It has been almost 20 years since the construction and startup of the first modern rerefinery in the United States, at Evergreen Oil in Newark, Calif. Numerous developments have taken place since then to make the processes at Evergreen viable, the authors explain, and able to produce consistently high-quality base oil from used oil collected in California. With today’s economics, they argue, this technology merits a closer look.

BY JACOB VOOGD AND LOUIS MAGNABOSCO

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lie 2 percent to 4 per- cent of a barrel of crude that is extracted to make lube oils 15 the

most valuable constituent of crude oils Yet after its use in engines and for other purpos- es, it is largely relegated for use as a fuel oil 01, worse yet, disposed of improperly in landfills or dumped in sewers or on the ground Over 75 percent of this used oil con- tains valuable lube oil con- stituents which are recover- able Rerefining is one tech- nique for full regeneration and recovery of this valuable oil product

It IS estimated that 2 4 bil- lion gallons per year of lube oil are consumed yearly in the United States Of this, 1 7 bil- lioii galloiis wind up in engine oil and hydraulic fluids for the transportation industry About 1 billion gallons of this are recovered, of which 860 mil- lion gallons are burned and 140 million gallons are rere- fined About 400 million gal- lons are improperly disposed in landfills, sewers, etc

Recent U S Energy Department studies have

shown that the environmen- tal benefits of rerefining used oil over burning it, give major improvements in global warming, particulate reduc- tion, and carcinogenic risk potential. The chemicals and metals added to the base oils to produce branded lube oils are released to the atnios- phere when the used oil is burned. In addition, the ener- gy saving for rerefining over burning of used oils is 8 per- cent or better, the State of California calculated last year.

Currently there are two rerefiners in the United States, Safety-Kleen in East Chicago, Ind., and Evergreen Oil in Newark, Calif. There are two more in Canada, Safety-Kleen near Toronto and Newalta in Vancouver. Several rerefineries operate in Europe, and a modern rerefinery has been designed and constructed in Indonesia by Evergreen’s engineering affiliate, Chemical Engineering Partners. A small rerefinery is being built in Puerto Rico. Several others are in the planning stage.

Evergreen’s Newark, Cd$, rere3ner.y

For purposes of this article, rerefining is meant to include not just distillation of the used oil but also hydrotreating of the distillate to produce a good-as-virgin base oil for later compounding into engine oil, hydraulic fluids and other lubricants. Atmospheric and/or vacuum distillation of used oil to produce a fuel oil or marine diesel are not considered as rerefining.

All rerefiners in North America use the same basic process. The used oil feed- stock is tested and is fed to a flash evaporation unit to remove the 4 to 6 percent water in the oil. This “dry- basis” oil is then fed to a thin film evaporator WE) which separates the lube component and light matei-kals from the heavy material -which comes out of the base and is sold as asphalt flux for use in making roofing tile or as an asphalt extender. These bottoms con- tain the metals and salts which comprise the additive in the lube oil. These nasty materials are encapsulated and meet all EPA leach tests.

The overhead from the TFE is distilled to separate the lube fraction, which can be as high as 80 percent of the dry feed. It is then treated with hydrogen over several cata- lyst-filled reactors at a pres- sure of 1,000 psi. The product is water-white and meets all requirements for base oil used for blending into lube oils and hydraulic oils.

The final hydrogenated product can be separated into various iieu tral base oils such as 100N and 300N. Evergreen sells its base oils to blender- compounders; Safety-Kleen and Newalta blend some of the base oils themselves for

branded and bottled or drummed lube products.

Long before the advent of water-white lube oil rerefin- ing, hydrotreating at varying severity was used to improve color and color stability, and to reduce reactivity of lubri- cating oils derived via sol- vent extraction. The result- ing lube base stocks were of considerably higher quality than those obtained via clay finishing. This is principally due to a number of chemical reactions that occur during hydrotreatment only, but not during clay finishing. These reactions remove undesir- able components and there- by impart improved quality characteristics into the oils. Examples of these reactions are: sulfur removal, nitrogen removal, and hydrogenation of color bodies, olefins and aromatics.

