Ethanol producers are mulling over building a coast-to-coast pipeline.
See the AP Article.
Paul and Mears estimate a dedicated pipeline would cost about $1 million per mile to build — about $2 billion from the Midwest to the East Coast, where strong markets already exist.
Most existing pipelines move petroleum products from south to north, Mears said. “They don’t flow in the right direction — ethanol wants to go the other way,” he said.
Moving ethanol through a pipeline would cost 3 cents to 6 cents a gallon, which is at least competitive with existing shipping methods, Mears said.
An ethanol-exclusive pipeline could move more than 4 million gallons of the fuel daily, or the entire production of about 30 average-size ethanol plants, Mears said. That volume, along with government incentives and long-term shipping commitments, would be necessary to support a dedicated pipeline, he said.
There is also another issue. Essentially there is a last-mile problem on both sides of an agricultural pipeline. Whereas oil drilling is localized, farming is not. Moving corn is like moving cement – it’s so low value /wt that moving it over a certain distance becomes unprofitable. So it means that the supply side of the biofuels industry has to be made economical with very little capital expense related to transportation.
The airline industry is a good comparison for this. On one hand, we have relatively few large airports serving major markets. At the same time, we have lots of small markets that also serve these larger markets (via regional airlines). This discussion is similar – we’re essentially talking about developing a regional airlines model for ethanol distribution.
But here’s the kicker. Putting in pipelines isn’t that much cheaper for smaller, more dispersed areas (or using our airline comparison, a small regional plane doesn’t cost that much less than a 737). This is because putting in a small pipe still takes much of the same planning and labor for putting in a big pipe (the cost of the pipe is relatively small). And therein lies a big barrier. It can be done… but man, those numbers better get better or we’re done.
I’d applaud anyone with the courage to back such a project. It would really mean that we’re doing this for real.
2 Comments
Doug, I was under the impression that an ethanol pipeline was not feasible because of corrosion and the fact that alcohol absorbs water. So, what are we talking here? E20? Or 100% ethanol? All of the above?
No, the corrosion issue is for putting ethanol into our current pipelines.
The story is that ethanol is corrosive to carbon steel. A new pipeline would need accomodate ethanol (let’s say pure ethanol for now). Stainless steel or some other material that is compatible to both gasoline and ethanol. The problem with this is that a new pipeline could be cost prohibitive given the business prospects of ethanol.
Supposedly (I don’t recall if it’s in this article or another that I’ve read) that some blend of ethanol could probably get into the pipeline. But I don’t know anything about what’s going on with that and can’t credibly comment (I could incredibly comment and say that it sounds like not worth it – we need a bulk solution for alternative fuels).