Sens. Lugar, Harkin propose bill to extend pipeline tax credits to renewable fuels

In Washington, U.S. Senators Tom Harkin of Iowa and Richard Lugar of Indiana introduced legislation that would give pipeline owners the same tax benefits for transporting ethanol as for fossil fuels. Currently, Publicly Traded Partnerships (PTP)  that operate most of the country’s pipelines, are barred by the tax ode from earning income from the transportation of renewable fuels. The bill would allow PTPs to earn income from any renewable liquid fuel approved by the Environmental Protection Agency.

US pipeline background

In Florida, the Kinder Morgan’s Central Florida Pipeline will commence delivering ethanol by pipeline between the Port of Tampa and Orlando Airport. The first test batch will be delivered in the third quarter after replacement of pumps, seals, and gaskets, to a 23 million gallon storage facility established in Orlando.

Magellan Midstream Partners and Buckeye Partners said that they are investigating a 1700-mile, $3 billion ethanol pipeline from the Midwest that would take several years to construct. It was not revealed whether the proposed pipeline will connect the midwest to both the east and west Coasts, but the proposed pipeline length is consistent with serving high-demand east coast markets initially. The companies said they would complete their feasibility assessments this year.

An official at the Nebraska Ethanol Office recently confirmed that plans were under discussion by several private firms to develop an ethanol pipeline from the Midwest to fuel markets such as Chicago and California. Kinder Morgan Energy, Colonial Pipeline, NuStar Energy as well as Magellan have been mentioned as potential partners. Costs are estimated to cost $1 million per mile of pipeline.

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