5 days ago
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Inside ReGen III's Base Oil Breakthrough
ReGen III Corp. (TSXV:GIII), a Canadian clean tech company pioneering the upcycling of used motor oil into high value Group III base oils through its patented ReGen™ technology, is sitting with us today and, with its flagship facility in Texas City, Texas, currently in the engineering phase, ReGen III aims to process 5,600 barrels per day of used motor oil, offering a sustainable alternative to traditional refining methods.
Lyndsay Malchuk from Stockhouse Publishing recently sat with Tony Weatherill, CEO of ReGen III to discuss the company's progress and future plans.
Lyndsay: I would like to kick off with the pain point that you are seeing now. ReGen III has a unique clean technology. So tell us about the critical problems your process addresses here.
Tony: Yes, well the fundamental business of ReGen III is recycling used motor oil to produce a higher quality product, predominantly a Group III base oil. But the industry faces some critical problems. Over half of all used motor oil in the United States finds its way into the environment or into a burner, which is a major environmental problem. Of the 25% of used oil that is re-refined, only 1-2% of this is a Group III quality.
Group III, just as a reminder, is the basis of modern synthetic lubricants. And indeed Group III is the fastest growing base oil category, but almost no re-refined supply globally. There is lack of Group III production in the United States, so approximately 85% of North America's requirements are actually imported from Korea and indeed the Middle East, which means that the United States is heavily dependent on foreign sources.
Lyndsay: So in your experience then Tony, why do these problems exist?
Tony: Well refining technology is dated. The traditional process yields lower-value, lower-quality base oils, which are abundant in supply as they produce a low value product. Re-refining economics for these products and projects are generally poor. High capital costs act as a barrier to entry.
The process inherently generates low margins. As a consequence, very few new re-refineries are being built. Indeed, in the last 10 years, only one new base oil re-refinery has been built. And it's not a Group III facility, it's a Group II plant. And low value feedstock. Typically quick lube facilities pay to have the waste used motor oil taken away. And indeed some of these used oil generators opt to discard it into the environment, regrettably or indeed burn it at their shop. So to summarize, it really comes back to the technology being dated and limited to a lower value product.
Lyndsay: How does the ReGen™ technology differ then, and why ultimately would you think it's the best re-refining choice on the market right now?
Tony: That's a great question. Our process is inherently different. So we take the standard two stage re-refining process of distillation and hydro processing and insert a middle stage to produce a high-value Group III product. We use high efficiency solvent extraction technology in our molecular separation unit, or MSU as we would call it, to cost-effectively isolate the Group III molecules from the used motor oil. It's a proven technology in oil and gas, but we do tailor it for used motor oil refining. As a consequence, we produce over 50% yield of Group III, and that comes with a 50% price premium. Historically throughout the entire commodity cycle, the economics are still very attractive. So we believe we have a significant competitive advantage.
Additionally, we also have a second product stream, which we upgrade through hydrotreating. It's small volume which saves on energy, hydrogen and catalyst but we produce a very valuable Group II+ product. So overall, our process reduces emissions from production by 36% versus virgin base oils while protecting the environment from harmful toxins. So if I could summarize, our project generates exceptional re-refining economics, boosts vital domestic Group III supplies, reduces the amount of used motor oil burned or dumped today and improves carbon circularity and increases the value of used motor oil. So just to repeat, 740 million gallons a year are being absorbed into the environment. A project like Texas City could divert about 10% of that.
Lyndsay: That's phenomenal stats right there. Now, Tony, let's flip to your recently completed pilot studies. Can you tell us a little bit more about the results and how they validate the technology?
Tony: Well perhaps a quick recap. So our technology has been validated numerous times in the past, various technical feasibility and pilot studies over the last decade. But we've also done a latest round of testing and we keep testing because we want to be sure we do take a conservative approach at ReGen III. But those results, critically, have been verified by additive companies, lubricant blenders, and major oil companies. And the results have been exceptionally good, surpassing our expectations.
So Group III yields, they're exceeding our base design of 53%. Viscosity index, we need to get to 120 to be considered a Group III, and our results are well above that, which is excellent. Color is fantastic, and I just happen to have a glass of water here. It would actually look like that.
And NOAC volatility was also above expectations. NOAC measures the evaporation loss at high temperatures. The importance of that is it's important to lubricant blenders and consumers because it extends engine oil life, lengthens time between oil changes, and increases your engines longevity.
In summary, we have a solution to several critical problems in the base oil and lubricants market. We have an innovative patented technology that addresses an unmet market need. Our pilot results continue to exceed expectations. We are very much looking forward to commercializing this technology and we have some very exciting strategic developments that are being advanced.
ReGen III Corp's website is and you can find them on the Venture Exchange under the ticker symbol GIII and on the OTCQB under the ticker symbol ISRJF.
Join the discussion: Find out what everybody's saying about this stock on the ReGen III investor discussion forum, and check out the rest of Stockhouse's stock forums and message boards.
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