Wednesday, March 18, 2009

Magellan, Poet considering U.S. ethanol pipeline joint venture

TULSA, Okla. - Magellan Midstream Partners said on March 16 that it has signed a joint agreement with Poet, the largest U.S. ethanol producer, to study building a dedicated pipeline to carry the biofuel from the U.S. Midwest into the Northeast.
The proposed $3.5 billion pipeline system would gather ethanol from distilleries in Iowa, South Dakota, Minnesota, Illinois, Indiana and Ohio to serve terminals in major Northeastern markets.
Amid U.S. mandates calling for greater amounts of ethanol to be blended into the gasoline pool through 2022, companies are boosting efforts to see if shipping ethanol through pipelines can be a less expensive, safer alternative to sending it on trucks and trains.
Kinder Morgan Energy Partners LP, one of the largest energy pipeline companies in North America, has been sending batches of ethanol through a 105-mile petroleum products pipeline in Florida.
Magellan, which owns and operates a major oil products pipeline in the Midwest, had originally announced in February 2008 it would work with Buckeye Partners LP to jointly study a large alternative fuel pipeline project. Buckeye recently decided to discontinue its role in that project.
Poet, which produces more than 1.5 billion gallons of ethanol a year from 26 plants across the Midwest, and Magellan said federal legislation revising the U.S. Department of Energy's loan guarantee program is critical for the project, which would span 1,700 miles, to move forward.

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