Wednesday, March 21, 2018

NexLube bringing the next generation of oil recycling to Tampa

TAMPA — The oil will come in used. Dirty. Polluted. Drained from crankcases all over Florida.

When it leaves, it will be like new. Clean. Clear. Safe. The purest form of oil there is.

The process is called oil re-refining. It is environmentally sound. Practical. Profitable.

To Enzio D'Angelo, however, it will be even better than that: It will be "beautiful."

He first saw the process eight years ago in Europe. Ever since, the petroleum executive has been trying to bring that process to the Western Hemisphere and make a clean break from the world of dirty fuels.

He's finally on the verge of doing so — and he's taking Tampa with him.

D'Angelo is the chief operating officer of NexLube Tampa LLC, which is spending more than $120 million to build an oil re-refinery on 12.3 acres at the Port of Tampa's Pendola Point. Set for completion in early 2014, it will process up to 24 million gallons of used oil annually.

It will be the most advanced oil recycling facility in the world, D'Angelo said.

NexLube will use hydrofinishing — applying extreme heat and pressure — to transform waste oil into a purer form, technical-grade white oil, and resell it. That oil, also known as TGWO or base oil, is the only lubricant pure and safe enough to be used in the machines that handle food.

Even the byproducts of that process can be resold. NexLube will also be able to make products like cleaner-burning diesel and asphalt flux, an oil used in paving.

The more used oil NexLube recycles in Florida, the less will be burned as fuel or dumped illegally, poisoning the air and water. It's a green industry that D'Angelo hopes will be as profitable as it is responsible.

"I saw how important this could be from an environmental point of view and an economic point of view," said the Venezuelan-born engineer. "This is a project where everybody wins.

"Every gallon that we will refine means this country has to import less crude oil. Every gallon we process brings wealth to the local economy. And every gallon that we refine, the environment will be very pleased with us.

"It's amazing. If you asked me, in my life, if there was any other project like this, I bet there is only one: refining used oil."

• • •

There are economic and environmental advantages to using oil that's already been used.

According to the Environmental Protection Agency, it takes 42 gallons of crude oil to produce 2.5 quarts of high-quality lubricating oil. But the same amount of virgin-grade oil can be produced from re-refining just 1 gallon of used oil.

"You cannot destroy base oil — the only way is to burn it," D'Angelo said. "You can also refine it and refine it again."

C.J. Hummel, a managing director for the energy group at investment banker Headwaters MB, said refineries that process used oil have a big advantage in producing lubricants. Headwaters has an undisclosed business interest in NexLube.

"The cost to purchase used motor oil, process it, clean it up into virgin-grade base oil is very cost-competitive to producing virgin-grade base oils from crude oil through a refinery," he said.

Turning used oil into virgin-grade oil takes 40 percent less energy than it takes to process crude oil for the same purpose, according to the EPA. So re-refining is both cheaper and easier on the environment.

The U.S. wastes 1.3 billion gallons of oil a year, according to the EPA. If all that waste oil were to be re-refined, it would save the country 1.3 million barrels a day.

But the risks to the environment of not recycling oil are even greater. The EPA estimated that 180 million gallons of oil are improperly disposed of in the United States each year. And motor oil is blamed for 40 percent of America's polluted waterways. One gallon of improperly disposed of oil can, theoretically, contaminate up to 1 million gallons of drinking water.

The improper disposal of oil isn't just an American problem, however. It's worldwide.

"I'm from Venezuela, and we had guys throwing the used oil into the river," D'Angelo said. "They didn't know the damage it would cause to the environment. And the people here who change their old oil by themselves, they don't know the impact of disposing of used oil.

"They just threw it down the sewer or onto the land."

There are about eight other oil re-refineries in North America, but they don't produce TGWO. They use a different process to refine base oils.

The technology that NexLube will use, Revivoil, is licensed from the Italian company Viscolube. Italian engineers are helping NexLube build the facility. Their process will distill and dehydrate waste oil, then put it through a "severe hydrofinishing process" utilizing temperatures of about 600 degrees Fahrenheit and pressure in excess of 2,000 pounds per square inch to create the base oil.

