IBJNews

Poet LLC putting plan for ethanol pipeline on hold

Back to TopCommentsE-mailPrintBookmark and Share

The nation's largest ethanol company, Poet LLC, announced Friday that it is putting on hold its plan to build a dedicated ethanol pipeline because of the lack of prospects for a federal loan guarantee.

Sioux Falls-based Poet and Magellan Midstream Partners LP had been studying the feasibility of a $3.5 billion, 1,800-mile pipeline that would send ethanol from plants in Iowa, South Dakota, Minnesota, Illinois, Indiana and Ohio to distribution terminals in the northeastern United States.

Magellan announced it was placing its interest in the project on hold early last year.

Jeff Broin, Poet's chief executive, said the pipeline is a viable project that would have tremendous benefits for the country.

"But with little prospects for a federal loan guarantee in the near future we are currently focused on other efforts." Broin said in a statement.

A 2010 Department of Energy study suggested that a dedicated ethanol pipeline could be profitable if the biofuel expanded beyond its use as a 10-percent additive in standard cars. That would come from a transition to a 15-percent blend in standard cars or a greatly expanded use of E85, an 85-percent blend that runs in flexible fuel vehicles.

But the DOE study also noted several barriers.

Ethanol tends to cause more internal cracking of carbon steel pipe than gasoline or diesel, but the study found that an ethanol pipeline could operate safely and without stress corrosion cracking when appropriate measures are taken. There are also siting and regulatory barriers, and such a project is unlikely to find affordable financing because of demand and supply uncertainty, and it would require government financial assistance.

The analysis by Poet and Magellan concluded that the project is economically viable with transportation rates about 15 percent lower than rail rates, and the venture becomes more viable with increased use of 15- and 85-percent blends.

On Friday, Broin said that the existing infrastructure for transporting ethanol serves the industry well.

"While a pipeline could improve the efficiency of ethanol distribution and lower costs for motorists, the system that we have in place today has allowed ethanol to flow seamlessly into more than 90 percent of the gasoline sold," he said.

ADVERTISEMENT

  • Ethanol's Future
    I'm glad to hear ethanol is still a competitor in the energy sector. For some reason it seems to have taken a lot of bad press lately.

    I still think it is a terrific idea, the breadbasket of the world (USA) growing its own energy. Henry Ford originally planned cars to run on alcohol.

    Just because it was said to compete with food some have suggested it is a bad idea. I don't agree. There are many other sources for ethanol besides corn, and I haven't seen proof that we do not have enough tillable land to grow both, food and energy.

    I hope we continue research in distilling of other sources for ethanol. We have a rich history of successful agriculture in America and growing our energy from the sun is a great sustainable idea.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

ADVERTISEMENT