Joint Venture Proposes 1,800 Mile Ethanol Pipeline

The largest US ethanol producer, Poet, and Magellan Midstream Partners, L.P. (NYSE: MMP) 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. 

Magellan primarily transports, stores and distributes refined petroleum
products in twenty-two states. Magellan owns and operates the nation’s
longest refined products pipeline system is connected to over 40% of
the  refining capacity in the United States.

The companies say the pipeline would be an economic boost for the U.S., creating almost 80,000 direct, indirect and
induced jobs across the country.

A recent report from the consulting firm LECG shows that the majority
of the jobs created will be in the construction and transportation
industries.  More than 50,000 jobs will come from construction alone.

The pipeline project would provide approximately 1,100 permanent jobs after construction is complete.

“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.”

“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,” Magellan COO Mike Mears said.

A loan guarantee with the U.S. Department of Energy 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, Poet said in a release.

Although Poet is moving into cellulosic ethanol production, the company primarily produces corn-based ethanol, a fuel that has dubious environmental benefits. According to a new policy paper by Rice University’s Baker Institute for Public Policy, the United States needs to fundamentally rethink its policy of promoting ethanol to diversify its energy sources and increase energy security. 

The LECG report and proposed pipeline route map is available on Poet’s Website.