According to a Friday report from the U.S. Energy Information Administration, increasing demand for middle distillates such as jet fuel, kerosene and diesel is giving refiners an incentive to build hydrocrackers in order to increase their ability to provide such fuels. Here are the details.
* According to the EIA, a hydrocracking unit takes heavier gas oil and cracks the heavy molecules. By using a catalyst to crack heavy hydrocarbons and then saturating these hydrocarbons with hydrogen, the low-quality oils can be converted to high-quality, clean-burning jet fuel, diesel and gasoline.
* Hydrogen is also used to control the temperature of the reactor that the product is fed through, allowing it to be cooled enough to complete the operation safely but preventing it from cooling to the point where the cracking will not occur, the EIA reported.
* A 2010 report from EIA stated that increased use of renewable fuels will drive a decline in consumption for petroleum-based gasoline from refineries, but that rising fuel economy standards -- which will also facilitate a decrease in gasoline demand -- will increase the demand for diesel.
* The presence of hydrocrackers at U.S.-based refineries would help in winter, when driving demand is lower but heating oil demand puts extra pressure on distillate prices.
* Additionally, in recent years, the U.S. has emerged as a middle distillate supply source for Europe, the EIA report stated, replacing reduced volumes from Russia and Eastern Europe.
* Tokyo-based Toyo Engineering Corporation states that hydrocracking is one of the most versatile refining processes for converting heavy fuel oil components and is widely used in recent years to meet the demands for middle distillates.
* Toyo has designed and constructed hyrocracking units in Japan and abroad.
* Shell Global has also gotten into the hydrocracking business, with 12 hydrocracker units licensed and designed in the past five years -- including a hydrocracker licensed by Marathon Oil Corporation's Garyville refinery, as part of its $3.2 billion expansion.
* Shell has also received licensing from the China National Offshore Oil Company for a hydrocracker as part of a new refinery in Guangzhou Province. It is the highest capacity hydrocracker in China, Shell reported, designed to produce diesel and jet fuel.
* Forbes reported this week that gas-to-liquids plants, which often use a hydrocracking process, are getting smaller and cheaper as the technology matures, enabling smaller sized corporations to get into the business of converting gas to middle distillates.
* "A refinery's ability to upgrade low-value products into high-value products and convert high-sulfur material to low-sulfur material with a secondary unit like a hydrocracker plays a key role in determining its economic fate," the EIA stated this week.
