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Blue Tide Environmental makes final investment decision to add hydrotreater, redesign Baytown base o

September 15, 2022

Blue Tide Environmental has big plans for its recycling plant for used motor oil in the Houston area.

The Plano, Texas-based company reached a final investment decision to add hydrotreater units to its re-refinery facility in Baytown. Steve Lewis, senior vice president of sales and marketing for Blue Tide, said the addition of a hydrotreater and redesigning the facility will enable the company to produce higher-quality, more sustainable recycled base oils for end customers.

Once completed, the changes will enable the firm to produce around 4,500 barrels per day of recycled base oils derived from reclaimed used motor oil. The front end of the facility will also produce around 4,000 barrels of vacuum gas oil (VGO) per day, which Blue Tide will sell to offtakers for things like marine fuels and other products.

"We'll move those products into the bunker market, which I've already got contracts set up for," Lewis told the Houston Business Journal. "Then, we'll turn the hydrotreating phase on."

Construction is getting ready to start on the front end of the Baytown facility, located along the Cedar Bayou just south of Houston-based NRG Energy's Cedar Bayou power plant complex in Chambers County. Blue Tide expects the plant's front end to begin production in June 2023. The first phase of construction will also include on-site office and laboratory space for Blue Tide's employees, Lewis said.

Production from the facility's second phase is expected to begin in early 2024. Blue Tide also plans to add more storage and processing and logistics infrastructure on undeveloped land it owns adjacent to the current facilities. A barge dock at the site also gives Blue Tide access to tanker markets in the Houston Ship Channel.

"The addition of hydrotreating units to our redesigned facility will significantly expand the breadth of our capabilities from not only recycling high-quality [used motor oils] but allowing us to produce even more environmentally friendly Group II+ base oils directly," said Blue Tide CEO Mark Bouldin. "Our mission is to provide the most reliable and highest-performing, sustainably sourced base oils in the market."

The scope of Blue Tide's plant in Baytown has changed a lot since plans for the project were first unveiled. Blue Tide itself has also changed a lot since first launching as The Woodlands-based TopSail Energy LP in 2016 with a $100 million commitment from Dallas-based private equity firm Tailwater Capital LLC.

TopSail Energy was originally focused on producing VGO to make marine fuels from reclaimed used motor oil. The company purchased 44 undeveloped acres in Baytown for the fuels plant in 2016.

Eventually, the firm's plans changed as Tailwater Capital brought in new leadership in 2021, including Bouldin and Lewis, who previously worked together with Safety-Kleen Systems Inc. in the Dallas area. Lewis spent three decades with Safety-Kleen before joining the company. TopSail rebranded as Blue Tide Environmental shortly after Lewis came onboard last year, and the company moved its corporate office from The Woodlands to Plano around the same time, he said.

After management discovered they had access to a hydrogen line at the Cedar Bayou site, Blue Tide went forward with redesigning the plant to become a full base oils recycling operation with a hydrotreater. Blue Tide secured an additional equity investment from Tailwater and Tailwater co-investors earlier this year to finance the redevelopment of the Baytown plant and to add the hydrotreater unit.

"It's a little bit of a shift in strategy," Lewis said. "We still make a VGO, but then we take it through hydrotreatment."

Financial terms of the project were not disclosed.

Earlier this year, Tailwater Capital and a subsidiary of Houston-based Waste Management Inc. (NYSE: WM) formed a joint venture to support The Woodlands-based recycling company Continuus Materials, which converts municipal solid waste into a sustainable roofing material.

By Chris Mathews, Houston Business Journal