Acceptance of 'green' lubricants growing

AKRON (July 2, 2013) — Improvements in the re-refining process and escalation in crude oil prices have bolstered the recycled motor oil market.

Unfortunately, fluctuating public enthusiasm for purchasing environmentally friendly products may continue to hamper significant growth in market share, according to industry analysts.

Recycled—or re-refined—oil is used motor oil that undergoes a re-refining process to remove contaminants to produce base oil. The base oil is then mixed with additive packages to produce lubricants, such as motor oil, transmission fluid and grease.

Re-refined lubricants that are certified by the American Petroleum Institute (API) specifications — as API SN and ILSAC GF-5 — often comply with vehicle manufacturer warranty requirements.

According to API Senior Associate Dennis Bachelder, re-refined motor oil that receives API certification is "just as good" as virgin motor oil.

The re-refining oil industry is growing rapidly in the U.S., according to research firm Kline & Co.'s report, "Used Oils and Re-refined Lubricants: U.S. Market Analysis and Opportunities."

"Given that all announcements pertaining to expansions and new capacities go as planned, it is anticipated that the re-refining industry will see a robust growth to an estimated 1.39 million metric tons by 2016, suggesting a 'golden decade' for many in the industry," the Kline report said. "However, this is contingent upon the successful and timely ramp-up of operational facilities."

Kline said the growth is spurred by enhanced technology and infrastructure, legislative requirements and rising crude oil prices.

"The improving quality and viability of re-refined base oils coupled with increased and more consistent collection rates due to stronger regulations enforcement are helping the industry assert its largely untapped potential."

However, potential market growth will be impacted by access to used oil and consumer acceptance of re-refined lubricants.

"The acceptance of re-refined lubricants is likely to be an incremental phenomenon assisted by more brands — especially major oil brands — entering this market, a more ubiquitous availability and a greater emphasis upon intrinsic value with little or no compromise," the report said.

"The used oil business has turned on its head in recent years," said Tushar Raval, an analyst with Kline. "Whereas previously, generators paid to dispose of used oil, now it's something to be sold. Essentially, used oil has been transformed from a liability to an in-demand commodity for generators, and consequently a revenue stream."

Acceptance of eco-friendly motor oil also gets a boost when major brands are behind the products.

API's Mr. Bachelder said it helps that some oil companies, such as Ashland Inc./Valvoline and Safety-Kleen Systems Inc., which focuses specifically on the re-refining sector, are promoting their recycled motor oil products to the public.

"What I think is critical is that the name-brand players get behind it because there is always going to be a little bit of consumer skepticism about an unbranded product….," said Rob Stravitz, vice president of marketing for Valvoline Instant Oil Change, which sell's Valvoline's NextGen re-refined motor oils.

"That's why when Valvoline got into the category, retail auto parts stores got behind the product finally because there was a name-brand behind it. The consumers are open to it because there's a name brand behind it. I would guess what will probably drive an acceleration of the growth would be really how many of the major players get into the category."

The company-owned Valvoline Instant Oil Change stores have seen a surge in NextGen sales. He noted that nearly 40 percent of the quick-lube's customers are using the NextGen product, about double the percentage from last year.

"I think a lot of what is starting to happen is you're starting to get some momentum, particularly in the installer channel where the installer is there to communicate with the consumer and help alleviate any concerns they might have.

"Like any new technology, there are always some reservations for some people. We really have not found it to be a big challenge…." Mr. Stravitz said.

What helps is that the recycled motor oil is comparable in quality and price as the virgin oil, he said.

In addition to the need for increased consumer demand, the industry needs more refineries to produce re-refined oil, Mr. Stravitz said.

"It's less about the amount of used oil collected and more about the number of refineries that can produce re-refined base oils," Mr. Stravitz said.

"There is a limited supply today and that is one of the limiting factors is how much can you make available in the market. There are always new refineries coming on line…that is a factor that will drive continued growth.

