Nebraska ethanol pipeline, hub proposed

Nebraska ethanol pipeline, hub proposed

	Published : Mon, 19 Nov 2007 19:22 By : Agencies Print this Story

OMAHA, Neb. (AP) - Moving millions of gallons of ethanol from Nebraska plants to a central hub for distribution isn't just a pipe dream.

Representatives of Seminole Energy Services of Tulsa, Okla., are approaching Nebraska ethanol plants about a $150 million project that could move a billion gallons of ethanol a year from plants to a terminal between Grand Island and Hastings.

Kirk McClymont, who works in Seminole's Holdrege office, said that ideally the hub would be built at an intersection of Union Pacific and Burlington Northern Santa Fe rail lines so ethanol could be shipped out of state. Seminole would work with Oklahoma City-based Musket Corp., which handles fuel distribution for Love's Country Stores in 32 states, mostly in the South.

The hub would be able to store 30 million gallons of ethanol and accommodate three or four 95- to 125-car trains.

Savings to Nebraska ethanol plants could be about 9 cents a gallon, said Dan Frey, Seminole's vice president of business development.

The timing may be perfect. Seminole has plans to build a natural gas pipeline from Clay Center to Columbus and possibly on to Norfolk, and the same rights of way could be used for an ethanol pipeline.

'Logistically, if the trench is dug and the pipes being laid ... there's an element of efficiency,' Todd Sneller, administrator of the Nebraska Ethanol Board, said Monday.

Last year the United States produced nearly 5 billion gallons of ethanol and will reach around 7 billion this year, according to the Renewable Fuels Association, the ethanol industry's main trade group.

In Nebraska, annual production of 1.35 billion gallons is expected to jump to 2.3 billion gallons by 2009. At best, Nebraska could use 100 million gallons a year, Sneller said, making out-of-state exports vital to the plants' survival. Nebraska has 21 plants in operation and six under construction, Sneller said.

The United States has 131 ethanol refineries and 72 more are being built, according to the Renewable Fuels Association.

Distribution remains a major challenge to the industry's growth. The price of ethanol dropped by 30 percent earlier this year, and production stalled on some ethanol plants hit by high corn prices and construction costs.

Ethanol isn't shipped in existing pipelines because its high oxygen content makes it too corrosive and it also absorbs water and impurities in pipelines.

Building a pipeline that can handle the corrosive nature of ethanol is one of the hurdles to overcome, McClymont said.

Ethanol pipelines have been used successfully in Brazil, the second-biggest ethanol producer behind the United States.

If enough ethanol plants commit, the pipeline and terminal could be operational by 2010.

The key, McClymont said, is gauging interest from Nebraska ethanol plants.

'If there's no interest, that'll be the end of it,' he said. 'We can't afford ... to go out and spend a lot of money if there's no interest.'