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Pennzoil-Quaker State acquires stake in lubricant recycling co. Blue Tide Environmental

December 5, 2022

A local Shell PLC subsidiary has acquired a significant stake in a North Texas company building a lubricant recycling project east of Houston.

Houston-based motor oil giant Pennzoil-Quaker State Co., which is owned by London-based major Shell PLC (NYSE: SHEL), acquired a 49% equity interest in Plano-based Blue Tide Environmental, the firms said Dec. 2. Blue Tide is a portfolio company of Dallas-based private equity firm Tailwater Capital LLC.Blue Tide is developing a re-recycling plant in Baytown to process used lubricants into base oils and co-products like vacuum gas oil and naphtha. The company aims to build out a global network of lubricant recycling facilities.

"Acquiring an interest in Blue Tide is a step in our journey to support a circular economy for lubricants," said Machteld de Haan, executive vice president for Shell Lubricants. "We look forward to working closely with Blue Tide to evaluate opportunities for recycled lubricants as we continue to develop sustainable solutions to complement our existing range of products."

In September, Blue Tide announced making a final decision to add hydrotreater units to its re-refinery facility in Baytown. Once completed, the plant will produce approximately 5,000 barrels per day of recycled base oils derived from reclaimed used motor oil.

Blue Tide's plant will also produce vacuum gas oil, or VGO, a common feedstock in the production of marine fuel. Blue Tide will operate the Baytown facility being developed along the Cedar Bayou, which is expected to start up in 2024.

"As we continue to make progress on the completion of our state-of-the-art facility, working with exceptional organizations like Shell and Tailwater will allow us to hit the ground running upon completion and position Blue Tide as the premier provider of sustainable, high-quality Group II+ base oils," said Blue Tide CEO Mark Bouldin.

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

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

The company's plans shifted as Tailwater brought in new leadership last year. TopSail rebranded as Blue Tide Environmental and the company moved its corporate headquarters from The Woodlands to Plano.

Steve Lewis, senior vice president of sales and marketing for Blue Tide, told the Houston Business Journal that the company plans to continue adding employees in the Houston area for the lubricants plant and on-site lab space.

For the Pennzoil deal, Blue Tide was advised by Kirkland & Ellis LLP. Financial terms of the transaction were not disclosed.

Pennzoil was acquired by Shell Oil Co. in 2002.

By Chris Mathews, Houston Business Journal