Gulf Coast refineries will increase diesel production

Gulf Coast refineries are expected to boost production of diesel by more than 100,000 barrels a day in 2013, allowing them to easily meet increased demand in Latin America.

Energy Security Analysis Inc.’s Global Refining Outlook suggests that a significant expansion in U.S. Gulf Coast hydrocracking capacity will allow refineries to maintain strong diesel exports.

That’s important for the bottom line as demand for gasoline and other refined products remains flat in the United States.

Demand is growing in Latin America, Asia and the Middle East, with demand for diesel growing especially quickly. Gulf coast refineries are well-placed geographically to capture the export market to Latin America.

According to the ESAI report, additional hydrocracking capacity will allow refiners to shift production to diesel and away from gasoline.

The Gulf Coast is expected to add nearly 200,000 barrels per day of hydrocracking capacity by the middle of 2013, according to the report.

The expansions come in the midst of a broader $15 billion expansion at chemical plants along the Texas Gulf Coast, as the plants take advantage of low-cost natural gas. The companies use natural gas and natural gas liquids to produce a number of products.

For refineries, the expansions are expected to provide flexibility.

“The new hydrocracking units will increase the region’s flexibility to produce additional diesel barrels,” ESAI Energy’s Chris Barber said in a statement. “This additional capacity will allow some U.S. refiners to boost diesel production, even when U.S. gasoline demand softens, making it easier to supply Latin America’s diesel requirements without relying as heavily on stocks.”