A PROPOSED ethanol pipeline would be an economic boost for the US, creating almost 80,000 direct, indirect and induced jobs across the country, a new report demonstrates.
In 2007, Magellan Midstream Partners LP began assessing the feasibility of an 1800-mile ethanol pipeline running from Midwest ethanol production facilities to distribution outlets in the Northeast (Feedstuffs, Feb. 28, 2008). POET, the nation's largest ethanol producer, joined the effort in early 2009 (Feedstuffs, March 23, 2009).
The two have formed a joint venture to assess the feasibility of the pipeline, which would start in Davison County, S.D., and end in Linden, N.J.
"Pipelines are the most cost-efficient, safest and most reliable mode of transportation for liquid energy," Magellan chief operating officer Mike Mears said.
When completed and operational, this pipeline would have the capacity to ship 240,000 barrels of ethanol per day. This amounts to more than 3.6 billion gal. of ethanol, or about one-fourth of the ethanol mandated for use in 2015 by the renewable fuel standard provision of the Energy Independence & Security Act of 2007.
POET has a network of 35 plants in eight states that produce more than 1.8 billion gal. of ethanol annually, and many of its plants are on the pipeline route.
Magellan and POET will invest more than $4 billion to develop and construct the ethanol pipeline between 2010 and 2014, when it is scheduled to become operational.
Economic impact
A recent report from consulting firm LECG LLC shows that the majority of the jobs created from the ethanol pipeline will be in the construction and transportation industries, with more than 50,000 jobs coming from construction alone.
The pipeline project would provide approximately 1100 permanent jobs after construction is completed. Magellan estimated that 143 jobs will be directly associated with ongoing pipeline operations.
The report notes that the largest share of expenditures and job creation is associated with construction activities that take place in years four and five of project development. Spending and job creation in the first several years of the project are primarily associated with project development, permitting and engineering.
LECG also noted the Magellan/POET ethanol pipeline will provide economic benefits over and above job creation.
For instance, it said the US economy will be $6.6 billion larger by 2015 as a result of the investment in the pipeline's development and construction, and the pipeline will generate nearly $3.7 billion of additional household income.
In addition, the project will increase federal tax revenues by $715.1 million, while state and local governments will realise additional tax revenues of nearly $618 million.
Future steps
A loan guarantee with the US Department of Energy is necessary for the ethanol pipeline project to become a reality, the partners said. Congress is considering amendments to DOE's loan guarantee program to include large-scale renewable fuel pipeline projects.
POET public relations director Nathan Shrock noted that because amendments to DOE's loan guarantee program are necessary to advance the project, the company is "hopeful that the House and Senate will take action in the upcoming JOBS bill to put 80,000 Americans to work on the nation's first long-distance renewable fuel pipeline."
"This project has the clear environmental benefit of dramatically reducing carbon emissions from traditional ethanol transportation, and this latest report shows its important impact on our economy as well," POET chief executive officer Jeff Broin said. "Ethanol continues to play a large role in the new energy economy taking shape here in the US."
Mears added, "Construction of a large-scale renewable fuel pipeline complements the national objective of creating quality jobs while increasing transportation efficiencies for the growing renewable fuels industry."
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