The plant will be powered by natural gas and its own petroleum by-products, D'Angelo said, so it will produce no waste that has to be disposed of. Everything will be reused or resold.

But NexLube's business model depends on having a supply of used oil to recycle. California leads the country in collecting used oil. Florida is second, collecting 146 million gallons of used oil and waste oil in 2011.

That's just one of the reasons that brought NexLube to Tampa.

• • •

If real estate is about location, location, location, then the same can be said of oil re-refining. The company looked at Texas and South Carolina, but settled here.

"There's a lot of used oil here, so it doesn't have to be shipped in from other states,'' D'Angelo said. "There are also natural consumers of used oil here." He means the state's many agribusinesses.

The Port of Tampa is an ideal transportation hub for moving NexLube's re-refined oil: It has access to water, rail and highways. Companies will have plenty of options to ship used oil here, and the finished product can go back out the same ways.

The state has several dozen aggregators who collect used waste oils from oil-change shops and others. So NexLube has a dedicated base of suppliers.

It was also able to get permitting from state and local regulators quickly, within 90 days.

Now it has to finish the plant.

NexLube plans to produce three products:

• About 1.6 million gallons of low-sulphur diesel fuel will be produced and resold each year.

• About 2.4 million gallons of asphalt flux will be refined from used oil annually.

• The bulk of the re-refinery's output will be 20 million gallons of technical-grade white oil.

It's odorless, colorless and nontoxic, which is why it is used to make everything from baby oil and hygienic products to water bottles. It's also used to oil the machines that manufacture and handle food and produce.

D'Angelo said the world's main producers of TGWO are in South Korea. Closer to this hemisphere, it's made by Calumet Specialty Products Partners Inc. (Texas), Petro-Canada and Sonneborn Inc. (Netherlands.) But those producers don't use waste oil. They use vacuum gas oil, which is produced from crude oil.

The new NexLube plant will also have the ability to blend the re-refined oils it produces with other additives. It will be able to reproduce any product specified by any supplier of industrial or motor oil and ship it for them.

D'Angelo said NexLube intends to compete on quality and price. It will produce the highest-quality technical-grade white oil in the world, he said, without worrying about price fluctuations in the world's crude markets. And he's not worried about competition. The world's appetite for TGWO is steadily growing, he said, and demand is great.

"Our competitive advantage is going to be quality and reliability of supply," D'Angelo said. "We don't rely on crude oil prices. We will take used oil and re-refine it.''

• • •

D'Angelo said the company is lining up potential customers for its products. He declined to discuss potential revenues.

He first saw a version of the process in 2005, while visiting an old colleague at his new job in Denmark. It was an oil re-refining plant, and a revelation for D'Angelo, who spent 33 of his 58 years working for the state-owned petroleum company Petróleos de Venezuela S.A.

"I was trying to develop the project myself," D'Angelo said. "I couldn't do it. It was the middle of the crisis."

Then Riata Corporate Group, a private equity firm in Texas, got involved. It invested in the project, lined up investors and expertise. NexLube Tampa LLC is privately owned. Hummel said the company spent years researching which process to use.

"The technology they are implementing is well proven through several re-refineries in Europe," he said via email. "The historical operational performance, availability factor, consistency of production, safety and emissions, makes this the best-in-class technology."

In June 2012, NexLube signed a 20-year lease with the Tampa Port Authority to build Florida's first oil re-refinery. It is expected to create 75 high-paying jobs (more than $50,000 a year in salary) and 100 indirect jobs. If NexLube is successful, it has an option on several acres of port land next door. So it can expand and add more refining capability.

For David Tedford, NexLube's environmental and health services manager, the project is also a kind of dream come true. After 17 years in the energy business, he's building a petroleum facility that will give off fewer emissions than an office building.

"This is the culmination of my entire career," he said. "At the end of the day, it's still a refinery. But it's a refinery that will do a cleaner job than anyone else."

Jamal Thalji can be reached at [email protected] or (813) 226-3404.

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