November 2008 Vol. 235 No. 11

Features

Biofuels Industry Takes A Searching Look At Using Pipelines

How best will the growing volumes of ethanol being produced to comply with federal laws be safely transported from producing plants in regions where there are few fuel transportation assets to consumers?

That is a question Pipeline & Gas Journal posed to a panel of expert biofuels observers including Russell D. Kane, consultant with iCorrosion LLC; four specialists who comprise a panel from CC Technologies, a DNV Company (Pat Vieth, Tom Bubenik and John Beavers, with technical review by Narasi Sridhar); and John M. Urbanchuk, an expert adviser associated with the LECG firm.

One big political hurdle identified by the roundtable is that the market for biofuels – unlike that for fossil fuels – is buffeted by uncertainty because it is being stimulated from the top rather than by actions taken in response to demand from the bottom, or consumer part of the supply chain. Biofuel producers are meeting new laws and regulations mandating production and looking for solutions from a fuels transportation industry that has to sort out how to safely move the increasing volumes to a market that does not yet seem prepared to absorb the output. Suffice it to say, there are some technical unknowns as the fuel transportation industry searches for the safest and best ways to move biofuels. Some observers believe the government may step in where the market is uncomfortable just to keep America’s shift to politically attractive biofuels moving forward.

P&GJ: What is the status of biofuel (ethanol) transport in the U.S.?

Kane: Going from small batches to bigger batches via pipelines.

In 2005, I was asked to survey the refining industry experience with stress corrosion cracking (SCC) in fuel grade ethanol (FGE) transportation and storage as it related to blending it as an additive to gasoline. From this examination, ethanol distribution is best described as a batch process. Manufacturers have produced bio-ethanol and transported it to customers for blending into conventional grades of gasoline (E10) using a series of tank trucks, rail cars and/or barges.

From my examination, the time in the distribution process could take from a few days to two to four weeks, or sometimes longer depending on the distance and number of stops between the manufacturer site and the point of blending. The present situation for E85 blends (85% ethanol 15% gasoline) is different. This product is not transported over great distances. It is usually blended as it goes into a tanker truck and is delivered directly to the point of the consumer purchase (filling station).

The issue today is that with the federal mandates for use of FGE as a gasoline extender and oxygenate additive in the future, it will greatly increase the volume of FGE that will need to be transported over that used today (several websites provide current information and future trends). This will make the existing distribution system inadequate to handle the added capacity and it will require batch shipments over long distances using liquids pipelines. The problem is compounded by the fact that many existing pipelines are not in the right locations or flowing in the right directions to link the ethanol producer and user. Therefore, new pipelines will also be needed as capacity increases.

CC Technologies panel (Vieth, Bubenik and Beavers with technical review by Sridhar): In North America, the vast majority of fuel grade ethanol (FGE) is transported via barges, rail cars, and tanker trucks. Pipeline transportation is being examined from technical, business, and regulatory perspectives. The main technical issues include SCC, elastomer (seals and gaskets) compatibility, contaminant pickup, and integrity management. A few pipeline companies have run test batches of ethanol in existing refined products pipelines primarily to evaluate product quality. Some pipeline companies may have started, or plan to start in the near future, transporting ethanol in small-diameter dedicated pipelines. It is likely that the technical issues related to the pipeline transportation of biofuels can be resolved but additional work is required to optimize the solutions.

Because of compatibility issues, the existing pipeline infrastructure for transporting biofuels may require significant changes and/or the construction of new facilities. Furthermore, the pipeline infrastructure is not well aligned with supply and demand for ethanol; that is, the ethanol is produced in the Midwest, demands for ethanol are along the coasts (Gulf of Mexico, West Coast, and East Coast), and existing pipelines generally initiate in the Gulf Coast region. This likely will necessitate the construction of new facilities.

Pipeline transportation of other biofuels, such as butanol and biodiesels, has yet to be addressed in a comprehensive fashion as current production volumes have not necessitated the consideration of pipeline transportation.

Urbanchuk: Maturation of unit trains and development of pipeline transport.

