ILMA Compoundings - May 2020 - 26

New World for Used Oil
Re-refiners look for ways to harness today's challenges and tomorrow's potential
By M. Diane McCormick

W

hen the age of sustainability meets a new era of
market disruptions, the re-refiners and collectors
whose lifeblood is used motor oil see potential
and challenges ahead.
Such disruptions as the IMO 2020 regulations and global
pandemics can squeeze already tight margins. But as the
U.S. Department of Energy (DOE) revises its 2006 used oil
re-refining study, used oil is bolstering its value proposition
as a natural resource offering economic benefits.
"The DOE is looking at it from the perspective of the
circular economy," said Leigh Harrington, vice president,
marketing strategy and communications, at Clean Harbors/
Safety-Kleen. "That tells you a bit more about how important
re-refining is becoming and the value of the molecule itself."
RE-REFINING: A STORY OF ADAPTABILITY
North America's 1.6 billion gallons of used oil is one of
the most important items to regenerate, because mismanagement sends it seeping into the water supply, said Scott
D. Parker, executive director of NORA, An Association of
Responsible Recyclers.
"Every time someone gets the oil changed in their vehicle,
they're generating four or five quarts of used oil," Parker
said. "A gallon of used lubricating oil still has its original
attributes, so it can still be used as a lubricant and/or as a
fuel. The only thing that has happened is that it has been
contaminated by metals, water and other contaminants."
In previous decades, industrial burning - especially for
asphalt plants - consumed about 70% of recycled fuel oil.
Since the shale revolution made natural gas price-competitive,
industrial consumption of used oil as a fuel plummeted to

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MAY 2020

| COMPOUNDINGS | ILMA.ORG

30%, according to Parker. But used oil processing doesn't
follow the typical economic model in which supply diminishes in response to lower demand.
"In the used oil world, just because the asphalt plants
weren't purchasing our oil at the same level doesn't mean that
we as a nation were going to stop producing used oil," he said.
Processors adapted, driving the number of re-refineries
from eight in 2006 to 24 in 2019. Production by re-refiners
has risen by 89%, from 360 million gallons to 682 million
gallons. While the industry is still recycling fuel oil for
industrial burning, they are also re-refining used oil into
base oils for fuels and lubricants.
A "green tsunami" is also driving investment into the next
generation of re-refining, said Mark Redcliffe, executive vice
president, corporate finance, at Gen III Oil Corp. Gen III
is developing a 2,800-barrel-per-day re-refining facility in
Bowden, Alberta, equipped with the patented technology
capable of processing used motor oil into Group II+ and
Group III base lubricating oils.
Investors who focus on ESG, or environmental-socialgovernance matters, want to see sustainability options.
Significant buyers and blenders worldwide are interested and
say that Gen III's Group III products derived from used oil
meet their requirements, said Redcliffe.
"We're a project that will effectively reduce greenhouse gas
emissions by 360,000 tons a year, which equals 76,000 cars
coming off the road a year, versus the burning or disposal of
used motor oils," he said. "We're going heavy on that message.
We look at it as a sweetener to our investors. Everyone wants
to be involved in greenhouse gas reduction. Everyone wants


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ILMA Compoundings - May 2020

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