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Poet, Magellan To Study Ethanol Pipeline

The Associated Press

SIOUX FALLS, S.D. (AP) — Biofuels company Poet LLC and Magellan Midstream Partners LP on Monday announced a joint venture to study whether they can build a dedicated ethanol pipeline with an estimated cost of more than $3.5 billion.

The 1,700-mile pipeline would deliver ethanol from plants in Iowa, South Dakota, Minnesota, Illinois, Indiana and Ohio to distribution terminals in the northeastern United States.

Jeff Broin, Poet's chief executive, called the agreement an important step in improving long-term transportation economics for biofuel producers and customers.

"A project of this nature would provide benefits throughout the ethanol industry, agricultural community and the economy in general," Broin said in a statement. "It would also represent another major step forward in the efficiency of producing and delivering ethanol to the marketplace."

Poet, based in Sioux Falls, S.D., is the nation's largest ethanol producer with more than 1.5 billion gallons of annual production from 26 ethanol plants.

Tulsa, Okla.-based Magellan Midstream Partners LP transports, stores and distributes refined petroleum products.

The companies said the project is dependent upon the success of studies addressing technical and economic issues related to transporting ethanol through a pipeline. Federal legislation revising the U.S. Department of Energy's loan guarantee program is also critical for the project to move forward, they said.

A positive assessment would allow one or both partners to enter into an agreement to construct an ethanol pipeline, but any project would take several years to complete.

Shares of Magellan Midstream Partners rose $1.26, or 4.3 percent, to $30.70 in afternoon trading. The stock has ranged from $18.85 to $43.61 over the past year.