The use of unit trains to move ethanol from Midwest production points to both coasts has matured with investments in marshaling yards and storage facilities. The development of a dedicated pipeline for ethanol will facilitate greater market penetration due to lower transport costs.

P&GJ: What is the next decision point (for ethanol)?

Kane: Do I put this stuff in my pipeline? A major issue is the problem of ethanol SCC. A recent ethanol roadmapping effort for USDOT found that one of the big potential barriers to safe handling, transportation and storage of FGE was the issue of ethanol SCC.

The phenomenon of ethanol SCC has been shown to occur in the laboratory in FGE and in a range of ethanol blends with gasoline, especially in E85 to E95. It may also occur at lower ethanol blend ratios, but does not appear in widely used E10 gasoline-ethanol blends. It normally occurs in the area of welds and it increases in severity as a result of high or fluctuating stresses and aeration of the FGE. Both factors readily occur during normal FDE handling and storage. Most of the experience derived from the API survey on SCC failures came from facilities, storage and blending operations. We documented about two dozen failures occurring over the period 1990 through 2005. These were documented in API Tech Pub 939D. Since this time, SCC was also found in at least one short pipeline segment. It is unclear if that occurrence is representative of the operation and construction found in major liquids pipelines.

There are several major pipeline operators looking at batch transportation of FGE and I know of at least one trial shipment that has taken place. But, the pipeliners are asking, “Do I want to put this stuff in my pipeline?” What has been seen from the experience surveys of ethanol SCC in facilities gives the pipeline operators some doubts. But, going forward, the USDOT and the pipeline industry are conducting research and related studies to help understand if the situation in pipelines may lead to a less severe condition than that found for ethanol handling and storage facilities.

CC Technologies panel: The resolution of the issue of internal SCC is the most significant decision point for the transportation of FGE in pipelines. Until this is resolved, most pipeline companies are unlikely to risk their pipeline assets.

Assuming that the technical issues with the transportation of FGE are resolved, decisions will then be required to make significant capital investments in facility modification and/or new construction for pipelines, storage, and blending facilities. One primary concern is that new facilities could become obsolete or “orphaned” in a relatively short period of time due to the dynamics of the biofuels industry.

Urbanchuk: From the ethanol manufacturer point of view the real issue is how to most cost-effectively deliver the product to the blender. As the number of viable alternative modes of transport increases, ethanol producers will face major decisions regarding the available transport options.

Currently, the concentration of ethanol production in the Midwest makes this a relatively easy decision. However, as cellulosic ethanol develops and expands the geographic foot print of the industry (more production in the Northeast, PNW and Southeast), the challenges facing both the transport and production industries will become more complex.

P&GJ: What is your sense of the urgency being expressed by the various ethanol players?

Kane: Pipeline operators are ready, but wary of SCC issues and associated risks. They are trying to respond to the growing current and future demand for FGE but are wary of the possibility of SCC and the associated risk of damage, resulting environmental and legal implications. The urgency of the situation has prompted joint action between many of the players, including the pipeline operators, industry associations like API and PRCI and the government (USDOT-PHMSA). These groups are conducting research that is needed to respond to the urgent needs for ethanol transportation in the 2008-2012 timeframe.

They also want to rapidly convert the results of this new research into practical guidelines. This is precisely what was done by API on the facilities side. The API refining committee, task group on ethanol SCC, funded field surveys and research on ethanol SCC (summarized in API 939D). This work was conducted with the assistance of the Renewable Fuels Association. The API commissioned an analysis of the results of the various API studies to draft a practical guidelines document for facilities that store and blend FGE. The analysis focused on identification, repair and mitigation of ethanol SCC. This document, API 939E, has since been reviewed by the committee membership and approved for publication later this year. This appears to have been a successful formula that may benefit rapid response in the pipeline sector.

CC Technologies panel: There is significant interest in resolving the technical issues associated with transportation of FGE in pipelines because pipelines are a much safer and efficient means of transporting ethanol than the currently used methods. PRCI, AOPL, API, PHMSA, and operators are funding applied research in this area. Individual pipeline companies are looking at ways to safely transport FGE by means such as chemical inhibitor additions, batching processes, or blending with gasoline. There is less urgency with respect to other biofuels because of the reduced volumes.