To enable production of high-quality lubricating oils via rerefining of waste lube oils, hydrotreating at moder- ate severity has to be employed, preferably in three reaction steps. In addi- tion to the objectionable materials derived from addi- tives present in used lube oils, raw rerefined distillates contain trace quantities of metals that must be removed to avoid fouling the hydrogenation catalysts. Used oil also contains a much higher concentration of olefins, which are generat- ed in the auto engine, as opposed to virgin materials. All of these contaminants must be removed or reacted out to produce a high-quali- t j 7 rerefined base oil that is equal to or better than virgin base oils.

LUBES‘N’GREASES 15

Figwe 1.

(10 million gals&. rerefiner): with crude at $60/bbl.)

Amount Comments Feed 13,176,000 gallyr. Drain oil, 6% water ODeratincr CaDacitv 95% 2 shutdownskr. Base Oil Yield 78% As 100N and 300N Asphalt Flux Yield 20.8% Saleable Product Light Ends 1.25% Fired as he1 Used Oil Feed Cost $0.34/gal. FOB Refine5 dry basis Sales Price-Base Oil $1.85/gal. For Group I, FOB Refinery Sales Price-AsDhalt Flux $0.30/gal. FOB Refinerv Source: Evergreen Holdings

The TFE-hydrogenation process has another advan- tage. This technology pre- serves the high-quality materi- als found increasingly in lube oils, namely polyalphaolefins - popularly known as syn- thetics. PAOs are made by oligomerization of ethylene followed by hydroisomeriza- tion; they are high-quality lube components with exceptional lubrication properties. The synthetics sell for up to five times the price of convention- al base oils. Preservation of these materials over alternate, irreversible disposal, such as burning, is highly desirable.

Improvements have been made over recent years in the rerefining process. They include fouling control in the front end, reduction of trace metals which foul the catalyst in hydrogenators, testing and selection of optimum hydro- genation catalyst for long life, and general chemical engi- neering improvements to reduce substantially the invest- ment in equipment and metal- lurgy In California, used oil is considered a hazardous waste. It is noteworthy that all rere- fineries in North America use the proven WE-hydrogenation technology - profitably

16 JUNE 2006

In the United States, a moder- ate-size city and its suburbs will generate in excess of 15 mil- lion gallons per year of used motor oil. Most of this can be collected or purchased from existing collectors who service the quick-lube stations, garages, automotive centers, and major truck owners, as well as public utilities and gov- ernment fleets such as police cars.

However, it is expensive to col- lect and haul used oil very far. One can figure 5 cents per gallon per 100 miles, not includ- ing the amortiza- tion of intermedi- ate tankage and hauling vehicles.

Thus, we have stated the eco- nomic case for the minimum size rerefinery, one producing 10 mil- lion gallons per year of base oil from 13.2 million gallons per year of dry-basis used oil. The calculations are based on last year’s typical

Figure 2.

prices, includ- ing crude at $60 per barrel (it’s much highei- now).

produced is Group I or Group I1 per API designation. Engine tests qualifying the base oil for

The base oil

blending and compounding are included in

the investment. Group I1 oils can be produced in the same plant with slightly lower yields. The bulk of U.S. auto- motive lubricants are Group I, but there is a growing use of Group I1 which has tighter restrictions on sulfur and volatility

Figure 1 gives the yields and unit costs for the product and feed. A selling price for

base oil of $1.85 per gallon is quite reasonable, a discount on the 2005 spot price for vir- gin base oil, which was over $2.00 per gallon. Used oil feed at $0.34 per gallon is eas- ily achieved in a community where the existing collector is either a partner in the rerefin- ery, or the project envisions its own collection operation. Where the used oil is classi- fied as a hazardous waste the cost of used oil will be lower.

