Pipeline Politics: Company to Ask for Help on Building Duct

By Jack Money, The Oklahoman

Feb. 20–TULSA — Magellan Midstream Partners and another company are looking at building a 1,700-mile-long pipeline to carry ethanol from the Midwest to New York Harbor.

And they want Congress’ help on the job.

“We think pipelines offer the safest, most reliable and most cost-effective way to transport large volumes of liquid energy from where it is produced to where it is consumed,” said Bruce Heine, a spokesman for Magellan.

“But before we get there on this particular project, we are focused on working with Congress,” he said.

There are two key issues Congress needs to be approached on, Heine said Tuesday. First, Magellan and the other company, Pennsylvania-based Buckeye Partners, seek a loan guarantee from Congress for building the line. Preliminary estimates place the line’s cost at more than $3 billion.

Second, they are asking for a tax code change so they won’t lose their Master Limited Partnership status once the line becomes operational.

The code today requires the companies to limit their sources of nonqualifying income, and income for transporting ethanol falls into that category.

Because Congress called for a substantial increase in the amount of renewable energies used by the nation — from 4 billion gallons in 2006 to 36 billion in 2022 — then it should be willing to help on both issues, Heine said.

Rep. John Sullivan, R-Tulsa, said Tuesday the requests from Magellan and Buckeye are worth considering.

“As it stands, transporting biofuels from America’s heartland to the urban population centers on both coasts is a major roadblock” to increasing their use, he said.

“If Congress is going to continue to implement biofuel mandates, we must consider how we will get these new fuels to the consumer in the most cost-effective way,” Sullivan said. “My House Energy and Commerce Committee colleagues and I will continue to discuss ways to efficiently bring these new energy sources to the consumer, and I am glad to see a new and innovative Oklahoma business such as Magellan work to use its resources to accomplish this goal.”

A news release put out by both companies on Tuesday said the pipeline would start in northern Iowa, or perhaps southern Minnesota, then head east through Illinois, Ohio, Pennsylvania and eventually to New York’s harbor.

It would carry as much as 300,000 barrels a day of denatured ethanol. The ethanol would be blended with gasoline at refineries where the product would be off-loaded from the line, Heine said.

Potential offload points include Cleveland, Pittsburgh, Philadelphia and New York’s harbor. Technical issues related to the line also are being worked on by a trade group, Heine said.

“We think pipelines offer the safest, most-

reliable and most cost-effective way to

transport large volumes of liquid energy from where it is produced to where it is consumed.”

Bruce Heine, Magellan spokesman

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