The good news, according to Kline and Co.s Geeta Agashe, is that the shortage will be filled by gas-to-liquids waxes. Agashe told the National Petrochemical and Refiners Associations Lubricant and Waxes Meeting that GTL waxes will account for 25 percent of worldwide supply by 2015.

A supply deficit situation seems inevitable in the petroleum wax industry, she said. This will create an ideal situation for the entry of GTL wax.

Petroleum wax – by far the most common type – is usually a by-product of Group I base oil plants, which remove waxy molecules that would hamper cold temperature performance. In recent years, however, growing demand for premium base oils has led to closing of numerous Group I plants. Agashe predicted that this trend will accelerate in coming years, eliminating a large chunk of wax feedstock in North America and Europe.

This loss will far out-pace projected growth in other parts of the world, Agashe said. If global wax demand continues rising at modest annual rates of between 1 percent and 1.2 percent, the world would face a billion-pound supply shortage by 2010, she predicted. By 2015, the shortfall would grow to 2 billion pounds.

Fortunately, the gap can be filled by gas-to-liquids refineries, which process natural gas into fuels, base oils and other petroleum products. Unlike the technologies used to make Group II and Group III base oils, GTL base oil plants do produce wax, or, more specifically, a waxy raffinate that can be de-oiled to make wax.

Two existing GTL plants already produce wax or raffinate that is transported elsewhere to be de-oiled and upgraded. Shells plant in Bintulu, Malaysia, and Sasols in Sasolburg, South Africa, give the wax market approximately half a billion pounds of wax per year, according to Agashes presentation.

But that volume is expected to grow significantly with construction of larger GTL refineries that have been announced by several oil company joint ventures. Shell, Sasol Chevron and ExxonMobil have all formed joint ventures with the government of Qatar to build large-scale refineries in Qatar by 2011. Shell and ExxonMobil have stated that their facilities will include base oil plants.

As result, Agashe said, global production of GTL wax will rise as high as 1.6 billion pounds by 2010. By 2015, she said, companies such as Total and ChevronTexaco could enter the market, helping output to swell to 2.7 billion pounds.

By 2015, there will be a number of GTL plants on-stream, she said. And while their reason for being will be low-sulfur diesel, they will be looking at GTL base stocks and waxes as a way to improve profitability.

By 2015 the supply side of the wax market will look dramatically different than today, Agashe summarized. GTL wax will account for 25 percent of the global market, while another 40 percent will come from traditional sources in Asia. North America and Western Europe, meanwhile, will have much reduced roles.

Agashe emphasized that much of the new supply is likely to come not directly from GTL refineries, but rather from existing crude oil refineries or de-oiling facilities that receive raffinate. These existing facilities will have the advantage of lower manufacturing costs, she explained.