Kinder Morgan Starts Moving Ethanol Through Pipeline

This will dramatically lower the cost of ethanol for consumers, and they said it could not be done?!?

Kinder Morgan Energy Partners, L.P. (NYSE:KMP) today announced it is now transporting commercial batches of denatured ethanol along with gasoline shipments in its 16-inch Central Florida Pipeline (CFPL) between Tampa and Orlando, Fla., making CFPL the first transmarket gasoline pipeline in the United States to do so. Kinder Morgan has invested approximately $10 million to modify the line for ethanol shipments which involved chemically cleaning the pipeline, replacing pipeline equipment that was incompatible with ethanol and expanding storage capacity at its Orlando terminal to handle ethanol shipments.

“We are excited about the commercial opportunities presented by the successful efforts in modifying Central Florida Pipeline and are assessing our other pipeline assets that may be similarly modified to meet expanding customer needs for biofuels,” said KMP Products President Tom Bannigan. “We expect the CFPL expansion to be immediately accretive to cash available for distribution to KMP unitholders.”

In addition to the CFPL ethanol project, Kinder Morgan’s Products Pipeline segment has approved over $90 million in ethanol and biofuel projects including modifications to tanks, truck racks and related infrastructure for new or expanded ethanol and biodiesel service at various terminals in the Southeast and Pacific Northwest. Kinder Morgan offers offloading, storage and blending of ethanol at its terminals in Florida, Georgia, South Carolina, North Carolina, Virginia, Pennsylvania, New York, Illinois, Tennessee, Mississippi, Louisiana, Texas, California, Nevada, Arizona, Washington and Oregon.

For producers like ADM (NYSE:ADM) and Pacific Ethanol (NASDAQ:PEIX) this immediately will give them leverage with rail companies like CSX (NYSE:CSX) and Norfolk Southern (NYSE:NSC) who have seen profits rise steadily primarily on the shipping of ethanol to the East and West coasts. Now that the ethanol can travel by pipeline, it cost will fall and it will open up more markets for the E85 blend currently principally available in the Midwest.