UPDATE 3-Marathon Petroleum sees distillate demand up in 2013

* CEO expects 3.7 pct increase in distillate demand in 2013

* Company aims to increase export capability

* Asset sales in quarter partly offset lower refining earnings

Nov 1 (Reuters) - Refiner Marathon Petroleum Corp expects U.S. distillate demand to rise by 3.7 percent in 2013 -- including exports -- and the company aims to increase distillate yields at its Louisiana refinery to reap the benefits, Chief Executive Gary Heminger told analysts on Thursday.

``Looking ahead into 2013, we expect U.S. gasoline demand to be flat and distillate demand to be up about 3.7 percent,'' he said during the company's third-quarter earnings conference call. ``In addition, we expect export opportunities to remain attractive in 2013.''

Last year the U.S. became a net exporter of refined products for the first time in 62 years, shipping out 439,000 bpd more fuel than it imported, according to U.S. government data.

Distillate exports from Marathon's 490,000 barrels-per-day (bpd) refinery in Garyville, Louisiana, reached 112,000 bpd in the quarter, up from 79,000 bpd a year ago, Heminger said.

The company is boosting pipeline and pumping capacity, adding tankage and upgrading dock capabilities to increase export capability next year for distillates and gasoline, he said.

Garry Peiffer, executive vice president of corporate planning and investor and government relations, told Reuters in an interview that the Garyville investments will ``allow you to stage 300,000-barrel shipments, that's the normal cargo size of an export.''

Peiffer said Garyville's gasoline exports are ``basically none at the moment'' because of higher diesel demand.

Last month Marathon announced plans to buy BP Plc's 451,000 bpd Texas City refinery, associated assets and inventory for $2.5 billion.

The Texas City plant, near Marathon's own 80,000 bpd Texas City refinery, does not currently export refined products internationally.

Heminger declined to elaborate on export plans after the deal closes early next year, though he has said the deal will increase Marathon's export capabilities.

``With the seller that we're dealing with, you don't want to get out in front to talk about projects that we see that maybe they haven't seen in the past,'' Heminger told Reuters. ``That is something we will talk about at a later date.''

On Tuesday a fire broke out in a residual hydrotreater at BP's Texas City plant where heavy oil burned off and sent black plumes of smoke into the air. No one was hurt and other units kept operating.

Heminger told Reuters that BP kept Marathon informed of the fire, which he said appeared to be ``very minor'' and did not look as though it caused much damage. Marathon has some staff on site at the refinery working on transition plans related to the acquisition, he said.

Heminger also told analysts that its 106,000 bpd Detroit refinery is starting up after more than two months of planned work to tie in a new $2.2 billion upgrade project to the existing plant.

The upgrade will push capacity to 120,000 bpd and increase capability to process cheaper Canadian heavy oil to 100,000 bpd from 20,000 bpd, Heminger said.

Regarding earnings, Marathon reported a better-than-expected quarterly profit on Thursday due in part to asset sales, though earnings slipped in the company's core refining unit.

For the third quarter, the company posted net income of $1.22 billion, or $3.59 per share, compared with $1.13 billion, or $3.16 per share, in the year-earlier period.

Excluding one-time items, the company posted profit of $3.31 per share.

By that measure, analysts expected earnings of $3.23 per share, according to Thomson Reuters I/B/E/S.

Revenue rose to $21.25 billion from $20.65 billion.

Marathon said operating profit fell about 1 percent in its refining unit to $1.69 billion, mostly due to higher crude oil costs.

Quarterly results were helped by a $183 million pre-tax gain the company recognized during the quarter related to the sale of a refinery and other assets in Minnesota in 2010.

Shares of the Findlay, Ohio-based company fell 2.6 percent to $53.47 in Thursday afternoon trading. The stock has gained 62 percent so far this year.