Okay, then what? After this billion gallons of used oil reach suitable hands, where does it go?

Again, we turn to API. Its web site says 11 percent is used in specially designed space heaters in automotive bays and municipal garages, and 14 percent is turned over to rerefiners who return used oil to its original virgin oil state. And 75 percent (approximately 750 million gallons) is reprocessed and marketed to a variety of industrial facilities for burning; a bit more than a quarter of it in industrial, utility and commercial boilers and another quarter in steel mills, cement/lime kilns, pulp and paper mills, and marine boilers. The biggest single combuster by far, at 43 percent, is asphalt plants.

Last month, this column looked at how and how much used oil is generated (about 2.5 billion gallons a year) in the United States. Of that, 1.5 billion gallons is lost. The other billion gallons – that which is legally collected and reused – is the focus this month.

Reprocessing and Burning (750 million gallons):

The largest single combuster in this category – 43 percent – are asphalt plants. American Paving Corp. of Salisbury, Md., with annual revenue of about $12 million, is representative of how reprocessed oil is burned in asphalt plants.

Our supplier picks up used oil around the region from Jiffy Lubes and similar places. He separates out water and other impurities and trucks the product to us as No. 2 fuel oil, about 200,000 gallons a year, explains Mike Wilkins, company vice president. Actually its a little heavier, more in line with No. 4 oil, but it meets all Maryland environmental requirements for virgin oil. The state inspects our stack monthly for compliance with its regulations. The only external filters are baghouses, mostly to remove dust particles.

Wilkins goes on, We burn the oil to dry out the stone and aggregate, the mixture is then super-heated to 350 degrees F, the asphalt is mixed in and the product is ready for road use. Our burners are like your home heater, except much bigger. Theres very little residue left over after burning and we dont have many problems to speak of. Burning is a clean process and its a good way to recycle used oil. Theres a lot of BTUs in that oil. Dont know what would happen to it if we couldnt burn it.

Demand for suitable oil is considerably higher than supply. Wilkins noted that his source recently had to stop supplying some customers because it couldnt pick up enough used oil for reprocessing. That hasnt happened to American Paving, but if it does, we can use virgin [fuel] oil simply by switching a valve, Wilkins said, adding, but the price is much higher.

Rerefining (140 million gallons):

Rerefining is Safety-Kleen Corp.s core business and its the largest rerefiner – the big dog – in North America by far. With about 140 million gallons annual output of petroleum products in all, the Plano, Texas, company holds nearly three quarters of North Americas total rerefining capacity. In addition to other facilities, it has two rerefineries; the larger and more modern facility located in East Chicago, Ind., and another in Breslau, Ontario. Both facilities operate 24/7 and have been running at capacity for 10 years.

Last December, Safety-Kleen emerged from Chapter 11 bankruptcy and turned its view toward the future, which includes potential new capacity. In June its director of operations, Dale MacIntyre, told LubesnGreases, Weve gone through a series of plant expansions over the past years and were always looking at further expansion. But that will depend on the availability of feedstock and economics, that is, capital investment.

Feedstock is key. Mike Sommer, North America sales vice president, noted, Our oil collection infrastructure has been integrated into our branch network collection. Product is picked up from a variety of sources – service stations, garages, quick lubes, small and large industrial sites. Payment for product depends on its quality. And weve got competitors everywhere. At $40 a barrel for crude [in June], some facilities are paying up to 75 cents a gallon for used oil to be used as fuel. Its hard for us to compete for feedstock at that price.

There was a time when rerefined oil was a second-class citizen compared with virgin base oil. There may be pockets of that kind of thinking remaining but its not accurate. As technical consultant Kirk McNaughton said, Our product is a solid API Group I. We call it a Group I plus, plus, plus. In fact, were almost a Group II. Sulfur, saturates and the V.I. [viscosity index] are the key factors in base oil classification. The cutoff between Group I and II in saturates is 90. While many of the classic Group I oils are in the 60 or 70 range, ours are running around 86 and 87. So were close to a Group II and from a marketing point of view it would be great to get there. But we recognize that many Group II products are considerably higher.

As for where rerefined base oil winds up, Sommer said, Its used in a full range of lubricant products – passenger cars, diesel truck and railroad applications, and industrial and hydraulic uses make up the bulk of our product mix. Dont forget, all vehicle manufacturers accept our rerefined product for service-fill oil.

While Safety-Kleen, the industry leader, produces 5,500 barrels per day of rerefined base oil at its two plants, a smaller company thinks it has a better idea. Oil Re-Refining Co., a private company in Portland, Ore., has opened a rerefinery there with capacity to produce just 600 b/d. Its planning another facility near Reno, Nev., and others are on the drawing boards.

These mini-rerefineries cost $3.5 million to build and thats why company President Bill Briggs, thinks they will be a winner. After just 4 months in operation the [Portland] project is already profitable, he said.

Safety-Kleen and fellow rerefiners Evergreen Oil in Irvine, Calif., and Newalta (formerly Mohawk Oil) in Calgary, Alberta, use the same technology – distillation, evaporation and severe hydrotreating – and together account for more than 90 percent of the rerefined market. Orrcos technology, licensed from Pragmatic Environmental Solutions Co. of Roanoke, Va., is based on evaporation and clay processing. About four-fifths of its output is destined to become neutral high V.I. base oils, with the rest split between diesel fuels and asphalt flux still bottoms.

Space Heaters (110 million gallons):

Clean Burn of Leola, Pa., has about 40 percent of the annual $50 million space heater and boiler market. Its space heaters are typically mounted high in a automotive or truck repair bay to save floor space and are designed to distribute hot air for general heating purposes.

Boilers can also be used for a range of purposes such as room heating, car wash facilities and de-icing systems.

For facilities that generate used oil on-site, a space heater or boiler represents free heat with an exceptionally fast payback time, Morris Mantey, Clean Burns national sales director notes. Depending on conditions such as climate, local weather, building insulation and how often shop doors are opened, a used-oil-fired burner can pay for itself in as little as 12 months in saved heating bills.

Moreover, he added, burning used oil with properly engineered and installed equipment also meets all EPA requirements for proper used oil disposal.