By Loren Gaylord Flaugh
A pipeline to transport ethanol from the Midwest where it is produced to the East Coast markets where a lot of ethanol is used has been proposed to be built. The pipeline could ship the corn-based fuel considerably cheaper compared to railcar, which would be a big help for the struggling ethanol industry. The proposed pipeline would begin in northwest Iowa, according to the current plan.
When it was first announced back on March 16, 2009 that Tulsa, Okla. based Magellan Midstream Partners, a major pipeline company, and a leading ethanol producer, Poet LLC, from Sioux Falls, S.D., had signed a joint development agreement to assess the feasibility of constructing a dedicated ethanol pipeline, this agreement merged an interstate pipeline company that has decades of experience with the largest ethanol producer in the U.S.
To discuss the pipeline proposal and provide an update, the O'Brien County Economic Development Corporation in Primghar, Iowa hosted a joint press conference on April 9, 2009 at Sheldon, also in northwest Iowa. With Magellan and Poet representatives present, company and county officials explained the scope of their proposed 1,700-mile, $3.5 billion ethanol pipeline. The pipeline would stretch from the Midwest where most of the ethanol is produced, to the ethanol blending and distribution facilities in the eastern and northeastern U.S. where a considerable amount of ethanol is used.
Northwest Iowa meeting provided an update
At the April 9 meeting in northwest Iowa, OCEDC's executive director, Kiana Johnson, welcomed and introduced Bruce Heine, Magellan's director of governmental affairs, and Bob Behrens, Poet's director of site development, to an interested and inquisitive crowd.
Magellan is a combination of the old Williams Brothers Pipeline System and Mid- American Pipeline Company. Magellan now has a total of 82 refined petroleum products terminals with 45 terminals able to blend ethanol into gasoline. Poet has 26 ethanol plants in operation.
Heine of Magellan began the meeting by saying, "We've got a lot to tell you. We are delighted to be working with such a great partner in Poet. We know a lot about pipeline and products terminal operations." Poet's Berens added, "We feel this is a very good relationship. There are significant opportunities for cost savings over shipping ethanol by railcar."
To decide by end of 2009 whether it is viable
In addressing the feasibility study, Heine said, "We have been at this for over a year now. A lot of engineering has already been done. We began this study in 2008 with Buckeye Partners, an Ohio-based pipeline company. Buckeye has since decided to focus on other priorities and discontinued their role. We plan to decide by the end of this calendar year, if we have a viable project and whether to continue on."
Heine cited several lawmakers who have introduced legislation to create a dedicated ethanol pipeline. Two U.S. Sens., Democrat Tom Harkin from Iowa and Republican Richard Lugar from Indiana introduced the bill that could eventually lead to the construction of the pipeline. Iowa Senator Charles Grassley, a Republican, is also a key supporter.
Federal loan guarantee is needed for project
But Heine also said at the recent northwest Iowa meeting that "It is critical to pass federal legislation revising the U.S. Department of Energy's loan guarantee program, if this pipeline project is to move forward and be built. We can not do this project without federal financing."
Heine discussed two key technical issues that challenge the construction of any dedicated ethanol pipeline. Heine said small amounts of water always exist in pipeline systems. A certain amount of water in ethanol, less than 1%, was still acceptable.
But the major issue that is closely scrutinized is the corrosion cracking factor caused by ethanol's corrosive nature that can erode the pipe's integrity. "Our goal is for zero leaks in the pipeline. Keeping the ethanol product inside the pipe is a major issue. We think we are close to resolving this issue."
Heine explained that by using the proper corrosion inhibitors, additives and other methods of protecting the pipe's integrity, this could mitigate the affect that ethanol has on mild carbon steel. "We think that regular carbon steel pipe will work," Heine asserted.
Pipeline could originate in one of three Iowa locations
Heine said O'Brien County in northwest Iowa and two other places, Mason City and Fort Dodge, are logical places that could be selected for the final point of origin of the pipeline, which is tentatively named, the Independence Pipeline. The proposal calls for building five different aggregation facilities, basically large tank farms, where ethanol will be collected and stored from many different ethanol producers. These five aggregation facilities would then be connected by a trunk pipeline system headed east toward New Jersey and the New York harbor.
With a capacity of 250,000 barrels of ethanol per day, the pipeline, as it passes through Indiana and western Ohio, is planned to be 20 inches in diameter. With several large fuel distribution terminals in eastern Ohio, Pennsylvania and New Jersey, the diameter will shrink as the line heads east.
Four to five years is the best case scenario
When asked how many jobs the project might yield, Heine replied, "We think 25,000 construction jobs will be created over the two-year construction period."
Heine indicated that if all the required legislation expeditiously goes their way, and financing for this project becomes available, and the time period needed to gather all the necessary construction and environmental permits is not prolonged, "then we could have a dedicated ethanol pipeline up and running in four to five years."
- Loren Gaylord Flaugh, a freelance writer based at Primghar in northwest Iowa, is a contributor to Wallaces Farmer magazine.