"For us the challenge is always that the quality of that base oil meets our requirements. Not every refinery out there making re-refined base oil does. That limits our potential to grow as quickly as we want."

Another obstacle to acceptance among installers is the availability of eco-friendly oil in bulk.

"Where we have it in bulk it tends to do well, where we don't, it is a barrier to adoption for installers," noted Mr. Stravitz.

API's Mr. Bachelder said he believes the re-refined motor oil market will continue to grow but may never become a major portion of the market, hampered in part by lack of consumer acceptance and a negative connotation of "recycled" because at one time used oil went through a less stringent filtering process.

Some of the companies that are promoting re-refined/environmentally friendly oil to the auto aftermarket include:

Universal Lubricants

John Wesley, CEO of Universal Lubricants L.L.C. (UL), called 2012 "a turning point in sustainable business practices.

"It was a year in which the dual business objectives of sustainability and profitability came together, proving that doing right by the environment is good for business," he said. "The result has been increasing customer demand for our high-quality lubricants, new oil delivery, used oil recovery services, and comprehensive industrial and environmental services throughout the U.S."

Last year the company opened a distribution center in Denver and expanded existing centers in Chicago and St. Louis to meet increasing demand. Mr. Wesley said he expects continued growth in 2013.

According to UL, the U.S. generates about 1.3 billion gallons of used engine oils annually, only about 20 percent of which is re-refined, with the balance either burned as an industrial fuel or disposed of improperly.

UL operates what it describes as a closed-loop program that involves collecting used oil, processing/reclaiming the oil and redistributing its own oil products, including the Eco Ultra brand. The company said its Closed Loop Process allows it to completely control every element in the production of new products and it makes the process an "infinitely repeatable, sustainable cycle."

The re-refining process uses up to 89 percent less energy than refining crude oil to produce lubricant products, the company said.

Universal said that only about 15 percent of the 1.3 billion gallons of oil used in the U.S. each year is repurposed.

"Consumer education about used oil recycling and eco-friendly oils is very important to spread the sustainability story. We're doing our part with initiatives like this summer's national 'Great American Oil Change for Good!' Facebook sweepstakes to encourage Americans to declare energy independence from foreign oil imports and spread the word on the role sustainable motor oils — like Eco Ultra — have in protecting the environment," a spokesperson said.

Last year the company debuted motor oil for natural gas engines — its Eco Ultra CNG/LNG line—that uses up to 83-percent refined material.

The company also secured a U.S. General Services Administration (GSA) Schedule Contract for its Eco Ultra line of auto and industrial motor oils, which allows federal agencies to purchase the product directly from the company.

UL also said it is helping the environment with its six-gallon Eco¬Pak bag-in-a-box, introduced two-years ago, that it said offers convenience, cost savings and environmental benefits for repair shops.

"The time was right for this kind of package and the response from installers has been tremendous," said Gary Shaffer, UL director of installer sales. "Buying in bulk saves installers money and reducing the number of individual bottles and keeps more plastic out of the waste stream. Since EcoPaks are so easy to store, installers can stock their service bays with a wide variety of engine oils and transmission fluids."

Last fall, UL offered an eco-friendly packaging for the consumer market: a flexible stand-up pouch called a FlexPak, which won the Packaging Award for Innovation at the 2012 Automotive Aftermarket Products Expo (AAPEX).

UL distributes its Eco Ultra to fleets, car dealerships and auto repair centers, including Green Garage.

Safety-Kleen

Safety-Kleen, a major collector and re-refiner of used oil, markets its EcoPower re-refined engine oil that it claims uses up to 85 percent less energy than refining motor oil from crude oil.

In 2011, Safety-Kleen said, it collected approximately 200 million gallons of used oil and recycled about 140 million gallons of it into base oil products for reuse.

The company, owned by Norwell, Mass.-based Clean Harbors Inc., said it collects reclaimed oil from more than 115,000 service locations across the country. After testing the used oil for quality, it undergoes a refining process that includes vacuum distillation and hydro-treating, removes contaminants such as fuel, water, sulfur and dirt from used oil.

