Crude Attempts

According to the Web site of the American Petroleum Institute, Washington, D.C., some 240 to 260 million gallons of used motor oils are recycled annually, with a combination of quick lube shops, retailers and do-it-yourselfers collecting oil.

Recycling used oil can have many beneficial effects, including saving energy, extending fossil fuel reserves and helping ensure that the used oil stays out of ground water supplies, streams and rivers.

While some companies are attempting to purify collected motor oil and re-blend it for sale as a recycled lubricant, the great bulk of used motor oil is recycled into a low-cost, low-grade fuel for cement kilns and utility boilers, or it is used as an ingredient in asphalt pavement.

GETTING THE DIRT OUT. Even within these so-called lower-end applications, a certain amount of cleansing and filtration of the collected oil is usually required.

In the cement kiln and boiler applications, the small-diameter orifices in the burners require clean fuel, so physical filtration—even multiple filtration—is mandatory. It is good practice to filter the oil when it enters the collection trucks and again when it’s pumped from them and, possibly, again later in one or more processes.

Depending on the specifics, there are alternative treatments for the dirt and particles taken out of the oil prior to their disposal. The objective will be to render the removed dirt acceptable for burial in an approved landfill.

Oil used in paving applications also must be purified, as it will be exposed to rain and subjected to drainage effects.

IN THE BUSINESS. Dan Cowart is president of Aaron Oil Co. Inc., a large oil recycler based near Mobile, Ala. A look at Aaron Oil’s business practices can give readers a good feel for some important aspects of the oil recycling business.

"We have a computerized scheduling program that constantly tracks the amount of oil generated by each customer we service," says Cowart. "Based on their tank size and our frequency codes, the computer tells us when we need to make a pickup. We also have a call-in system.

"We have a lot of different customers. Some customers don’t generate much used oil, and so they may go as many as 6 months between pickups. Others have a daily pickup. The computer system helps us keep it managed well and keeps tanks from overflowing," he adds.

"We basically cover about a 200-mile radius from our facility. Some companies in the industry will go farther; and sometimes we will go farther, but as a general rule, we go to a 200-mile radius. We can stretch out farther, but then there would be greater charges involved, transportation fees, etc.," Cowart notes.

Uniformity does not seem to be widespread in the oil recycling industry. "It’s amazing how many different kinds of processes are used," says Cowart. "Every used oil recycling facility is a little different. Our facility uses a proprietary process that we developed, combining a number of technologies, and it’s the only one like it in the world."

Cowart says a number of processes are needed because used oil can take many different forms. A wide range of flexibility in the processing is virtually a necessity because of the different types of oil, which can include "everything from hydraulic oils to transmission oils to lube oils to industrial oils," he says. "Many times they come in mixed together. That’s why your processes have to be really flexible to handle the variety and range that you’ll see."

The total volume of used motor oil collected can vary from year to year. "It depends on the company," Cowart says. "We’re a growing company, so our volumes are growing. But, it’s a market-driven product. For instance, after 9/11 there was a lot less traveling, and so the generation of used oil fell off in many markets. Then, as vacations and travel picked up, the volumes went back up," he says. "We’re also in a trend where the oil is not being changed as often as it used to. It used to be every 3,000 miles between oil-changes."

Cowart credits the improved oil blends created by refiners for the decrease in oil changes. "Synthetic oils are part of the reason you don’t have to change the oil as often."

PLAYING THE MARKET. What factors influence the price a recycler can afford to pay for the used oil collected? "The price of energy—whether it’s #6 oil or #2 oil or natural gas—is key," says Cowart.

When the price of oil is at an all-time low, as it was in 2000, most people in the used oil industry and the generators of used oil managed the material "as a waste," he says. "As the oil price goes up, you go through another cycle—a service cycle—where the generator is neither paying to get rid of it, nor getting paid for it; so it becomes a sort of free-type service." During stable markets, when the price is neither high nor low, service becomes very important. Cowart says that generators want "good, efficient pickup service" during those periods.

Today, the used oil market is similar to a commodities market—the price of oil is high, and, therefore, generators expect to be paid for their oil. "A lot of people in the industry don’t understand [how] the industry goes through those cycles," says Cowart, a refrain that will sound familiar to scrap metal and paper dealers.

