Seminole Energy to build ethanol pipeline in Nebraska; first of its kind

In Nebraska, Seminole Energy said that they plan to construct a $150 million ethanol pipeline that would create a hub in central Nebraska where out-of-state rail lines intersect. The hub would store up to 30 million gallons of ethanol and use rail for the out-of-state shipments. The pipeline is expected to save up to 9 cents a gallon in transportation costs.

Terminal operators and transport companies such as Kinder Morgan Energy, Colonial Pipeline, NuStar Energy and Magellan Midstream Partners had so far declined the $1 million per mile investment.

The USDA published a report in September on ethanol transportation and logistics, titled Expansion of U.S. Ethanol from the Agricultural Transportation Perspective. The report said “Transportation is a major cost for ethanol producers and balancing these expenses with needed infrastructure can be critical to sustained profitability.”

The report looks at truck and rail options for corn and fuel shipments. Rail accounted for 60 percent of ethanol shipping, with 30 percent handled by trucks and 10 percent by barges.

Ethanol pipeline construction has come under recent scrutiny since an official at the Nebraska Ethanol Office confirmed that plans were under discussion by several private firms to develop an ethanol pipeline from the Midwest to fuel markets such as Chicago and California. Currently, the state’s 950 million gallons ethanol exports travel by two weekly 2.5 million gallon trains from Lincoln to California and a similar train to Chicago traveling at less than a weekly frequency.

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