As noted in last months column, line wash is the material used to flush the lines and pipes when lubricant blenders switch production from one type of lubricant to another. By its very nature, line wash is a commingled mixture of various types and grades of lubricants. Because of this, it typically does not meet the specifications for most types of lubricants.
At the same time, the close to 10 million gallons of line wash produced annually in the United States has value. So where does line wash go, and what is its true value?
For answers, start by looking at where and why its produced. Although virtually all lubricant manufacturers produce line wash, the majors produce much more than others, and some majors produce more than their peers. One reason is a function of the volume of lubricants they blend. Others include the age, blending processes and layout of their lubricant blend plants. Some of these plants, for example, operate without the benefit of pigging.
According to Steve Langley, general manager with Pigging Solutions, a well-designed pigging system will result in line residuals well below 1 percent, at transfer volumes as low as just 50 gallons. Plant design also takes a toll: Some blend plants produce more line wash because they have longer lines and more dead spots.
There are a number of ways for blenders to handle the line wash they produce. One option is to run it back through a refinery. In this case, its value is close to that of crude. Another option is to sell it as waste oil. Depending on its quantity and quality, whos buying it and market conditions, this waste oil may fetch from 25 cents to close to $1.00 a gallon.
A third option is to consume the line wash in-house, turning it into lubricants with comparatively low performance requirements, or those where specifications can be met by making corrections (i.e. viscosity adjustments). The most common examples of such lubricants include bar-and-chain oil, dust suppressant, form-release oil, process oils and some hydraulic fluids. But even these applications can be a challenge.
Form-release oil and dust suppressants for example often require the use of white oil, and volumes of white oil line wash are limited. And while it can go into some hydraulic fluids, line wash is often considered too dark or too heavily additized for such applications. So for most majors that produce a considerable amount of line wash, the volume soaked up for captive sales in the United States is limited.
This leaves those that have a surplus of line wash with one more option to consider: Sell it into the merchant market, for export or domestic use as what some call recoverable lubricant.
In the United States, Shell, Chevron and ConocoPhillips are some of the leading majors selling line wash into this market. Shell for example sells 3 million to 4 million gallons of line wash a year, usually to other blenders and marketers. These buyers then have the option to sell the product as is into less sensitive or less demanding applications, and/or correct it to meet other lubricant specifications.
When they sell it as recoverable lubricant, line washs value to the majors is currently in the range of $2.50 to $2.80 a gallon. Assuming the buyers handle it in a legitimate and ethical way, theyll usually see a value of $4.50 a gallon when the fluid is sold to end users as finished lubricant.
However, some resell line wash as engine oils, with little to no correction. In these cases, the product has a street value of $4.55 to $5.00 a gallon.
These numbers give a sense of the value of line wash. But to understand its true cost, its helpful to look back at where and why line wash is produced. When one does, it becomes evident that the true cost of line wash may be more important than its value.
This is because line wash is a combination of products that are devalued significantly by the manufacturing processes. These processes, for example, can take a leading-brand engine oil that would sell for $8.39 a gallon in bulk and mix it with another viscosity grade that sells for $8.05 a gallon, only to create a product valued at a low of 25 cents a gallon (waste oil) or a high of perhaps $2.50 to $2.80 a gallon (recoverable lubricant). As you can see, its not the value of the line wash a blender should be thinking about – its that $5.59 to $8.14 loss they may be incurring for each gallon of it they produce.
In addition to this cost to producers, a growing number of marketers say line wash costs them business when they lose sales to unethical competitors selling the commingled fluid as engine oil, at prices they simply cant compete with. Further, they say, it can cost retailers and consumers a great deal more when they unknowingly buy and use line wash with the belief that its something other than it is.
So maybe now is the time for our industry to take a good hard look at the true value and cost of line wash. Because while lubricants made with line wash may have legitimate value in some markets, their cost outweighs their value in others.