Kleen Performance Products creation as a separate entity within rerefining giant Safety-Kleen was a move the business had been contemplating for some time, said Mark Bouldin, who was tapped to take over as the new units president as long-time Safety-Kleen chief Jerry Correll retires on Jan. 1.

Safety-Kleen Environmental does a world class job of gathering used motor oil, but we had this gem of a rerefining [and finished products] business that was never managed as an independent unit, Bouldin continued. It was time to break out the segment listed as oil rerefining and recycling on parent company Clean Harbors balance sheet and make it stand on its own.

While the new entity is still in its infancy, Bouldin says it has met with positive response from the marketplace and from customers. Employees at Safety-Kleen, which Clean Harbors acquired for $1.25 billion in 2013, are also proud to see the importance being placed on their work. The company has big growth aspirations for its lubricants blending business in particular.

New Names, New Capacities

According to Safety-Kleens website, the company is one of the largest independent lubricant manufacturers in North America, churning out 70 percent of the rerefined product volume on the market. Between its three facilities in Breslau, Ontario, Newark, Calif., and East Chicago, Ind., the company expected it would rerefine 180 million gallons to make base oil and blended lubes in 2015.

LubesnGreases recently paid a visit to the East Chicago location, just over the Indiana border with Illinois. Beginning as American Recovery in the 1970s, it was bought by Breslube and then Safety-Kleen in the 1980s. By 1991, it was the largest rerefinery in the world, covering 15 acres of land.

The addition of a blending plant in 2012 and an expansion of that plant in 2015 doubled the size of the site. Throughput is also double that of 1991, with more than 120 million gallons of used oil per year arriving by truck, railcar and barge. Today, East Chicago produces 100 million gallons per year of base oils and finished products.

The facility – particularly the new blending plant – is state-of-the-art. The mostly automated in-line blending process is regulated with electric trace instead of steam. Products are mixed with a Pulsair system, which utilizes a controlled release of nitrogen bubbles for faster and more energy-efficient mixing than mechanical techniques. A brand new gas chromatograph mass spectrometer whirs away in the testing lab.

The Green Cycle

Safety-Kleen and Kleen Performance Products are strongly invested in environmental responsibility. According to Bouldin, the business goes to great effort to make sure that most of the oil Safety-Kleen collects is rerefined – typically 90 percent. The company says that rerefining emits up to 80 percent less greenhouse gases and consumes up to 80 percent less energy than starting from virgin crude. Further­more, one gallon of used motor oil can yield as much lubricant as 42 gallons of crude.

The real beauty of their process, says Bouldin, is the closed loop. This continuous-recycle process sees the used oil collected, rerefined and returned to the market – from where it can be collected and recycled again.

The only part of the closed loop that we dont do here [in East Chicago], says Jason Shoff, refinery manager, is run it in engines.

Starting from Good

Quality control is another area of high importance. Rodney Walker, Kleen Performance Products vice president of technology and oil rerefining, says the organizations culture has changed from benchmarking against other rerefiners to benchmarking against anyone in the industry. This demands rigorous chemical and physical testing of Kleen Performances products and everything that goes into them.

The companys quality control process begins with testing samples of used oil, once prior to acceptance and again when it arrives on site, in East Chicagos own lab. We are what we eat, quips Shoff. All oils are not created equally.

One critical way that Kleen Performance Products differs in quality, says Walker, is its use of large storage tanks to hold used oil – two 4-million-gallon feedstock tanks were part of the 2012 expansion. Aggregated in such large quantities, the variability gets worked out, Walker explains.

Testing doesnt end after the used oils arrival. Safety-Kleen tests all of its finished products, including its asphalt. The blending site and lab double-check each other. At each step in the process, says Shoff, we presume guilty until proven innocent. Tight specifications for finished products have enabled the company to achieve ISO 9001 certification.

If anything, weve seen quality go consistently up – not just from our processes, but because the material that comes in is good pedigree, says Bouldin. Seventy percent of the rerefinerys feedstock is automotive oil, and as the average use of synthetic motor oil has increased over the last 10 years, Safety-Kleen has seen the viscosity index of its feedstock rise each year.

Kleen Performances Products

All three of Safety-Kleens rerefineries produce 70, 120 and 240 viscosity API Group II and II+ base oils, with the exception of Newark, which does not make the 70 grade. The clear, odorless Group II+ is a relative drop-in for making SAE 5W-20 engine oils because its low volatility translates to reduced oxidation in turbo­charged engines, boasts Walker. It also matches up well with the expected PC-11 and GF-6 performance requirements. Base oil accounts for just under half of the companys business, and is sold to some of largest independent blenders and marketers.