Urbanchuk: Current profitability pressures on ethanol production caused by high feedstock prices has diverted the attention of many producers. However, the recent EPA decision to deny the renewable fuels standard waiver requested by Texas Gov. Rick Perry sent a firm signal that the U.S. is serious about developing biofuels as an alternative motor fuel. The ability to move twice as much ethanol in a decade and nearly five times as much by 2022 requires urgent attention. I believe the major players in ethanol production are aware of this potential obstacle to market penetration.

P&GJ: What is the significance of biofuels (ethanol) transportation needs on the U.S. pipeline industry?

Kane: The amount mandated by federal regulations in the near future (2012) is huge vs. historical volumes. There is a need to understand the link between our historical base (tanks, rail tanker cars, tank truck shipments) and requirements and guidelines for pipeline transport. The other issues that I hear include: Where is it all going to come from and, how will it affect other consumer products? From my standpoint, consumer pressure will likely result in our present dependence on corn-based ethanol in the U.S. being changed to include non-corn and non-food sources for bio-ethanol. This brings up another question: Will the different chemical fingerprints of ethanol produced from other bio-sources (sugar cane, sugar beets, paper plant and brewery waste streams to mention only a few) influence SCC susceptibility? We have already seen some data from lab tests that suggest that this may be the case.

CC Technologies panel: Biofuels transportation is a huge financial opportunity and risk for the pipeline industry. Pipelines are the obvious method of choice for biofuel transportation but, if the technical issues cannot be resolved, then the other means of transportation will fill the gap and expand in the near future. On the other hand, new facilities for transporting FGE could become obsolete or “orphaned” in a relatively short period of time, as previously discussed.

Urbanchuk: These needs will focus and direct investment and financing requirements. The development of ethanol from cellulosic and other non-cornstarch feedstocks will require careful technical evaluation.

P&GJ: How do we get the USDOT biofuels road map and associated requirements/needs/info developed and disseminated in a time frame to make the ethanol mandates happen successfully?

Kane: We have lots of experience pipelining a variety of petroleum products. Ethanol SCC is only one among many potential problems as the industry scales up to handle batch shipments of FGE. One related problem being examined under USDOT funding in a program at Colorado School of Mines and National Institute of Technology is the question of microbiological activity in FGE. We have seen from experience in gas transmission pipelines that the problem of microbiologically influenced corrosion can lead to incidents of highly localized corrosion and unexpected failures. I am sure that there are even other issues that will develop as the pipeline industry scale-up progresses. We just need to go into this with our “eyes wide open” rather than our “eye wide shut”.

P&GJ: Another question around batch transport of FGE via pipeline is the following: What is the effect of ethanol when mixed with other products that may be present in the pipeline? This can be in the trans-mixture when the batch of FGE is placed between gasoline, jet fuel or other products.

Kane: We already know that ethanol is a good solvent and can actually “clean” the surface products and deposits from metal equipment. This may lead to new contamination or corrosion issues in the ethanol and adjacent products in the shared pipeline.

P&GJ: Briefly, what is the status of research with respect to mitigation strategies for ethanol SCC?

CC Technologies panel: By far, the most effective method to mitigate ethanol SCC is to exclude or remove oxygen from the FGE. Since ethanol typically is oxygen-free when produced, oxygen exclusion translates to preventing oxygen access during transportation. The consensus is that most oxygen gets into the FGE during filling and emptying transportation vessels or storage tanks. Oxygen removal can be accomplished by means of chemical oxygen scavengers, vacuum deaeration, or sparging with an inert gas. Some amine inhibitors have been shown to reduce the severity of SCC, but not completely eliminate it, in aggressive laboratory testing. Water additions to FGE (above 4.5%) also will mitigate SCC but have other undesirable effects, including increased corrosivity and the potential for phase separation in ethanol-gasoline blends, not to mention end-user problems.

Batching FGE with other refined petroleum products also may be effective in mitigating SCC by limiting the exposure time to the ethanol. On the other hand, transporting ethanol-gasoline blends appears to be less promising from the standpoint of SCC mitigation. While no SCC has been reported in tests with E-10 (10% ethanol), SCC has been observed in some aggressive laboratory tests with higher ethanol concentration blends. Whether this SCC translates into an increased risk of SCC failures in pipelines has yet to be resolved.