The base oil is then blended with a package of additives to reduce oxidation and engine wear while protecting against viscosity and thermal breakdown.

"Our closed-loop process enables motor oil to be recycled indefinitely, making it a far smarter way to manage used oil," the company said.

The company also produces EcoPower diesel engine oils for the commercial trucking industry and EcoPower NGP-2 15W-40 Natural Gas Engine Oil.

"Re-refined oil lasts as long as conventional oil. You change your oil because it becomes dirty from engine deposits and the additives are depleted over time. The petroleum base stocks that hold the additive chemistry together never lose their lubricity and can be used over and over again, making it a sustainable product," the company said on its website.

Safety-Kleen claims more than 70 racetracks across North America — from Daytona International Speedway to Indianapolis Motor Speedway — use EcoPower for their track vehicles. The company collects and re-refines more than 200,000 gallons of used motor oil each year from racetracks.

Safety-Kleen said its products are used by commercial fleets and the federal government, as well as some auto maintenance shops, such as some Grease Monkey International locations.

Valvoline

Ashland Inc.'s Valvoline unit markets its re-refined oil under the NextGen brand. The semi-synthetic is made with 50-percent re-refined base oil, 35 percent virgin base oil and the rest with Valvoline's Maxlife additives,

Z. George Zhang, manager of Valvoline R&D Lab, said the supply of quality re-refined oil limits Valvoline from increasing the percentage of recycled oil in its product.

"For us to be able to distribute the product to 13,000 stores and all the quick lubes, we feel like if we do the 50 percent, we can have more product available to our customers. So that's the reason we use 50 (percent) for now, but in the future there is no limiting factor for us not to go, say, (to) 85 percent."

Valvoline's Mr. Stravitz said that there is still some skepticism on the part of installers and consumers regarding the quality of re-refined oil.

For its part, Valvoline, which distributes NextGen products through its company-owned quick-lube outlets as well as to 13,000 retail stores, has an advertising campaign to educate DIYers that they don't have to sacrifice performance when they use re-refined oil.

"You can have both. You can have performance and be better for the environment in one product. So we're really working hard from that consumer standpoint to continue to educate that perception that exists out in the marketplace," said Michelle Allen, associate brand manager for Valvoline global brands.

NextGen motor oil is backed by the company's Engine Guarantee Program.

"In the past, used oil was recycled through acid-clay treatment that removed some contaminants, but the quality was not suitable for Valvoline motor oil," the company said on its website.

"But today's oil recycling uses the same refining processes used for crude oil refining, including hydro-treating and distillation techniques to remove contaminants and used-up additives. This process results in recycled base oils that can have the same quality and performance as base oils made from virgin crude."

The "oil" part doesn't really wear out, Valvoline said — it's the additives that wear out.

According to the Valvoline website, retailers that offer NextGen oil include Tire Discounters Inc., most TBC Retail Group and Big O Tires L.L.C. locations, Walmart Tire & Lube Express and Pep Boys — Manny, Moe & Jack.

Green Earth

Green Earth Technologies Inc. markets its biodegradable, bio-based and re-refined conventional and synthetic motor oils under the G-Oil brand.

The company claims its products, when disposed, degrade from 70 percent to 95 percent within nine days, exceeding the "Ultimate Biodegradable" American Society for Testing and Materials (ASTM) ranking standard that 60 percent of a product must degrade within 28 days.

The company said its process replaces the petrochemical base of traditional performance chemicals with a bio-base made with plants or animal fat.

The company also touts that its oil cartons are manufactured with 30-percent post-consumer recyclable plastic.

According to Green Earth, its bio-based fully synthetic motor oils receive API certification and became the "official motor oil" of the Daytona International Speedway and the Daytona 500, a year after G-Oil became the first bio-based full synthetic motor oil to be used in NASCAR competition at Daytona.

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To reach this reporter: [email protected]; 330-865-6127.