Figure 2 gives typical eco- nomics for a 10-million-gallon base oil rerefinery. Consumptions are based on actual performance including labor and management requirements for a grass-roots facility Hydrogen as a variable operating expense can be reduced by building a small steam-reforming hydrogen plant with PSA purification for about $1 million installed;

Conlinued on page 18

(10 million gals&. rerefine5 with crude at $60/bbl.) (000’s) Comments

SALES REVENUE Base Oil $18,500 100N and 300N

TOTAI, REVENUE $19,281 FOB Refinery

COST OF SALES Waste Oil Feed $4,480 FOB Refinery @ 34 centslgal

Asphalt Flux $781

VARlABLE OPERATING EXPENSES (per 1,000 gal. of Waste Oil Feed) Hydrogen $42 Liquid @ $2.00 per lOOSCF Electricity $52 Mechanical Vacuum Catalyst $20 Incl. Disposal Heat $27 Nat. Gas or Propane Waste Water Disposal $30 Incl. Odor Control Misc. Chemicals 541 Incl. Water Treatment

$212 $2,793 For 13.2 MM Gal. of Feed

Direct Prodn. Labor $1,556 27 Operators, Lab, Mgmt. G + A + Sales 400 Incl. Office Expenses

TOTAL EXPENSES $9,229

EBITDA $10,062 Operating Earnings Source Evergreen Iloldings

Conlinuedfiona pqqe 16

however, liquid hydrogen is readily available now in most parts of the United States. The hydrogen supplier will include the metering and vaporization and compres- sions facility in his offer.

The net operating earnings

figure 3.

(10 million gals/yr. rerefinery)

provide the figure known in the financial community as EBITDA, earnings before interest, taxes, depreciation and amortization. This figure compared to the total project cost determines the financial ability of the project. Thus, in the example, an EBITDA of

15

e4

2 12

3 3 .- 3

shown. This graph k illustrates the impor- $ 6 tance of feedstock

2- 9

price. However, even with feedstock

10 20 30 40 50 60 70 at 60 cents, the EBITDA can be

3 Used Oil Cost, cents/gal.

Soirx-e: Euei:p?eiz Holdings healthy

$10 million for a $9.2 million total project cost is eminently financible.

Obviously, the feedstock cost is the highest single cost for the project - more than the total vai-iable cost and about the same as the total operating expense. Figure 3 gives a plot

of EBITDA at various feedstock costs between 10 and 70 cents per gallon, dry basis. Rerefined lube base oil sales prices at $1.60 and $1.85 (base case) and $2.00 per gallon are

With the tixed costs being constant for larger capacity plants, the higher-capacity rerefinery has even better financial returns, but one must consider the higher cost of inoving used oil greater distances. Another considera- tion is plant location. A plant may be sited at an existing collection depot with many of the tanks and other support in place, such as office, lab, electrical supply, loading and unloading racks, and land. However, if a grass-roots site is considered, the added investment for utilities, build- ings, etc. is about $3 million per refinery

As a result of years of experi- ence and good engineering, rerefineries are affordable and eminently profitable, especial-

18 JUNE 2006

ly when oil prices are high and bound to stay high or go higher. Base oil prices over the past year, derived from the most valuable small per- centage of a barrel of crude, at $2.00 per gallon equate to $84 per barrel. Compare this to crude, untreated and not refined, at $60 per barrel in the case study - or to the current $72 per barrel. Base oil prices will continue to climb as old, inefficient sol- vent extraction refineries are taken out of production by the majors.

Environmental benefits of rerefining are enormous and have drawn the attention of government, state and local authorities. The economics are very attractive to the financial communi8 the result of good chemical engi- neering to simplify the

process combined with mod- ularization of most of the

Services, Nov. 2,2005. 2. “1,ife Cycle Assessment of

rerefinery Great progress has been made in the rerefining industry I

Used Oil Management in California,” Boughton, R.. California Dept. of Toxic Substances Control, and

Further Reading

Task Force on Re-refining,” Anderson, J. and Lappinen, M., Technology Management

Horvath, H., Univ. of California, Dept. of Civil and Environmental Engineering, 2005.

