May 17, 2007 – 3:06 a.m.
Some of the nation’s biggest oil pipeline builders are looking into laying new pipelines dedicated exclusively to ethanol. The ambitious, costly projects would come with a hefty economic risk — but many lawmakers say the pipelines could provide an essential key to reducing U.S. oil dependence.
And the industry is hoping lawmakers on Capitol Hill will provide the help they need to get the pipelines built, including easing of siting and permitting requirements, tax incentives for building the lines, and research and development funds.
Production of ethanol, the nation’s number one alternative fuel, has exploded in the wake of concerns about global warming and dependence on foreign oil. But ethanol’s boom has slammed into a ceiling: transmission.
Experts say for the fuel to ever displace a significant amount of petroleum, it must be moved in pipelines — the quickest, cheapest way to transport liquid fuels. Ethanol now travels by train, truck and barge from plants in the Midwest, but is still rarely available elsewhere in the country.
And although ethanol is used as a gasoline additive in cars, the ethanol-gasoline mixture corrodes existing pipelines. So many lawmakers, and many in the ethanol and pipeline industries, say construction of new ethanol pipelines, or conversion of existing pipelines to ethanol-exclusive use, is the only way to bring the fuel into the future.
But pipeline companies also see great risk in such ventures.
“Some companies are interested — it’s a real business opportunity,” said Shirley J. Neff, president of the Association of Oil Pipe Lines. But she said the companies are still concerned about whether supply and demand for ethanol will be enough.
“Most of these ethanol plants are really pretty small. You have to have a decent supply to justify building a pipe. You’re talking about putting a lot of steel in the ground,” she said.
Neff and executives of other pipeline companies also point out that individual ethanol refineries produce far less product than oil refineries — not enough to work well with wide industrial pipelines.
Steep construction costs and permitting requirements are also hurdles. Many in the ethanol industry say what they need most is a massive pipeline that would run from the Midwest to the East Coast — which pipeline companies estimate could cost $2 billion or more.
But Neff says, “That’s a virtual pipeline that people are talking about. Nobody’s going to put down money down until there’s more certainty.”
Houston-based Kinder Morgan Energy Partners is considering building an ethanol pipeline system, as well as converting an existing pipeline for ethanol. James Holland, vice president of logistics for Kinder Morgan, said siting and permitting for the new pipelines are among his biggest concerns.
“I think every pipeline company around the nation is looking at what it takes” to build ethanol pipelines, he said. “But getting permits for all the new lines could take years. Congress could help by speeding that.”
Holland also sees a role for Congress in converting existing lines to ethanol-dedicated lines. He said the first few hundred gallons of ethanol that go through a pipe once used for fossil fuel “will just clean the pipe right out. It’ll be unusable sludge. Who will pay for that ethanol — and take care of disposing of it?”
A government offer to take the sludge could help expedite the opening of that ethanol pipeline, which would run from Mississippi to North Carolina, Holland said.
Congress isn’t considering anything like that yet, but odds look good for an energy bill (S 1321) —now headed to the Senate floor — that includes a provision directing the Energy Department to conduct a feasibility study on construction of dedicated ethanol pipelines.
One of the Senate’s biggest ethanol supporters, Iowa Democrat Tom Harkin, has authored a separate bill asking for the same feasibility study, as well as several other ethanol-boosting measures. An aide in Harkin’s office said Congress is not yet ready to deal with the specifics the pipeline industry says it needs — but Harkin, who heads the Senate Agriculture Committee, said he sees that pipeline study as a first step.
In an e-mail, Harkin wrote, “Our national energy situation necessitates that we increase production of ethanol and ensure its accessibility across the country. In order to meet these goals, we must develop a safe and cost-effective way to transport ethanol. A pipeline would be a large and important investment and we would want to do it right. That is what this feasibility study is about.”


