The North American shale gas boom could have a major effect impact lubes quality through GTL-derived base stocks.
Gas to liquid (GTL) plants are benefitting from a high price differential between oil and gas prices, according to a white paper published by analysts, Kline. There is now the potential to produce very high quality (Group III) lubricant base stocks from elements of the the paraffinic wax produced from the Fischer-Tropsch (F-T) condensation process used in GTL refining.
If the price differential is sustained, says Kline, GTL could become a player in the supply of mainstream refined products and put pressure on conventional refinery margins.
According to the report, GTL base stocks will be able to compete directly with conventional oil-based Group II and Group III stock. Large lubricant marketers such as BP/Castrol, Fuchs and Ashland/Valvoline would be likely to take advantage of this new supply source, as would the larger NOCs who are driving their domestic markets towards advanced lubricant formulations but are unable to make the heavy GTL investment with its associated costs and risks.
The news comes at a time when traditional oil stock are apparently under increasing pressure anyway. According to a recent International Energy Agency (IEA) report, the significant increase in global refinery activity could mean problems with crude supply.
The report stated that refineries are set to increase production by as much as 2.2mb/d between the second and third Quarters of 2013, taking average production to 77mb/d. While crude output from some African nations has fallen, Middle East OPEC countries have seen a slight rise in output. However, this may not be enough to keep refiners happy in the longer-term.