Somethings to think about with used oils / re-refining process.
Used oil prices are connected to natural gas prices in the wholesale market. So as natural gas goes up and down, used oil prices go up and down. The other two primary outlets for used oil is asphalt extender and bunker fuels. (Used in ships / power generation / asphalt production/ concrete production / etc.)
If natural gas sky rockets, the amount of re-refined base stocks will go down. As there will be an increase in demand (typically) for bunker fuels. If natural gas decreases, you will typically see an increase of re-refined base oils on the market.
However, this also has changed, slightly. In the modern re-refined process, you create a VGO (vacuum gasoil) in the process of re-refining. I have a neat “road map” of the re-refining process somewhere. And a cool YouTube video again, somewhere, that I’ll have to dig up about thin-filmed evaporator re-refining. Picture and video now below!
VGO’s can go right into the production of distillates (diesel fuel primarily) in the normal refinery process. And this can extend the a normal refinery’s output of distillates. Which, currently is extremely profitable to do, as diesel fuel on the wholesale market is still $3+. While base oils are currently collapsing in price.
So, do I expect to see massive growth in the re-refined market? No. It’s very expensive to get testing done on base oils, to determine compatibility, to develop adpacks for so that you can get OEM approvals, etc. With being limited to being a group II (+ if you want to say) - it has its markets but there is going to be a fall off in the PCEO business.
Add in how volatile the market for this product is and its competitors in normal group II’s - well, it’s going to be limited. There’s other demands for the same product.
Yes, you can get an extremely high quality base stock out of a good re-refinery. I’ve seen out of our (former) refinery 125+ VI 4cst base stocks. The same refinery also burped out some real crap at times, because the feed stocks might have been a bunch of group 1 gear oils from a steel mill. Or something like that. Good feed stocks in = good base oil out. Bad feed stocks in = bad base oil out.
In terms how clean the base stock is… it has the potential to be just as good as any other group 2 on the market. No worries about that. You’re re-hydro treating it. So it’s clean.
The inconsistency in base stocks also makes it hard for toll blenders to use the base stocks reliably. The testing involved, tweaking, etc. Fine for hydraulics or R&O’s. Having a wild VI range for a PCEO - not great.
As for Valvoline nextgen… it actually was born out of my formulation. For our house brand, we were partners with a major quick lube chain that offered our brand, but called it and marketed it as eco. We partners with a used oil collector, who co-owned the re-refinery with us. And we offered a cradle to grave road map for this product. We did a cool film series and advertising campaign. Educating consumers on how the process worked. From birth (re-refining) to blending, to end user, to death and rebirth (re-refining.)
It was pretty popular for several years. Valvoline got onboard with the idea. I actually trucked a substantial amount of the base oil to their blend plant for it initially.
But re-refined group 2s are out in the market place. I can’t say who I know buys them for confidentiality reasons. But you have a chance in finding them in any synthetic blend PCEO. Depends on the market conditions (see above reasons why.)
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