have a strong bias to put it in Illinois — thats where our corporate offices are, but our largest operating facility is in Indianapolis so thats another possible location. We think the Gulf Coast has some opportunities as well.

Acquiring an existing used oil processing site is another option under consideration. Weve also entertained the idea we might find an existing site where we could bolt on a hydrotreater and add on our technology to make it a more capital-efficient project, or maybe find somebody else whos already got a similar property in use, in terms of having some of the infrastructure thats valuable to our business, he explained. To run a significant used oil rerefinery, you like to have tankage, transportation access by rail and barge, and utilities for delivery of natural gas or hydrogen via pipeline are nice too. Those things can steer you in the direction of an existing site if you can find one, so were looking at that.

Evaluating transportation costs is another key. Were doing a study now that looks at our different transportation lanes, where we pick up used oil, and where we would expect to in the future, Ray continued. And we overlay that against what we think as being the typical transportation model for different locations based on truck or rail. Its a pretty standard industry activity to try to figure out which locations are likely to be most cost efficient from a transportation expense standpoint.

According to Ray, Heritage-Crystal Clean President Joseph Chalhoub began his career building a used oil rerefining business in Breslau, Ontario. Chalhoub later sold the rerefinery, which now has 1,000 b/d of API Group I and 800 b/d of Group II capacity, to Safety-Kleen. Chalhoub stayed at Safety-Kleen and was in charge of building its East Chicago, Ind., refinery, which today has 2,600 b/d of Group I and 2,000 b/d of Group II capacity. He became president of Safety-Kleen in 1997 and left in 1998. A year later, Chalhoub started Heritage-Crystal Clean.

Ray said his own career began with Evergreen Oil in California, where he remained for a decade before joining Chalhoub at Safety-Kleen.

In connection with the rerefinery initiative, Heritage-Crystal Clean hired Glenn Casbourne as vice president of engineering. Glenn worked with Joe [Chalhoub] many years as a chemical engineer and helped design Safety-Kleen rerefineries, Ray noted. Those two are the brains behind our particular process design and innovation – theyve done it twice with two different plants, different configurations, and been very successful. We have a high degree of confidence theyll be able to understand the technology and come up with something that will work for us if we go down that path.

He said Heritage-Crystal Clean doesnt expect to need to get bids from rerefining technology licensors or to hire someone else to design a rerefinery. It would be in-house in terms of the critical process design, Ray stated. From a project management point of view, we would be the design engineers, and we would be the general contractor managing our own project – if we go ahead with it. Its not an absolute commitment yet, but we think its quite probable.