Pipeline Potential

In order for biodiesel to become a mainstream fuel, distribution costs have to be reduced and consumers need to have better access to the fuel. Pipelines, which are fast, reliable and inexpensive, offer a solution. Although some companies have conducted experiments to test a pipeline's feasibility, at this time it's not clear when or if it's a viable option for biodiesel.
By Anduin Kirkbride McElroy | January 24, 2007
Moving biodiesel seamlessly into the existing transportation fuel network would improve its distribution and decrease distribution costs. The efficiencies provided by a pipeline system have prompted some producers and distributors to experiment transporting biodiesel through pipelines that are faster, less expensive and use less energy than current transportation methods. Finding alternative transportation methods is crucial as the production of the renewable fuel expands.

"The bottom line is, it's been increasingly clear that being successful in biodiesel has to do with delivering product to customers wherever they are," says Gene Gebolys, CEO and founder of World Energy Alternatives LLC, a Massachusetts-based biodiesel producer and distributor. However, the methods used to transport the fuel must be cost-effective. "It's important that we spend less money per gallon in moving this material," he says. In many cases, distribution costs outpace the cost of manufacturing biodiesel, he adds. This is due in part to the industry's dramatic growth, which he says is straining the existing distribution infrastructure.

"It's critical that we have efficient, high-quality distribution if we're going to have an efficient, high-quality industry," Gebolys states. "Obviously, the most efficient way to move massive amounts of liquid energy is in a pipeline. Pipelines are the next frontier."

World Energy has already started its journey into this new frontier. In August 2006, the company participated in a trial whereby it supplied 75,000 barrels of B5 for shipment through a common-carrier pipeline operated by Colonial Pipeline. The B5 blend was transported from Houston to Linden, N.J., on one of Colonial's mainlines. That mainline is usually reserved for distillate products such as jet fuel, home heating oil, fuel for U.S. military use and various grades of diesel fuel, including the new ultra-low sulfur diesel.

The pipeline move was a lesson in logistics from start to finish. "We had to stage a large volume of biodiesel to be available at the right time and make sure it was all of ASTM or better quality," Gebolys says. The company transported the B100 in a barge to the shipper's staging tank where it was blended with No. 2 low-sulfur diesel and then transported through the pipeline.

This trial wasn't a one-time-only experiment, World Energy tells Biodiesel Magazine. "It's the first in what will be a sustained push to get biodiesel into markets," says Gebolys, who adds that the experiment was an activity designed to teach the company how to move the high-volume material efficiently. Nevertheless, Gebolys declined to provide any details about when the next trial may be scheduled.

This was the first time a biodiesel blend has been transported on a common carrier pipeline that also carries aviation fuel, according to World Energy. However, it wasn't the first time that biodiesel has been shipped via pipeline. Countrymark Co-op Inc., a petroleum refining and marketing company based in Mt. Vernon, Ind., moved B5 through its private carrier pipeline system in late July 2006. Biodiesel Magazine reported that 210,000 gallons of B5 was moved through the 238-mile pipeline from the company's Mount Vernon refining complex to a central terminal in Indiana. The move took 72 hours.

Countrymark's pipeline experience marked the first time a company had moved B5 through a pipeline that carried gas, diesel and heating oil. Unlike World Energy, Countrymark used a pipeline that isn't used to transport aviation fuel. At that time, Countrymark said it would go back to transporting biodiesel by truck until independent lab results demonstrated whether fuel and transportation specifications were met. Countrymark couldn't be reached for comment on this story.

What's Next?
The Colonial Pipeline experiment was deemed a success because the B5 wasn't downgraded during the pipeline run. World Energy tested the fuel, and it was subjected to a third-party survey and independent analysis prior to blending, according to the company. Tests were performed on samples taken as the fuel traveled through Houston; Baton Rouge; La.; Greensboro, N.C.; and Linden, N.J.
Paul Nazzaro, president of Advanced Fuel Solutions Inc. and petroleum liaison for the National Biodiesel Board, explains a standard testing procedure: Pipeline companies visually inspect fuel shipped before and shipped afterward, and run a series of ASTM specifications that run in D 975. Colonial had to make sure the biodiesel blend didn't cause the prior or subsequent fuel to fall outside of its ASTM specification. "It was successful in those categories," Nazzaro says.

However, there is one issue that's holding the process back. "There isn't enough empirical data and testing equipment," says Nazzaro, referring to a problem called "trail back," where trace amounts of residual biodiesel may stay in the pipeline and end up in future fuels. "[The biodiesel] could be extremely low, but until more work is done there is no tolerance for any measurable level of biodiesel in jet aviation fuel."

