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Magellan Midstream Partners and Buckeye Partners Assessing $3B Dedicated Ethanol Pipeline System

Proposed dedicated ethanol pipeline route. The black and green dots represent existing and planned ethanol facilities. Click to enlarge.

Magellan Midstream Partners, L.P. and Buckeye Partners, L.P. have begun a joint assessment to determine the feasibility of constructing a dedicated $3-billion ethanol pipeline system to deliver fuel ethanol from the Midwest to distribution terminals in the northeastern United States.

The proposed pipeline could have the capacity to supply more than 10 million gallons of ethanol per day, enough to meet the needs of millions of northeastern motorists who purchase 10% ethanol blended gasoline or higher ethanol blends such as E85.

The pipeline would gather ethanol from production facilities in Iowa, Illinois, Minnesota and South Dakota to serve terminals in major markets such as Pittsburgh, Philadelphia and the New York harbor. The project, which preliminarily has been estimated to cost in excess of $3 billion, would span approximately 1,700 miles and would take several years to complete.

The most promising liquid fuel alternative to conventional gasoline today is ethanol. But without an efficient means to transport ethanol from the Midwest to other markets, its benefits are limited. Having a dedicated ethanol pipeline running from the Midwest to the eastern markets will help bridge the gap between the Midwest and the East, aiding America’s energy security. So I applaud these two companies’ efforts and I look forward to working in Congress to support the development of such pipelines.

—US Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Agriculture, Nutrition and Forestry

In 2006, Senators Tom Harkin (D, IA) and Richard Lugar (R-IN) introduced a bill that would direct the Department of Energy to study the feasibility of constructing one or more dedicated ethanol pipelines for distribution of the fuel from the Midwest to the East and West. (Earlier post.)

The energy bill enacted at the end of last year authorized the appropriation of $1,000,000 for each of fiscal years 2008 and 2009 for the Department of Energy to fund a study of the feasibility of the construction of pipelines dedicated to the transportation of ethanol.

The feasibility of the Magellan-Buckeye project is dependent upon the successful outcome of ongoing studies addressing technical and economic issues associated with the transportation of ethanol via pipeline. Congressional support and assistance is necessary for a project of this nature given the changing federal policies associated with renewable fuels, according to the two partners.

In addition to assessing governmental support, financing and technical issues, Magellan and Buckeye stated that the feasibility study would also review construction requirements, construction costs, project economics, regulatory issues and other matters. The technical and feasibility studies could be complete in the latter half of 2008. However, the necessary governmental support, the timing of which is unknown at this time, is critical for the partnerships to make a decision on proceeding with construction of the proposed ethanol pipeline. Pursuit of the proposed project also is conditioned on changes to federal tax laws to ensure that transportation of ethanol by pipeline will be treated the same as the transportation of natural resources, such as refined petroleum products, by pipeline.

Both companies have extensive experience handling ethanol at their respective terminal locations. Magellan already blends ethanol at 36 of its petroleum products terminals and is currently investing in six new ethanol blending systems at its terminals in the Midwest and southeastern states. Buckeye currently has 24 terminals with ethanol blending capabilities and is in the process of investing in two new ethanol blending systems at its terminals in the Northeast.

Magellan also currently owns an 8,500-mile refined petroleum products pipeline system, including 47 terminals; seven marine terminal facilities; 27 inland terminals; and an 1,100-mile ammonia pipeline system.

Buckeye is one of the largest independent refined petroleum products pipeline systems in the United States in terms of volumes delivered, with approximately 5,400 miles of pipeline. The Partnership also owns and operates 50 refined petroleum products terminals with an aggregate storage capacity of approximately 20 million barrels in Illinois, Indiana, Massachusetts, Michigan, Missouri, New York, Ohio, Pennsylvania, and Wisconsin, and operates and maintains approximately 2,700 miles of pipeline under agreements with major oil and chemical companies.


Rafael Seidl

Ethanol fuel blends cannot be transported in regular pipelines because ethanol is hygroscopic. In part load conditions, it draws moisture from the air also in the pipeline, which can lead to phase separation and corrosion.

New York and several other Northeastern states follow CA emissions regs and therefore require ethanol for their summer gasoline now that EPA has decided to no longer provide legal indemnity regarding MTBE. No other oxygenate is available in sufficient quantity.

However, 1700 miles is a very long way to pump a highly flammable liquid. The alternative would be much shorter pipelines to the Great Lakes harbors. From there, it could be transported to anywhere along the Eastern seaboard or the Gulf coast with corrosion-resistant ethanol tankers. The lakes do freeze over in winter, but fuel does not need to be oxygenated in that season. It would be interesting to learn if shipborne transport of ethanol has been considered.

A separate issue is the companies' claim that "congressional support and assistance is necessary for a project of this nature given the changing federal policies associated with renewable fuels". At present, ethanol is highly subsidized and subject to protectionist tariffs. Midwestern politicians of both parties are naturally keen to keep it that way on behalf of corn farmers and ethanol refineries. However, casting those in stone to enable the construction of a pipeline would probably be a mistake.

Given a ballooning budget deficit, energy dependence on OPEC and global warming, Congress ought to gradually raise taxes on fossil fuels and at the same time eliminate subsidies for ethanol produced in an unsustainable manner - this arguably includes ethanol from tropical countries that cut down their rain forests to clear the land for energy crops. A protectionist tariff is therefore also not required. The ramp-down would have do be done in such a way that other farm subsidies don't take their place.


Maybe the problem we are having is the corn-belt senators perception that "the most promising liquid fuel alternative to conventional gasoline today is ethanol".

Really? It shouldnt even be on the top 10 list.


Ethanol should be part of the solution. They simply need to make it out of something other than corn.

Come-on farmers plant something else, you have several to choose from that are much better than corn.


I could see farmer cooperatives where they vertically integrate and finance biomass gasification facilities. Not only would they get the $40 per ton for the biomass, that ton would create 100 gallons of fuel to get them $200.



"this arguably includes ethanol from tropical countries that cut down their rain forests..."

The .54 cent per gallon tariff on foreign ethanol functions in part to discourage imports from tropical countries with poor sustainability policy. However in order to meet the Renewable Fuels Standard of 7.5 billion gallons by 2012, imports will probably have to increase (we import only 100 million gallons annually from Brazil.) Agreed that gradual lowering of subsidies to corn-produced ethanol will help but support for cellulosic is needed in these early stages.

The pipeline may be pork for these two companies and should be balanced by a study of alternative shipping via Great Lakes. But transportation adds significant cost to ethanol pricing already and some large scale method is needed to meet the mandates. In that light this project may be the best near-term solution.


Ethanol and Biodiesel pipelines all over America NOW!


Cellulose ethanol will have the same problem. How do you get it to market from where it is made to where it is consumed? This is one of the reasons I favor biomass to NG. The pipelines are already here.


Butanol is pipeable, higher energy density than ethanol, mixes better with gas, and can be blended at higher ratios with no modification to the ICE. . . also doesn't require much of a change (referring to the production process) from ethanol. . . . and it can still be made from corn so the subsidy happy senators can be pacified.

Why aren't we thinking more in this direction?


There is some work being done on butanol, but ethanol has the inertia for historic reasons. I read that in the 70s Carter called ADM and asked if they could produce ethanol. They said sure and the process started. It was meant to be a short term fix for a present day problem. Carter had the synthetic fuels program for longer term.

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