Poet, Magellan assess pipeline feasibility

By Luke Geiver | January 04, 2010
Posted Jan. 13, 2010

Poet Inc. and Magellan Midstream Partners LP have formed a joint venture to assess the feasibility of a 1,800-mile ethanol pipeline from ethanol production facilities in the Midwest, starting at Davison County, S.D., to distribution outlets in the northeast U.S., ending in Linden, N.J. Once the feasibility study is complete, the pipeline could be operational as early as 2014.

Currently, Magellan operates a pipeline system including 51 terminals, seven marine terminals, 27 inland terminals and a 1,100 mile ammonia pipeline system. The proposed pipeline will ship ethanol from the Midwest to the major markets in the Northeast and will be the first dedicated to ethanol in the United States. According to a report by the consulting firm LECG Inc., the capacity of the pipeline will equal 240,000 barrels of ethanol a day, an amount of more than 3.6 billion gallons, or about one-fourth of the ethanol required for use by the renewable fuel standard.

About $4 billion will be invested toward the development and construction of the pipeline from Magellan and Poet between 2010 and 2014. "Pipelines are the most cost efficient, safest and most reliable mode of transportation for liquid energy. Construction of a large-scale renewable fuel pipeline complements the national objective of creating quality jobs while increasing transportation efficiencies for the growing renewable fuels industry," Mike Mears Magellan chief operating officer said.
A loan guarantee with the U.S.DOE is necessary for this project to become a reality. Congress is considering amendments to DOE's loan guarantee program to include large-scale renewable fuel pipeline projects.

"This project has the clear environmental benefit of dramatically reducing carbon emissions from traditional ethanol transportation, and this latest report shows its important impact on our economy as well," Poet CEO Jeff Broin said. "Ethanol continues to play a large role in the new energy economy taking shape here in the United States."