3. “Ecological and Energetic Assessment of Re-refining Used

1. “Special Report ofDOE/EPA

and Univ. of Southem Califomia, Voogd has served as president and CEO of ICI, a $200 million European chemical engineering contrac- to? and also held positions with Selas

and DuPont. He founded Evergreen Oil in 198’.

Louis M. Magnabosco is president of MAGNA Associate$ a research, engi-

Jucob Voogd Louis Magnuhosco

Jacob Voogd is chairman and CEO of Evergreen Holdings inc. and of CEe its enginew- ing afiliute. A chemical engi- neering graduate of Stanford

Oils to Base Oils: Substitution of Primarily Produced Base Oils Including Semi-synthetic and Synthetic Compounds,” Fehrenbach, H., Institute for Energie-und Umweitsforschung GmbH.

Purchasing Re-refined Lubricating Oil, EPA Office of Solid Waste, June 1991.

4. EPA Guidelines for

newing and consulting com- pany specializing in process R&D, mathematical modeling and catalysis, with particular emphads on petroleum rejn- ing and petrochemicals. He holds bachelors and musters degrees in chemical enginew- ing, and a doctoratepom the Swiss Federal institute of Echnology

For further informution, visit www.evergreenoil.com

1-800-437-31 88 www.calumetlubricants.com

LUBESN’GREASES 19

BY DAVID McFALL

xxonMobil Automotive Marketing Manager Brad Onofrio calls last year’s lubri- cants market “volatile, with competitors in the trenches”

- a description that would prompt his counterparts around the industry t o nod their heads in agreement.

er, punctuated by spiraling prices for motor oils, painful supply disruptions after Hurricanes Katrina and Rta, and

In hindsight 2005 was indeed a bruis-

widespread consumer dissatisfaction prod^&" replied Ann b i t e , the Ho ston-based director f The NPD

roup -Automotive, a arket data / firm which tracks the autoi { otive after-

with oil companies. In short, not the year you might pick to unveil a new line of engine oils, as Mobil did.

Still, Onofrio expressed satisfaction with the new products’ performance “While our research indicates that ‘ takes at least two years to make

product line,” Onofrio told Lubes’n ’Gfaeases recently, “after more than one year we’re pleased with the progress of our new high endurance oil, particularly in the premium-end semi- and full-synthetic oils.”

ny’s expanded line of Mobil motor oils, launched in early 2005 after two years of intensive and highly secret technical work. The products guaran- tee engine protection for distances ranging from 5,000 to 15,000 miles (depending on the product) and, with few exceptions, this promise covers all driving regimes - including what the

final judgment on the success of a n / w

Onofrio was referring to his compa-

20 JUNE 2006

increase in motor oil a decline in habits faltered, possibly as a respons i> to high gasoline prices and Hurricanes \,

Katrina and Rita, which played havoc with supply channels.

“2005 was unusual; consumers had more money, but because of high gaso- line prices, miles driven did not grow as historically would have been expected,” White pointed out. “Overall, miles dri- ven posted the smallest increase since 1980, when there was an actual decrease.” The end result: “Motor oil sales overall were down past year, partic- ularly from the end of the third quarter. Fourth-quarter 2005 was the lowest-per- forming motor oil quarter we’ve seen in years in the auto parts channel.”

NPD tracks retail auto parts scanner data on conventional motor oil, plus three categories of “nonconventional” products: oils for high-mileage engines, synthetic blends, and hll synthetics. Nonconventionals enjoy premium prices, and have been gaining ground on their conventional brethren in the past few years, White said. Nonconventioiml oils now account for 18 percent of all quart sales in the auto parts channel. On a dol- lar basis, though, their higher cost means they claim 30 cents of every motor oil dollar spent in the auto parts channel.

It’s tricky to pinpoint how well the Mobil high endurance oils are doing after just one year, she continued. Besides other difficulties, the products were facing off against two new com-