Farm Industry News Blog

Can Ethanol Become More Geographically Desirable?

POET and Magellan Midstream Partners L.P. announced last week that they will assess the feasibility of an ethanol pipeline that would stretch from South Dakota to New Jersey. If the companies find the pipeline to be feasible, it could be operational by as early as 2014.

This would make ethanol more geographically desirable, particularly in a heavily populated region where a lot of fuel is consumed, but also with its own share of ethanol skeptics.

Distribution through pipeline would be cheaper than train or truck, the way most ethanol is transported now. Anything that would help reduce fuel costs would be as welcome on the East Coast as anywhere else in the country. And, according to a report from the consulting firm LECG, the pipeline would help create as many as 80,000 jobs across the country if it were built. This would mean jobs in New Jersey and Pennsylvania as well as five states across the Midwest.

But, it won’t be easy. The Association of Oil Pipe Lines explains why in a policy paper—it points out ethanol has an affinity for water which can be picked up as the fuel flows through a pipeline. Water contaminates ethanol and makes it unusable. Pipeline companies have reported that the presence of ethanol in pipelines has led to stress corrosion cracking.

The Department of Energy (DOE) and the Department of Transportation have been researching the impact of ethanol on pipelines. In addition, Kinder Morgan began transporting commercial batches of denatured ethanol along with gasoline in a 16-inch pipeline spanning from Tampa to Orlando. The company spent $10 million in modifying the pipeline for ethanol. This included chemically cleaning the line and replacing equipment that was incompatible with ethanol.

There is also the cost. The pipeline from South Dakota to New Jersey could cost as much as $3.5 billion. “A loan guarantee with the DOE is necessary for this project to become a reality,” stated the news release from POET and Magellan. The companies added that Congress is considering amendments to the current DOE loan guarantee program to include large-scale renewable fuel pipeline projects.

Ethanol could become more geographically desirable, especially to the East Coast, but it still has miles to go.

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The Farm Industry News Blog features commentary from Willie Vogt, Jodie Wehrspann, Kathy Huting, Lynn Grooms, Daryl Bridenbaugh and Jeff Ryan.

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