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POET joins ethanol pipeline planning

By Staff | Mar 23, 2009

By 2014, ethanol could flow through a dedicated pipeline between the Midwest and the East Coast.

However, the project is still in the initial design phase – and it will be at least a year before proponents determine whether the pipeline is feasible.

On Monday, a joint development agreement for the pipeline was announced between POET and Magellan Midstream Partners of Tulsa, Okla.

The partnership brings together POET’s expertise in developing and marketing ethanol with Magellan’s experience in operating an 8,700-mile refined petroleum products pipeline system, said Bruce Heine, director of government and media affairs for Magellan.

POET, based in Sioux Falls, S.D., is America’s largest ethanol producer, with more than 1.8 billion gallons of annual production from 26 ethanol production facilities in seven Midwestern states, including plants near Gowrie and Jewell in north central Iowa.

In 2008, Magellan, in partnership with Buckeye Partners of Breinigsville, Pa., began an assessment to determine where, when and how such a pipeline could be constructed.

A tentative routing was proposed, in which a 1,700-mile pipeline would stretch from northwest Iowa to New Jersey. The pipeline could carry 4.5 billion gallons of ethanol annually.

The routing identifies Fort Dodge as one of several ”receipt locations” for the pipeline. At the receipt locations, ethanol producers – including, but not necessarily limited to, POET – could truck in their product for distribution to the pipeline, Heine said.

Direct connections to ethanol plants along the route are also envisioned, Heine said.

Magellan currently operates a terminal for gasoline, diesel and fuel oil near Fort Dodge.

Part of the proposed pipeline route follows existing right of way owned by Buckeye through Ohio and Pennsylvania, Heine said.

Though Buckeye has since decided to discontinue its role in the project, the option to use that route is still on the table, Heine said.

“Buckeye hasn’t ruled out future activity if the project goes ahead,” he said.

That “if” should be determined by February 2010, said Heine.

“We are continuing to work through an engineering study,” he said.

Some of the technical shortfalls of transporting ethanol by pipeline have yet to be alleviated, Heine said.

POET has looked at the feasibility of shipping ethanol by pipeline for the past couple of years, said Jeff Laudt, executive vice president for corporate operations for the company.

By “comparing notes,” Magellan and POET can expedite the process through which the pipeline becomes a reality, he said.

“Our distribution in the northeast has rapidly grown in the last year or two,” Laudt said.

Currently, ethanol is transported largely by rail. The rail transport component will continue to be important even if the pipeline is constructed, Laudt said.

Laudt said he is “highly confident” that the pipeline can be established successfully with existing technology.

The project will cost an estimated $3.5 billion – which means that a loan guarantee from the federal government would be necessary for the project to be feasible, Heine said.

On Feb. 4, Rep. Leonard Boswell, D-Des Moines, introduced the Renewable Fuel Pipelines Act of 2009, which would provide such loan guarantees through the Department of Energy. That bill has not yet been voted on by the House.

If the pipeline is determined to be feasible, right-of-way acquisition can begin, Heine said. That process will likely take two years, he said.

Physical construction of the pipeline will take at least two years after that, Heine said.

Contact Jesse Helling at (515) 573-2141 or jhelling@messengernews.net

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