Once the health care debate is over, the Obama administration says it will again make job creation its main domestic priority. There will surely be a renewed focus on the maintenance and build-out of infrastructure like highways, bridges and transmission lines in the coming months.
Banking on this political shift, the nation’s largest ethanol producer, Poet, is trying to raise awareness about another kind of infrastructure project – an 1,800 mile ethanol pipeline that would bring biofuels from the Midwest to markets in the Northeast.
Poet and the energy transportation company Magellan Midstream Partners have been looking at such a project for many years, but they’re releasing new job creation figures in order to shore up more political and financial support. ::continue::
According to a report from the consulting firm LECG, the pipeline – stretching from South Dakota to New Jersey – would cost about $4 billion to build and account for 50,000 temporary construction jobs, 15,000 manufacturing jobs and 1,100 permanent operations and maintenance jobs. Poet and Magellen are hoping that politicians will take notice as they look at new ways to spur job growth in the U.S.
“This could be a major component to rebuilding our economy,” says Jeff Lautt, executive vice president of corporate operations for Poet. “This would offer a lot of jobs and a permanent piece of infrastructure.”
The key now will be to secure a loan guarantee from the federal government. Without such backing, lenders will likely shy away from the project. This doesn’t say anything about the feasibility of the project, given that the need for loan guarantees is commonplace for other oil and natural gas pipelines.
But Poet’s new push for the project does say something else about the biofuels market: The company believes that ethanol will continue to play a major role in the U.S. fuel mix for a long time to come. And without such a pipeline, current infrastructure may not be able to efficiently handle the increase in ethanol production as the industry scales up to 36 billion gallons of fuel per year by 2022.
Currently, ethanol from plants is either transported in trucks to local markets or by rail to far-away markets like the Northeast. This system is fairly efficient and cost-effective today, says Poet’s Lautt. But in the future, the pipeline will become increasingly necessary.
“There’s already enough volume to accommodate a project like this. Once you reach a critical mass, it makes you ask if there’s something more efficient. This will allow us to more efficiently get ethanol from local markets to destination markets,” he says.
This proposed project has been floating around for years, but the conditions haven’t been right to develop it. Ironically, it could take a poor economy to create the momentum needed to get the project going again.
What do you think? Is this the kind of project we need to see in order to get the U.S. economy back on track?