Fuel that's ready to be shipped is stored in segregated tanks and specific amounts are moved in a scheduled manner, Nazzaro explains. Because dozens of products and grades are shipped one after the other in a pipeline, there's a certain amount of mixture of both fuels at each different fuel interface. This mixture is called transmix, and sometimes the transmix doesn't meet the spec of the fuels on either side of the interface, Nazzaro says. "If this is the case, it then goes into a holding tank and gets reprocessed." It's unclear how much transmix is needed to get the biodiesel to a nondetect level in the subsequent fuel, or whether some low level of biodiesel can be allowed in jet aviation fuel, Nazzaro says. One of the biggest hurdles in shipping biodiesel blends through a pipeline is that extremely low levels of contamination can't be detected using existing testing instrumentation. However, new methodology is being developed, he says.

The potential for fuel contamination led Colonial to issue a statement saying that additional pipeline shipments of biodiesel blends wouldn't occur at this time. In a press release, Colonial said "test shipments of biodiesel, while feasible, had raised concerns of potential contamination to other products in the pipeline, especially jet fuel."

Dwaine Shroyer, Colonial's vice president for strategic planning and business development, added, "We will continue to work with the renewable fuels industry for solutions that both assure the quality of jet fuel and permit biodiesel shipments on the same pipeline."
Biodiesel blends could be more quickly integrated into pipelines that don't carry aviation fuel, such as the one used by Countrymark. "[However], if the pipeline is multi-fuel, everyone is going to be cautioned," Nazzaro says. "Aviation carries a big stick. Every pipeline is going to look at additives or biodiesel with caution. They cannot have residue hanging on those pipes."

Several questions, in addition to the residue issues, must be answered before biodiesel can be moved through the existing pipeline network. Nazzaro says there are also concerns about the fungibility of biodiesel, its solvent properties, and the material compatibility of the pipeline's gasket and seals-especially with blends over B20. Biodiesel's cold-flow properties could also prove challenging. Nazzaro doesn't expect that any company will transport blends higher than B5 through a pipeline, citing the risk of the fuel congealing in the pipeline.

Supply and demand also have to be considered before biodiesel becomes a candidate for shipment via pipeline. The biodiesel industry has yet to provide the production and demand necessary to require shipment through a pipeline, when compared with other products, Nazzaro says.

Gebolys agrees. "In the past, [biodiesel has] been an industry that's been too small in scale to warrant much consideration from pipelines," he says, but that's changing rapidly. "We're getting to where the volumes are great enough," he says. "We're just at the first stages where we can supply the scale and consistent quality necessary to move product along the pipe."

Biodiesel's longevity can be proven once it's established in long-term markets, Nazzaro says. He cautions the biodiesel industry from marketing itself as a lubricity additive. "All lubricity additives are added at the terminal to bring a product to ASTM specificatio.." he says. He also cautions against marketing on price. "You need to sell biodiesel on features, not price," he says, adding that the industry needs to find long-term markets like heating oil.

When blended at 5 percent, heating oil would create a demand for 450 MMgy of biodiesel in the northeast United States, Nazzaro explains. This represents approximately 16,000 railcars moving biodiesel from the Midwest, he says. Providing consistent supply to long-term markets, such as the heating oil industry, would be one benefit of pipeline shipping.

As previously alluded to, one of the greatest benefits of pipline transportation would be the dramatically reduced cost to ship fuel. According to information gleaned from Colonial's tariff sheet, available on its Web site, the cost to ship fuel via pipeline from Houston to Linden, N.J., is 148.52 cents per 42-gallon barrel, which is about 0.035 cents per gallon. For comparison, Nazzaro estimates that rail shipments average 15 cents per gallon, and the cost is even more for truck transport. "The efficiency of a pipeline is a must if you're looking to build the biodiesel industry," Nazzaro says. "As the industry grows, moving it in the most cost-effective manner is critical. That's why we're so aggressive to get it going."

Getting pipeline companies on board is one of Nazzaro's top five priorities, and he's talked to pipeline companies that are extremely interested. Depsite the interest, he estimates that it may be 12-18 months before B5 will be shipped regularly through a pipeline, but only when all the prevailing issues are addressed to the satisfaction of the pipeline companies and their shippers.

"There's a lot of work to do," he says. "The timeline is so unpredictable."

Meanwhile, Gebolys declined to make any predictions. "It's going to happen as soon as we can do it consistently in a high-quality fashion," he says. "Until then, it's not going to happen. I think we've taken our first steps toward the inevitable move of moving product in the pipeline."

Anduin Kirkbride McElroy is a Biodiesel Magazine staff writer. Reach her at amcelroy@bbibiofuels.com or (701) 746-8385.
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