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Recycling Chemicals In The Heartland

Mon, 06/09/2014 - 5:03pm
Jeff Reinke, Editorial Director

A combination of over-use and under-appreciation can relegate terms like vision and innovation to the realm of cliché. However, those words ring much clearer when presented against a backdrop of time-tested approaches that repeatedly drive growth and produce positive results. Such is the case with Evansville, Indiana-based ORG CHEM Group.

The toll processor has a rich history of identifying opportunities, expanding and improving upon the related approaches, and then applying this core knowledge in order to grow in new directions. The company’s origins go back to the early 1980s, when current president Dave Carson and his brother Paul, fresh off of working for their father’s used oil collection and reclamation business, decided to head out on their own.

Shortly after starting a used oil refining business, better margins in a less competitive field turned their attention elsewhere. By removing all the heavy, more volatile materials contained in used oil, a lighter, cleaner mineral oil that maintained all the desired lubrication qualities could be obtained. At the time this was a very new development. “It took off immediately throughout the aluminum industry,” recalls Carson. “For 3-4 years, rolling oil for aluminum production plants was all we did.”

Dave and Paul Carson would eventually spin off and sell the used oil business to Valvoline, focusing on several new ventures that would become the foundation of ORG CHEM Group’s current growth and expansion. Examples include heat transfer fluid recycling and production, antifreeze recycling, aromatic oil distillation and glycerin reclamation from biodiesel feedstock. The company currently handles more than six million gallons of used antifreeze each year.

It also employs more than 100 people at three facilities in Troy, Indiana, Hot Springs, Arkansas and at its base of operations in Evansville. In addition to custom toll-processing projects, the company produces several repurposed and virgin products under their own brand names, including: Thermaflow® heat transfer fluids, Polyflo® aromatic oils and PolyFreeze™ antifreeze.

The Troy facility handles the smallest number of products but processes the largest volume, as those six million gallons of antifreeze run through this site. ORG CHEM Group’s aromatic oil operations are also performed here, with these fluids used as plasticizers for applications that can include rubber mats, small automotive and plumbing parts and, most recently, a pitch for coatings.

The Hot Springs facility is described as “built for purpose.” In other words, its operations are focused specifically on the needs of longstanding customers or established marketplaces. These include de-souring refinery amines to remove hydrogen sulfate and carbon dioxide. Additionally, this location still reprocesses the rolling oil that helped get the business started, as well as one its more recent additions – tech-grade glycerin extracted from industrial and biodiesel-based byproducts.

“Evansville is where new projects start”, offers Eric Mittlefehldt, vice president of operations. Home to a full-size pilot plant, Evansville is the incubator from which most new products and processes are developed. Glycerin, heat transfer fluid reclamation and most initial contract processing projects have their origins at the Evansville location.

“I look at some of the stuff we do,” offers Carson, “and it really offers a great response to some of those who question the work chemical processors do. We recycle and repurpose chemicals that people don't want – used antifreeze, aromatic oils, glycerin from biodiesel plants – and we reintroduce those materials back into the marketplace. We work with chemical engineers and larger chemical companies and refineries in helping produce better products that people use every day.”

The Path Less Traveled

In addition to their insight on new opportunities within the custom tolling and chemical reclamation marketplace, the technological approach embraced by ORG CHEM Group has been key to their growth and differentiation within a very competitive industry. “Our core technology is short path distillation,” explains Mittlefehldt.

“This makes us unique on a couple of fronts,” he continues. “First, we’re one of the only companies that use short path distillation outside of the pilot stage. Since we are committed to this approach right from the start, it allows us to focus on the types of materials that are the right match for this process.”

Short path distillation gets its name from the shorter distance, or path, that the desired substance travels once it has been separated from the original feedstock. This feedstock, which could range from antifreeze to biodiesel byproducts, is heated at lower temperatures than most reclamation processes. It’s also placed under vacuum, but for a shorter time. The reduced exposure to both heat and vacuum allow for ORG CHEM Group’s Pfaudler-style evaporators to extract the desired substances in a gentler manner, safeguarding against damage that can occur with more aggressive exposure to heat and vacuum.

“We seek opportunities based on our approach, which led to work with plasticizers and nutriceuticals that might fall apart or break down with other processes,” adds Mittlefehldt. “Glycerin was considered a waste product, even though it can be used to make munitions, pharmaceuticals, soap or shampoo. We produce a tech grade material that can be used in polymers, urethane, foams, herbicides or anti-freeze.”

ORG CHEM Group’s feedstock decisions are not based solely on their own internal process, but factors like availability, varying industry or customer specifications, emerging markets and cost. The glycerin business is steady, but the best biofuel feedstock, like soybean oil, has increased in price. And due to the limited amount of used ethylene glycol antifreeze that is separated and collected, ORG CHEM Group currently faces some challenges in obtaining more antifreeze to grow that spoke of the business.

