Magellan Midstream/POET Assess Feasibility Of Dedicated Ethanol Pipeline

June 2009 Vol. 236 No. 6

Magellan Midstream Partners, L.P. has signed a joint development agreement with POET to continue assessing the feasibility of constructing a dedicated ethanol pipeline.

As proposed, the pipeline would deliver ethanol from the Midwest to distribution terminal in the northeastern U.S. The planned common carrier pipeline system would gather ethanol from production facilities in Iowa, South Dakota, Minnesota, Illinois, Indiana and Ohio to serve terminals in major Northeastern markets. The project, preliminarily estimated to cost in excess of $3.5 billion, would span approximately 1,700 miles and would take several years to complete.

Although there are many hurdles to overcome to make this ethanol pipeline project a reality, Magellan and POET are optimistic that the obvious need for a pipeline to deliver ethanol from the Midwest to distribution terminals in the northeastern United States may lead to a viable and successful project. A positive assessment will allow one or both partners to enter into a subsequent agreement to construct a dedicated ethanol pipeline.

Magellan and Buckeye Partners, L.P. originally announced their intent to jointly study the feasibility of a large-scale renewable pipeline project in February 2008. Although Buckeye continues to believe pipelines are the most effective way to transport large volumes of liquid energy, they recently decided to focus on other priorities and have discontinued their role in this pipeline project.

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