This spring, demand for ethanol for blending in gasoline is likely to increase, creating challenges for pipeline companies and possibly spurring increases in consumer gasoline prices.  An increase in ethanol demand is expected because of pressure to reduce use of MTBE in gasoline, the U.S. Energy Information Administration (EIA) recently reported.

Detection of MTBE in water supplies has led to state MTBE bans and decisions by petroleum companies to use less MTBE.  As less MTBE is used, companies in many cases are seeking ethanol as a substitute, especially in the East and Northeast but also near Houston and Dallas-Fort Worth, where MTBE has been used extensively in cleaner-burning reformulated gasoline required there.  (In California and the Midwest, where reformulated gasoline is also required, the transition to ethanol has already occurred.)

But a smooth transition may be difficult, EIA has concluded.  New ethanol production capacity may not be on line soon enough to meet the increase in demand.  Also, transporting ethanol to East Coast and Texas terminals, storing it, and blending it in gasoline raise significant additional difficulties that could impact supplies.

The prospect of more ethanol in more markets across the country has raised the issue of transporting ethanol by pipeline, which is rarely done in the United States.  When it occurs, it involves generally small pipelines with few shippers and a limited slate of products. 

In the near term, it is likely that most of the projected increase in shipments of ethanol to terminals will be handled by tanker truck and rail tank car as opposed to pipelines.  Except for a few proprietary pipelines, the refined product pipeline operators do not ship ethanol in their systems. 

Wider use of pipelines to transport ethanol is problematic for several reasons.  It means addressing ethanol’s water affinity problem (ethanol is water soluble meaning it absorbs water). Because water accumulation in pipelines is a normal occurrence (in most cases water enters the system through terminal and refinery tank roofs or can be dissolved in fuels during refinery processes), introducing ethanol into a pipeline risks rendering it unusable as a transportation fuel.

The second challenge to transporting ethanol by pipeline is the need to address corrosion issues.  Ethanol-related corrosion problems can result from how ethanol behaves in the pipe.  There is some evidence that ethanol in high concentrations can lead to various forms of corrosion including internal stress corrosion cracking, which is very hard to detect.  This damage may be accelerated at weld joints or “hard spots” where the steel metallurgy has been altered.

While it may be technically possible to address issues relating to transporting ethanol via pipeline, significant investments in new and modified facilities and operational practices would be necessary.

While oil pipeline operators search for ways to address the challenges of transporting ethanol blended products, they will continue to provide the most efficient, reliable and safest means of transporting fuel for your daily life.