The other half of Kleen Performance Products business is the finished lubricants it produces per year, sold both directly and through distributors. Its EcoPower brand engine oils are guaranteed to be made from Kleen Performance Products rerefined base oils, and Bouldin points to the companys relationship with Roush Fenway Racing, which uses EcoPower engine oil in all of its racecars, as proof that the product can hold up in the most extreme conditions.

Kleen Performance Products other brand, Performance Plus, is a line of high performance products, including passenger car and heavy duty motor oil, transmission fluid, hydraulic oil, gear oil and other lubricants. Performance Plus PCMOs and HDMOs are said to exceed all North American standards for performance, including API, ILSAC, SAE and military specifications. The diesel oils are used in all types of non-arctic U.S. Army tactical equipment, such as Abrams tanks running in Iraq and Afghanistan.

Performance Plus lubes currently account for a higher volume of sales than EcoPower. However, Bouldin continued, The long-term prospects of EcoPower are great. The environmental story has started resonating a lot recently.

Marketers, distributors, the federal government and municipalities account for the largest share of Kleen Performance Products finished lube customers. Bouldin hopes to grow the companys market share in this arena, particularly among government bodies that can use rerefined products to meet sustainability goals. He also disclosed plans for Safety-Kleen to sell finished products to their customers where they currently pick up used oil, making the closed loop even tighter. So far, he said, a pilot program in Canada has been going well.

The final piece of Kleen Performance Products business is fuels and specialty products, which it sells to customers in the asphalt and marine diesel industries, among others.

Weathering the Market

While 2014 was tough for rerefiners, 2015 has been even more challenging in many aspects, related Bouldin, who worked for Shell before joining Safety-Kleen in 2014. In September, Safety-Kleen made the switch from pay-for-oil to charge-for-pickup. Costs for feedstock have come dramatically down since then, Bouldin says, but it takes time to trickle down to the companys bottom line. Clean Harbors posted third-quarter 2015 revenues totaling $893.4 million, of which Kleen Performance Products third-party revenues were $100.8 million – down about 28 percent from the previous year.

Our business model is built around assuming a low oil price. We dont see a fast recovery in lube oil pricing in North America, either, Bouldin projected. Safety-Kleen has gone a long way in getting costs under control and improving how we go about supplying and producing product, he continued. The companys big thrust now is to grow the proportion of blended oil sold relative to base oils. Were very bullish on our growth strategy as it relates to blended oils. We believe well see large market growth in the next year, which will buffer softness in the base oil market.

The folks in East Chicago are charging ahead. If we can run at 100 percent, were going to run at 100 percent. Were not going to throttle back because the markets not good, declared Walker.

A Brave New Future

Bouldin says he is most excited about the companys blended product initiatives as it aims to double the volumes sold into that segment over the next three to five years.

Kleen Performance Products is also awfully close to producing a Group III base oil, Bouldin affirms. As the company continues to invest in new technology and facility upgrades, the quality of feedstock and resulting base oil goes up every year. If it ends up being a Group III one year, well be the first to let you know, he laughs. Despite talk some years ago of building a rerefinery in the Southeastern U.S., the company does not have plans to expand capacity.

With Kleen Performance Products in a relatively stable position going forward, is Clean Harbors looking to spin it off, like Ashland is doing with Valvoline? At this point, there is no intention of separating, reassures Bouldin. Its a very volatile industry – anything could happen, he cautioned, but the motivation behind creating Kleen Performance Products was placing a clear focus on the blended oil business and driving the sustainability message to marketplace. We really believe the sustainability story is ultimately going to take hold, he said.

The Safety-Kleen/Kleen Performance Products East Chicago facility can easily impress with all of its bells and whistles. Rooms in the on-site laboratory are glass-enclosed so testing and equipment are fully visible to passers-by. The two largest thin-film evaporators in the world sit outside a control room that looks like the animators studio display in Disneyland – no coincidence, since the designer had just visited the Hollywood theme park prior to drawing up the plans.

In fact, the entire experience is a bit Disney-like, dotted with slick, colorful videos and smiling faces that are accustomed to seeing refinery manager Jason Shoff lead tours not only for customers but also local Boy Scout troops and grade school classes. The tours are part of a general education effort to raise positive public awareness of rerefined products. According to Shoff, the plant stopped counting at 20,000 tour takers 10 years ago.

A lot of people use the word recycled with the misperception that its the same old product that some guy just runs through a filter and throws back in the engine, related Kleen Performance Products new president Mark Bouldin. A more appropriate term, says Bouldin – a Ph.D. chemical engineer himself – is twice-refined. Because contaminants that come in crude oil have already been removed, the second refining essentially starts with base lube, he says.