In aromatic oils, Scott Herrington, director of business development, continues to seek new applications. “After the refining process, the aromatic oils can be used in flexible polyurethanes, plasticizers and industrial tires. Recently, this product line became a growth area because we’ve discovered a unique petroleum pitch that can be developed and used for carbon fiber coating applications on aircraft brake parts and other military-grade products,” he explains.

The common trait, whether it’s finding new feedstock or marketable applications, is that ORG CHEM Group continues to examine their available options and make decisions accordingly. “We’re always asking, ‘what can we do with this?’ Where do the supply and market sides come together?” states Herrington.

“We’re also uniquely positioned to handle a lot of these challenges because of our size,” states Dave Osbourne, director of supply chain at ORG CHEM Group. “We’re not huge, so we have the flexibility to handle a number of different projects. Customers feel comfortable working with us in the R&D and test marketing stages. They don't have to invest in the capital internally for products that might never be seen again based on scale-up costs or market demands.” Osbourne says they’ve done this type of work on many well-known lubricant, cleaning and health supplement products.

New Challenges, New Opportunities

As is the case with any contract manufacturer, one of the most significant benefits ORG CHEM Group can provide is its ability to remove the burden of investing in equipment, people and processes for new products. “The toll processing we do is pretty specialized,” states Carson. “It’s also a tough business to predict because at any time one of our largest customers might simply decide to invest in their own equipment, and phase us out.”

Combatting this dynamic is how the nature of their work brings ORG CHEM Group very close to their customers. “These are not line card items,” cites Osbourne. “We're very involved with the customer, and each requires different set-ups. So we end up working very closely with them. Plus, we’re always focused on service. We’re here to solve their problems, save them money and constantly develop those long-term relationships.”

“We do have some challenges,” echoes Mike Sturgeon, ORG CHEM Group’s CFO. “From my perspective, it’s always tough evaluating start-up costs because feedstock and other variables are constantly changing. This means we might need to adjust our pricing based on these fluctuations. But the biggest benefit we offer is that we’ve been here a while and customers can count on us to do the right thing. Relationships survive price increases,” he states.

Carson and his colleagues are seeing the industry as a whole becoming more and more receptive to recycled products. This trend, coupled with gains throughout the U.S. chemical industry due to in-country shale gas and oil processing, have allowed ORG CHEM Group to grow and continue looking for new opportunities. They’ve also been able to invest in more equipment to handle larger quantities of feedstock.

From a purely operational perspective, the leadership at ORG CHEM Group offers these priorities:

  • According to Carson: “Environmental stewardship is something we live. We are members of the SOCMA chemical industry trade group and adhere to the ChemStewards® environmental, health, safety and security standards.”
  • “It’s not our materials going through our equipment. We’re being trusted with millions of dollars in material. So material handling, storage, labeling and cleaning processes need to be precise and error-free,” offers Mittlefehldt.
  • Osbourne adds, “Rising fuel and shipping costs, teamed with a shortage of drivers, and in particular those who are HAZMAT qualified, has made having our own in-house fleet of trucks a key customer service and supply chain advantage.”

An established track record in identifying new opportunities, dedicated, industry-leading processes, and operational objectives that tie-in with both have laid a strong foundation for ORG CHEM Group. Recently, the company was purchased by Owner Resource Group, an Austin, Texas-based private investment firm. Carson and his team feel that the additional assets ORG brings to the table will be key as the company targets new areas for growth.

One of these areas is a portable reclamation unit designed for use at oil refineries. Emulating what is housed at the company’s three plants, this unit can be placed onsite, usually for 30-60 days, to help reduce transportation and logistics costs. Although there is only one model currently in use, the recent growth in U.S. oil production would seem to indicate significant potential.

To achieve some of their aggressive goals, such as doubling their size within the next five years, ORG CHEM Group will need to look at new feedstock, new processes and new geographies. Company leadership indicates that the Middle East presents a significant opportunity for the portable reclaiming technology.

Mike Millard is ORG CHEM Group’s vice president of recycling services and serves as the lead for their joint venture – Addar CHEM Group (ACG), located in Saudi Arabia. “Breaking into global territories presents many hurdles to overcome and can take longer than expected to implement. Compared to domestic growth, one must be more patient, but the size and breadth of the opportunities are typically much larger, especially in the Middle East,” he offers.

Dave Carson freely admits that he has no formal education in chemistry and is far from an expert on its technical qualities. However, he says he was drawn to the industry because “chemistry is innovative.” At the risk of sounding cliché, it seems vision and innovation are still running strong at ORG CHEM Group. 

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