ILMA Compoundings - May 2020 - 28

three targeted base oils provide the foundation for working
with major additive companies to develop new formulations
and blends, said Colvin.
"Essentially, we're the same as any large virgin integrated company in terms of developing key products," he said. An upgrade
to ILSAC's GF-6 engine oil performance standard shows that
"you learn how to formulate and keep up with the times."
Agility grows increasingly important in an ever-shifting
marketplace. The price of heavy fuels that once dominated
the marine market has dropped with the implementation of
IMO 2020 to reduce marine emissions.
Wider adoption of scrubbers by the marine industry
within four years could cause demand for high-sulfur fuel
oil to rebound, according to Thiggins Energy Consulting.
Currently, though, re-refiners can be forced to revise their
pay-for-oil models to charge-for-oil, or to revise charge-for-oil
prices upward. Such upticks affect those DIFM, or do-itfor-me, quick-lube shops that provide much of the feedstock.
GROUP III MIGRATION
As re-refiners know, old oil never dies. It just gets dirty. However, the composition of the oil coming into their facilities is
changing as synthetics increase their share of the market.
"Over time, we can upgrade the quality of our base oil
based on the fact that there's higher-quality finished product
in the marketplace that we're collecting as used oil," said
Colvin. "Group II+ products are starting to act more like
synthetics. Cold-temperature performance is a lot better
than conventional Group IIs. The viscosity index is creeping
closer to Group III synthetics."
Safety-Kleen has the internal capability to manufacture
Group III oils. Whether to scale up Group III production
will depend on the evolution of its strategy. Of course, Group
III products occupy a growing share of the marketplace, and
when the time comes for U.S. plants to play a greater role in
meeting demand, Safety-Kleen believes it will have an advantage over traditional crude refineries, said Harrington.
"Re-refiners are going to possibly fill a very substantial gap
there because a lot of that Group III, that synthetic base, is
not available through U.S. refineries right now," Harrington
said. "It's being imported from some areas throughout the
world that are highly volatile."
Gen III aimed straight for Group III production to leverage
a "high-yield, high-margin" opportunity, said Redcliffe.
Even with the global demand for electric vehicles, affordable
cars and hybrids with internal combustion engines and the
manufacture of higher-compression turbo engines requiring
higher-grade motor oils will remain for the forseeable future.
"That's why you're seeing more demand for Group
II+, Group III and Group III+ in North America," said
Redcliffe. "The gap has been historically fed by offshore
providers, by the Middle East and South Korea."

MAY 2020

| COMPOUNDINGS | ILMA.ORG

THE APPEAL OF RE-REFINING
In uncertain times, the future offers challenges and glimmers of hope.
One challenge remains the scarcity of hard data that
investors demand. NORA recognizes that tracking every
gallon generated and collected is impossible, but the
association is urging the DOE to develop methods for
tracking sector trends.
"If we don't know how much is generated and collected,
we can't assess the effectiveness of new policies and plans,"
said Parker. "We're kind of in a shoot-aim situation, and it
hinders investment."
Collectors and manufacturers must sustain their
long-standing partnership to protect and grow markets for
finished products, said Parker. The industry once shifted
output amid the upheavals of the shale revolution. Now, it
must stay agile in an age of unknowable disruptions.
"We should have the most flexible and robust policies and
strategies possible, so that when the next disruption arrives,
we as an industry continue to have healthy markets for
used-oil-derived products," said Parker.
Redcliffe sees multiple advantages in the green revolution.
Millennials and many others disdain waste and demand to
see "re-refining, recycling, renewables, sustainable. That's
only to our benefit and the other re-refiners' benefits."
Even tighter regulations regarding collections will benefit
re-refiners by making more feedstock available, he adds. Gen
III sees plenty of room for partnership models with collectors and upgrade-minded re-refiners.
"We make nothing if we don't share," Redcliffe said.
"There's a lot of margin in what we do to upgrade somebody
from a vacuum gas oil or Group I or Group II to a Group
II+ or Group III."
The economical use of natural gas and used motor oil as
burner fuels continues to impose market limitations, but
re-refiners see rising demand for their valuable services.
Re-refining reduces greenhouse gas emissions by 85% compared to refining from crude, but decisions still boil down to
"what the customer wants," said Harrington.
"If sustainability is a higher priority for our customers,
they're going to be turning to us," he said. "We're seeing
some of that now - that option for them to be able to tell
a stronger sustainability story to the marketplace for their
brand and their company."
McCormick is a Pennsylvania-based freelance writer and a frequent
Compoundings contributor.
To read about how re-refining is being impacted by
IMO 2020 and the COVID-19 pandemic, turn to this
month's Washington Landscape column on page 38.

http://www.ILMA.ORG

ILMA Compoundings - May 2020

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