Lelio said the facility will not initially produce base oil, and the company doesnt consider it a rerefinery because it wont have a hydrotreating component. Rerefining to base oil requires a more complex and expensive process than the initial investment being made at TopSails Baytown facility, he said. However, the company may pursue investments to upgrade its operations in the future, Lelio added.

To obtain the used motor oil feedstock, the company will be working with third-party suppliers. Additionally, TopSail may pursue strategic acquisitions in support of long term supply, he said.

Stephen B. Ames of SBA Consulting, Pepper Pike, Ohio, said TopSails project is reported to be a 3,000 barrels per day operation.

Ames noted that the location has no rail or barge access, so products must be brought in and out by truck. The project site appears to be located in an existing tank farm with 100,000 barrels capacity, he told Lube Report. It should be a relatively low capital expenditure operation as they will not need hydrogenation to make VGO.

He pointed out that TopSail does not appear to have any waste oil collection business. So they would be wholly dependent on others and the market for their feedstock – a risky venture in my opinion, unless they lock in a long term supply with an existing collector, Ames said.

TopSails equity sponsor, Tailwater Capital LLC, provided financing for the initial Baytown site and for future locations. In addition to space for the processing plant, the Baytown property has nearly 40 acres of undeveloped industrial-zoned land thats marketed for liquids storage, logistics and processing opportunities.

In its news release, Lelio said acquiring the property as its first location is part of a long-term national processing arrangement for which we plan to construct a number of regional locations across the U.S. over the next 18 months.