Used Oil Re-Refining Stakeholders Meeting Mauri Lappinen John Anderson Technology & Management Services, Inc.

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1 Used Oil Re-Refining Stakeholders Meeting Mauri Lappinen John Anderson Technology & Management Services, Inc. Washington, D.C. November 2, 2005

2 Agenda 9:00-9:15 DOE / EPA Welcome 9:15-10:00 Clarify Facts Energy & Environmental Benefits Energy - Used Oil Supply/Demand Environmental Issues / Wasted Energy Economics: Collection, Burning, Re-refining Used Oil Collection 10:15-10:30 Break 10:30-11:45 Stakeholder Comments 11:45-12:00 Wrap-up 12:00-1:00 Lunch 1:00-2:00 Informal Discussions 2

3 DOE Role Prepare report based on prior studies and stakeholder input 2005 IFEU Study 1995 DOE study on recycling of waste oils Others (API, EPA, etc.) Recommendations / Policy 3

4 Annual Lubricating Oil Demand Type of Oil Automotive Fluids of which is Engine Oil General Industrial Oils Process Oils Industrial Engine Oils Metalworking Fluids Grease Total Million Gal/year 1, ,362 Comment Engine, atf, and gear oils Hydraulic, turbine, and gear oils Rubber. electric, white and agricultural spray oils Cutting and forming oil, metal treating Automotive and industrial Source: DOE, Assessment of Opportunities to Increase the Recovery and Recycling Rates of Waste Oils, August 1995 (for data from 1991) 4

5 Lubricating Oil Demand and Recovery Comparisons Million gal/year DOE, 1995 Report (1991 Data) API Current Website (1997 Data) Company A Engine Oil Demand 1, Total Lubricating Oil Demand 2, ,400 Consumed Recovered Oil (a) ~1000 of which is Burned of which is Re-Refined Disposed of improperly/ landfill 426 (b) (a) API estimates recovered engine oil is only 237 to 256 million gallons/year (b) Disposed oil at 19% of DOE total demand of 2,363 million gallons/year Need to identify the best source of overall demand data and recovered used oil volumes.

6 Disposition of Used Oils (*) Item Space Heaters ** Processed Oils Re-refiners Total Recycled % Million gallons/yr ,008 Disposition of Processed Oils (750 MMgal/yr) Processed Oil Disposition Asphalt Plants Industrial Boilers Utility Boilers Steel Mills Cement/Lime Kilns Pulp and Paper Mills Commercial Boilers Other % (*) Source: API website, Used Motor Oil Collection and Recycling 6

7 Energy and Environmental Comparison of Re-refining vs. Combustion of Used Oil Source: IFEU Overview of the impact assessment results, where all figures are related to the particular result of re-refining ; e.g. a scenario with a value of 2 is half as beneficial as the scenario with the value 1. 7

8 Energy Savings for Re-refining vs. Burning Used Oils Energy Balance Thousand Btu/Bbl of Waste Oil Reprocess to Fuel & Burning Rerefining Variance % Transportation Processing consumed Processing saved Energy Recovered Net Energy Recovered Source: DOE 1995 Memo: The DOE Study indicates that processing through primary refining saves energy vs. re-refinery but the analysis does not support those conclusions. 8

9 Energy and Environmental Benefits Studies 2005 IFEU Study 1995 DOE study on recycling of waste oils Others (API, EPA, etc.) What other authoritative analyses should be considered in the DOE response? 9

10 Burning vs. Re-refining Considerations Burning Pros Low investment & op costs, more tolerant to contamination, less complicated, more operators, more geographically diverse, more outlets Re-Refining Pros Energy utilization, environmental benefits, Need supporting information on economics, volumes, prices, trends 10

11 Key Industry Statistics Re-refining Plants Company Location Capacity (MMgal/yr) Process Safety-Kleen E. Chicago 180 (*) Vac Dist & Hydrotreat Evergreen Newark, CA 121 Vac Dist & Hydrotreat ORRCO Portland, OR?? General??? (*) East Chicago and Ontario plants Number of Recyclers? Capacity? Collection Points - 12,200 (API data) 11

12 Key Industry Statistics (cont.) Volume Collected Trends Engine Oils Other Oils Re-refined Lubricant Sales Trends Industrial Automotive To U.S. Gov t

13 Key Industry Statistics (cont.) Major Brand Names America s Choice, Firebird, Gemline, Others? Key Industry Parameters Collection rates Used oil costs Sales price to burners/re-refiners Others? 13

14 Used Oil Collection Many different techniques used around the world Laws, deposits, subsidies, incentives, public relations campaigns, municipal programs, retail station programs, etc Perception: Environmental awareness is improving California reports positive used oil recycling trend Concern about initiating a new program that might undermine good work already done Investments Local successes Observation: It takes a long time to change consumers behavior 14

15 Conventional Wisdom? The biggest problem with used oil is to get more oil collected? The biggest problem with used oil is to get the re-refined oil lubricant product to be accepted by the consumer? Classifying re-refiner byproducts as hazardous waste is a big problem? Used oil collection/recovery is getting better every year as consumers slowly change their behavior? Regarding collection of used oils - the major issue is the DIY market? Industrial oils & other oils are in good shape? Collection of used oil continues to be a big problem due to contamination with paints, solvents, other hazardous materials? Quick lubes stations, garages, dealers all recycle their used oils responsibly? Lubricant products made with re-refined oils command a market price equivalent to virgin oil products? Need to get ISO 9000 certification for re-refined lube oil products? It takes 6 months to get API certification for motor oils made with re-refined oils? 15

16 Conventional Wisdom? A new 10 MM gal/year re-refined oil plant costs $5-10,000,000 investment and costs $0.50/gallon to operate? Original equipment manufacturer warranties do not cover use of rerefined oils? Used oil burned (110 MM Gal/yr) in small fired heating systems (abt 75,000) contributes almost 10% of the total emissions of zinc into the atmosphere in the U.S.? 150 re-refining plants existed in the US before price controls were abandoned? The yield from a typical re-refining plant is 75% lube oil basestock, 12% asphalt flux, 8% light hydrocarbon and 5% water? The cost for achieving API motor oil product certification is $250,000 - $500,000? State laws prohibit processing used oil through a conventional oil refinery in California? Motor oils made from synthetic lubricants improves the economics of used oil re-refining? Economic returns for oil re-refining is typically 20-25%? Motor oil is sold to gov t fleets for $1.00/gallon (Forbes Mag 2001)? 16

17 Stakeholder Comments 17

18 Attachment 18

19 Motor Oil Recycling Channel DIY DIFM Total Recycling Automotive Lubricants Volume Sold, MMGal/Year Volume Recycled MMGal/Year % Recycled Source: API 1997 Study 19

20 Contacts Art Hartstein Mike Svizzero John Anderson Mauri Lappinen

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