Biofuel giant "optimistic" over ethanol pipeline plan

The US could be on track to build its first dedicated ethanol pipeline, after pipeline specialist Magellan Midstream Partners this week inked a new research alliance with the world's largest ethanol producer, Poet.

The two companies have agreed to work together on assessing the feasibility of plans for a $3.5bn (£2.4bn) pipeline system that would connect ethanol plants in Iowa, South Dakota, Minnesota, Illinois, Indiana and Ohio to major markets in the North East of the US.

Poet chief executive Jeff Broin said the proposed 1,700-mile pipeline could significantly enhance the efficiency of the US ethanol market, removing the need to transport millions of gallons of ethanol by rail or road.

"A project of this nature would provide benefits throughout the ethanol industry, agricultural community and the economy in general," he said. "It would also represent another major step forward in the efficiency of producing and delivering ethanol to the market."

The firms said there were still significant challenges to overcome before work can begin on the project, adding that it was dependent on planned revisions to the US Department of Energy's loan guarantee program.

However, they said they remained optimistic that the "obvious need" for a pipeline between ethanol-producing regions in the Midwest and distribution terminals in the North East meant the project would get the go-ahead.

US biofuel production is expected to increase massively over the next decade as producers attempt to comply with a target set out in the 2007 Energy Independence and Security Act for the US to consume 36 billion gallons of bioethanol equivalent a year by 2022.

Pipelines offer a more energy-, cost- and carbon-efficient means of transporting the ethanol, and there is widespread acceptance that consumption of ethanol on such a scale will require a pipeline link between ethanol-producing and consuming regions.

The new partnership comes as Poet this week gave an update on its plans to develop second-generation biofuels from cellulosic material at a meeting hosted by the US Department of Energy.

The company said it plans to begin producing cellulosic ethanol from corn cobs in 2011, adding that a 25m-gallon-per-year plant will be built in Emmetsburg, Iowa.

"We have made significant progress over the past year toward commercialising cellulosic ethanol," said project director Jim Sturdevant. "We are happy to present our work to DOE, which is such a key partner in this project."