(EnergyAsia, March 27 2013, Wednesday) — A significant expansion in US Gulf Coast hydrocracking capacity will increase diesel output to easily meet Latin America’s diesel import requirement in 2013, predicts US-based consulting firm ESAI.

In its recently published Global Refining Outlook, ESAI is forecasting a more than 100,000 b/d rise in US Gulf Coast diesel production in 2013, enabling USGC refiners to maintain strong diesel exports despite lower stock levels compared to a year ago.

The middle distillate-focused downstream units will allow refiners to shift production to middle distillates and away from gasoline, when demand trends warrant. This will limit the bearish impact on gasoline prices when diesel demand strengthens.

ESAI said is expects the US Gulf Coast to add nearly 200,000 b/d of hydrocracking capacity between 2012 and the first half of 2013.

Data from the US EIA on crude flows into hydrocracking units for the second half of 2012 provides a glimpse of the impact that these diesel oriented projects will have in 2013. Hydrocracker inputs were up roughly 120,000 b/d during the final quarter of 2012, contributing to a 60,000 b/d year-on-year increase in middle distillate production.

With a second 60,000 hydrocracking project at Valero’s St. Charles refinery in Louisiana expected online in the second quarter, ESAI expects middle distillate production capacity to rise even further prior to the peak summer demand period for transport fuels.

“The new hydrocracking units will increase the region’s flexibility to produce additional diesel barrels,” said Chris Barber at ESAI Energy.

“This additional capacity will allow some U.S. refiners to boost diesel production, even when US gasoline demand softens, making it easier to supply Latin America’s diesel requirement without relying as heavily on stocks.”