New Energy Future In the News

By David Dagan

Two companies yesterday proposed building a 1,700-mile pipeline to carry ethanol from the Midwest through Central Pennsylvania to New York.

The project would cost more than $3 billion, according to Oklahoma-based Magellan Midstream Partners and Lehigh County-based Buckeye Partners. The companies announced yesterday they would study the feasibility of building the pipeline together.

The pipeline would run through existing Buckeye terminals in Dauphin, Cumberland and Lancaster counties, said Stephen Milbourne, manager of investor relations for Buckeye. Buckeye distributes gasoline, heating oil, diesel fuel and jet fuel at those terminals. It's safe to assume the company would add ethanol to that mix if the pipeline were built, Milbourne said.

The Magellan/Buckeye project could add to the midstate's growing stature as a center for biofuels. Central Pennsylvania is home to several biodiesel producers. Also, a company called Lancaster Biofuels has proposed building an ethanol plant in Conoy Township, Lancaster County. It would be the first such plant in the Harrisburg-Lancaster-York region. A Lancaster Biofuels representative could not immediately be reached. Biodiesel is used in heavier vehicles, while ethanol is used in cars.

The project also could serve local gasoline retailers who sell ethanol. Many gas stations sell gasoline that contains up to 10 percent ethanol. A number of local companies are also involved in a project to develop a corridor of gas stations that sell E85, a vehicle fuel that is 85 percent ethanol and can be used in so-called "flex-fuel" cars. Those companies include Shipley Energy of York County, Wesco Energies of Perry County and Worley & Obetz Inc. of Lancaster County, according to a news release about the program from the state Department of Environmental Protection. Representatives of those companies could not immediately be reached.

The proposed pipeline would be the first to funnel ethanol to the East Coast, which now gets the fuel primarily by rail, Milbourne said. The structure could carry up to 10 million gallons of ethanol daily from Midwest production facilities to distribution points in Pittsburgh, Central Pennsylvania, Philadelphia and New York.

Magellan and Buckeye would seek to use existing land rights for the new pipeline, which would follow the routes of pipelines already in place for much of the trip east.

"We have the corridor already…essentially in place," Milbourne said.

Construction would depend in part on whether the companies can get government support in the form of loan guarantees, Milbourne said. The companies will review technical and economic issues in a study that could be completed later this year, according to their announcement.

The pipeline could pose a challenge to the fledgling ethanol-production industry in Pennsylvania, said Russ Montgomery, president of Regional Economic Development District Initiatives of Southcentral Pennsylvania, an economic-development nonprofit based in Harrisburg. REDDI is working to develop a renewable-energy industry in the region.

But the industry eventually will move from using corn to making cellulosic ethanol, which is made from a broad range of plants, Montgomery said. That would weaken the dominance of the Midwest and support local production, he said.

"(The pipeline) could have an impact on some of our producers, but in the long run, corn-base is not going to be the fuel of choice," Montgomery said.

Demand for ethanol is on the rise primarily as a result of federal support, including a requirement that fuel suppliers use ethanol and a production subsidy of 51 cents per gallon. A federal energy bill passed in 2007 specifically requires the use of cellulosic ethanol.

Corn-based ethanol should only be a stepping stone to cellulosic ethanol, said Nathan Willcox, energy and clear-air advocate at Philadelphia-based PennEnvironment. Studies have cast doubt on the ultimate energy savings of corn-based ethanol because of the amount of energy it takes to produce the fuel, he said. Also, there is concern that farmers overseas could clear forestland to grow ethanol crops, neutralizing the benefit of the cleaner-burning fuel, he said.

Milbourne said the pipeline would make sense even if the industry shifts to using cellulosic ethanol because the Midwest remains the nation's agricultural center.