P&GJ: What are the drivers specifically behind ethanol as a biofuel and how does it affect infrastructure decisions?

CC Technologies panel: There is a federal mandate for biofuels production and the goals are specified in the Renewable Fuels Standard (RFS) passed in the 2007 Energy Independence and Security Act (EISA). These are “production” goals that don’t currently have mandates for “consumption.” One concern with capital investments for infrastructure is that the mandate has the potential to change. In summary, there is a consensus that companies will make capital investments based upon demand for consumption. However, in the case of ethanol, it is production that is mandated.

P&GJ: What challenges exist for pipeline integrity management?

CC Technologies panel: Integrity management challenges include:

a. Requirements for establishing a baseline state or condition. Inline inspection or other strategies may need to be developed to address cracks in circumferential or arbitrary orientations.
b. Methods of identifying where high likelihood locations exist and for defining the consequences of a release as a function of release type, rate, location, etc.
c. Requirements for monitoring the effectiveness of oxygen control programs and to look for unanticipated degradation.
d. Defendable reassessment methods of identifying where significant changes have, and have not, occurred and to establish reassessment intervals.
e. Methods for identifying when operational or other changes call for additional risk assessments.
f. Guidelines for response to upsets or releases and to identify when, where, and how to inspect for damage that could have occurred as a result of the upset or release.

Participants

Russell D. Kane is president of iCorrosion LLC, Houston, TX. Dr. Kane is an internationally recognized corrosion and materials consultant who specializes in materials selection, corrosion prediction, evaluation and monitoring, and failure analysis. He has been involved in a diverse range of projects involving materials selection, corrosion monitoring and research/testing in petroleum, refining, pipeline and petrochemical applications. Most recently, he has been the lead consultant for the API in the area of ethanol stress corrosion cracking (SCC) involved in experience surveying, guidelines developing, lab and field testing, and program data analysis. He authored the first white paper document identifying SCC.

Pat Vieth is senior vice president of CC Technologies, a DNV Company. The firm is an engineering, research, and testing firm specializing in corrosion control, fitness-for-service, pipeline/plant integrity analysis, corrosion monitoring, and materials evaluation. He is a mechanical engineer and has 18 years of experience in the field of pressure vessel fracture behavior and defect assessment methods for transmission pipeline systems. Prior to joining CC Technologies, Mr.Vieth held positions with Battelle and Kiefner & Associates, Inc. His expertise is primarily directed toward assisting the operators of transmission pipeline systems with development and implementation of short-term and long-term pipeline integrity management programs. Specifically, he works with operators to develop programs to reduce the likelihood of failures through inline inspection, hydrostatic testing, defect assessment, risk assessment, and fitness-for-purpose assessment.

Tom Bubenik is vice president of integrity services at CC Technologies, a DNV Company. He has more than 20 years of experience in pipeline integrity assessments, inline inspection tools and their capabilities, direct assessment techniques and methodologies, and field data collection. He has managed a large number of experimental, numerical, and analytical projects. Prior to joining Battelle, Dr. Bubenik worked for ten years with Exxon Production Research Company where he conducted and led research programs related to pipelines, materials, welding, and structural analyses. His research experience also includes the development of analysis tools for corroded and damaged pipelines and repair techniques for pipelines.

John Beavers is the research fellow for CC Technologies, a DNV Company. Over the past 30 years, he has directed and contributed to numerous research programs on SCC and corrosion performance of structural materials. Dr. Beavers has conducted research programs for API, PRCI, and PHMSA on SCC of structural steels in fuel grade ethanol. In 2002, he was recognized by PRCI with a Distinguished Research Award.

John Urbanchuk is with the expert advisory firm LECG. He has extensive experience in agriculture and the biofuels industry. He provides clients expert economic analysis to support a wide range of agriculture and renewable fuels policy issues. He also has conducted economic feasibility studies and prepared business plans for organizations interested in building and investing in ethanol and biodiesel plants. He as testified as an expert witness before numerous congressional committees.