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POET pleased with DOE ethanol pipeline study

While not agreeing with all of the specifics, ethanol giant POET is generally pleased with the Department of Energy’s (DOE) study on the feasibility of an ethanol pipeline from the Midwest to the East Coast. 

“We’ve been doing our own feasibility study around an ethanol pipeline that would come from the Midwest to the East Coast, and we were encouraged by the results of the Department of Energy’s study that looked at a hypothetical project,” says POET spokesman Nathan Schock. “That project differed somewhat from ours, but still found that this pipeline would be feasible with a Department of Energy loan guarantee.”

Efforts are underway in Congress to include pipeline loan guarantees in upcoming energy legislation.  Schock says the guarantees are crucial to the project.

“If you look at a project of this size that requires this large of an investment, we think that a loan guarantee will be a necessity in order to be able to get the financing to build the pipe,” says Schock. “No different than a natural gas pipeline coming in from Canada—or other ‘fueling infrastructure’ in this country that has received federal assistance.”

The DOE assessment found the project would not be profitable without higher demand for ethanol.  To make it feasible, the DOE says the ethanol pipeline would need to ship 4.1 billion gallons a year to the East Coast.  But current ethanol demand in those markets is only 2.8 billion gallons a year.  Schock thinks the USDA number is too high, but admits that moving the ethanol blend rate to 15 percent would make the project more attractive to investors.

“Our feasibility study shows that it’s viable with the current level of demand,” Shock says, “but we do think that a move to E15 would certainly make it even more attractive and a better opportunity for the loan guarantee—as well as attracting the lending and debt that we’ll need to build the project.”

Another area of disagreement—DOE says the project would cost 4-point-25 billion dollars.  POET estimates the cost at just over three and one-half billion. 

AUDIO: Nathan Schock (7:30 MP3)