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February 12, 2002

U.S. DOE STUDY CONCLUDES "NO MAJOR INFRASTRUCTURE BARRIERS EXIST" FOR A 5.1 BILLION GALLON PER YEAR ETHANOL MARKET

Study Boosts Support for Renewable Fuels Standard and California Market

WASHINGTON, DC -- The Renewable Fuels Association (RFA) called attention yesterday to a new report completed for the U.S. Department of Energy (DOE) on the infrastructure requirements for an expanded ethanol industry. The report found that “no major infrastructure barriers exist” for producing and using over 5 billion gallons of ethanol across the country each year.

“This study produces empirical support for the transportation industry’s recent statements that they have the capability and the capacity to move large quantities of ethanol from coast to coast,” said Bob Dinneen, RFA president. “This report leaves no reasonable doubt that a dramatic expansion of the domestic ethanol industry can be achieved without supply disruptions or distribution problems. Whether replacing MTBE in California or meeting the demand for ethanol created by a robust renewable fuels standard (RFS), the U.S. ethanol industry can and will respond.”

The report, Infrastructure Requirements for an Expanded Fuel Ethanol Industry, analyzed the infrastructure requirement for expanding ethanol use, including transportation, distribution and retailing issues. The study assumed ethanol production of 5.1 billion gallons per year, comparable to pending legislation establishing an RFS. According to the study, 495 terminals (58.6% of operating terminals) would offer ethanol. Also:

-181 terminals would need to add new ethanol tanks and an additional 63 existing tanks would by converted to ethanol use.

-49 terminals would need to add rail spurs and 287 terminals would need to add blending equipment.

-35,214 retail outlets would make one-time modifications to handle ethanol
Amortized, the combined cost to terminals and retail outlets would be only $0.0008 per ethanol-blended gallon of gasoline.

Given the amount of Midwest production, the report found that nearly a billion gallons of ethanol from that area would be moved down the Mississippi River via river barge, staged in the Gulf Coast, and travel by ship to the West Coast and northern portions of the East Coast. Significant amounts of ethanol will also be shipped throughout the country by rail tank car.

The report found:

-The volume of ethanol shipped in Jones Act vessels is less than the volume of MTBE it would be replacing.

-21 river barges of 30,000 barrel capacity will need to be added. This is “not a major addition to demand for new barges.”

-2,549 additional rail tank cars will be needed. This “would not be a major challenge for the freight car builders.”

-The average freight cost for all categories would be $0.0767 per gallon of ethanol.

The report concluded “no major infrastructure barriers exist” and that needed investments on an amortized, per-gallon basis are “modest” and “present no major obstacle.”

“We appreciated the concerns of a few regarding the ability to ship ethanol effectively from coast to coast,” said Dinneen. “This in-depth study answers the necessary questions. Ethanol can be a cost-effective component of our nation’s fuel supply. The Congress should pass an RFS to increase our energy security and the state of California should move forward with its MTBE ban to protect drinking water supplies. The ethanol industry is ready.”

The full report can be found on the U.S. DOE website at: www.afdc.doe.gov/pdfs/6235.pdf
 

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