Transformer oil rerefiner Hydrodec Group acquired used lube oil collector OSS for 4.7 million (U.S. $6.3 million), securing feedstock for a planned pilot plant that would rerefine used paraffinic base stocks to potentially produce API Group II and III base oils.
According to Hydrodec, OSS is the United Kingdoms largest collector, consolidator and processor used lubricant oil and seller of processed fuel oil. It processed about 60 million liters of used oil in 2012. OSS has a national network of oil storage and transfer stations, currently serviced by a fleet of more than 90 trucks which collect used oil and other garage workshop waste from more than 30,000 customers.
The deal was for the business and assets of OSS Group Ltd., which converts the used oil into processed fuel oil at its plant in Stourport, and mainly sells it to the U.K. quarry and power industries. OSSs existing senior management team, led by Iain Lees, together with its 200 existing employees will join Hydrodec.
Hydrodec collects used transformer oil and manufactures, markets and distributes transformer oil and naphthenic base oil at its facilities in Australia and in Ohio. While the company has corporate offices in London, the OSS acquisition represents its first foray into the U.K. market.
Generally speaking, OSS collects waste and used oil, primarily from workshops, Hydrodec Chief Executive Ian Smale told Lube Report. Therefore its a collection relatively dominated by used motor oils. But they also take waste oil, though not transformer oil.
In December 2012, Hydrodec announced proof of concept in its industrial research program by producing a Group II base oil sample from a wide range of used industrial oils. The company said that extension of the companys catalyst technology into paraffinic feedstock and products also gave it insight into how to use the technology to rerefine engine oils.
We continue to work on the extension of our existing and proven technology for transformer oil into general lubricant oil, Smale said last week. Thats progressing well, and were at the point of beginning to plan the pilot phase for that. Once Hydrodec is ready to deploy its rerefining technology to produce base oil, he noted, OSSs collection of used motor oils would be a core feedstock.
Smale explained that the United Kingdom operates under a used oil protocol which allows treatment of used oil that will be subsequently used as a fuel.
So the U.K. is a genuine opportunity to go from used oil as a fuel to used oil as a source of a new high quality base oil, which is very much what were looking to achieve with our technology, Smale said. Thats a big step up in potential value for us in due course, and I think one of the reasons [the U.K.] may be an attractive market for us to invest in.