"Sometimes it may take a couple of years; sometimes they’re all in one year," he says of the up and down price cycles. "But, we’ve certainly seen all those cycles in the last few years—when we’ve seen both a 20-year low and a 20-year high—and somewhere in the middle too."

Cowart says the industry is still developing methods to deal with this volatility. "It’s a challenge for the industry to make the adjustments because your whole philosophy of management has to change: The strategies change; the way you think about materials changes; the way you get business, and the way you keep business. It’s a [situation] that many large companies don’t understand, and that’s one of the reasons that most of your national companies have either gone bankrupt or have been sold or are up for sale, even today."

The larger generators of used oils tend to ask for contracts, primarily as a financial monitoring and management tool, notes Cowart. For Aaron Oil, however, contracts are a necessity: "In our business, we don’t take anything unless we have a contract—from anybody! There are a lot of terms and conditions that you have to have in place to pick up from even the smallest account," he says. "You have to have some basic agreements about the materials; the customer has to commit to not mixing in any hazardous materials with the oil."

In discussing the reporting requirements, John Williams, president of the Holston Companies, Chattanooga, Tenn., notes that the recycled industrial fuel oil sold is covered under air-quality regulations. Accordingly, recyclers have to provide documentation on their end product and its processing.

COMPLETE CLEANING. When it comes to processing and regulations, re-refiners offering recycled lubricants have to meet standards that set them apart from the rest of the market.

Darwin Hall, VP of sales and marketing for Evergreen Oil Inc., Irvine, Calif., cites several differences. "After the initial filtration, once it reaches our refinery, it’s put into a selection tank and analyzed for major contaminants, such as PCBs, silica and sulfurs. If it meets our criteria, it goes into our feedstock—which goes through an oil-water separation and vacuum distillation that pulls out contaminants in what we call an asphalt plug. The light ends are taken off the top, and the water is dropped out. Through that vacuum distillation process, we end up with a gas oil that contains lubes. That, in turn, is sent through a hydrotreater, which puts out two API-grade base oils that are functionally equivalent to ‘virgin’ oils."

Hall says the competition to collect used motor oil generated on the West Coast is vigorous, "but in California it falls under the California EPA, and it’s what we call a non-federal regulated hazardous waste, or a California-regulated waste."

Hall says currently major generators may not be charged to have oil picked up, "but typical charges are 10 to 15 cents per gallon, or $45 to $55 per stop."

He continues, "The per-gallon price varies, but there’s a fee for stopping the truck . . . For the rest of the world, it’s a commodity, but here it’s a hazardous waste. You have to have a lot of insurance on your trucks; you have to be a registered waste-hauler with the state; and if you operate a facility, there’s a 10-year permitting process, with a million dollars or more to get it; plus, you have to have closure funding."

California’s regulatory approach to the industry "has some good points, and some bad points," says Hall.

Evergreen collects from a variety of generators. "Automotive oil is our biggest source, of course. But, we do collect industrial oil heavily and agricultural oil to a lesser degree."

Hall foresees a change in the proportions of used oil that will end up as fuel and as re-refined lube stocks. "The California Integrated Waste Management Board has focused for the last 15 years on proper collection and recycling, and the indication that I get now is that in the future they will be pushing harder for re-use. Re-refined oil, theoretically, doesn’t wear out, so you can run a quart of oil through a process many times whereas [recycling oil as fuel] gives you just two uses," he says.

"The state of California has pushed very hard to overcome that, and there are government regulations to require all agencies, by executive order, to use re-refined oil; but that’s not done in total . . . The post office buys re-refined oil for their trucks, as does the military. Companies like Coca-Cola and Ryder use it for their trucks. In California, CalTrans uses re-refined oil."

Hall believes the acceptance at the corporate level in the U.S. and in Europe should begin to chip away at pre-conceived notions that re-blended oil is second-rate.

Buyers of luxury cars assembled in Europe, for instance, may help reverse this trend. "It’s my understanding that when you buy a new Mercedes, there’s re-refined oil in the engine block."