Kinder Morgan, Andersons Plan Ethanol Projects as Demand Rises

  • Ethanol use will reach record this year, EIA predicts
  • Cheaper gasoline is helping boost demand for the fuel

Kinder Morgan Inc. and Andersons Inc. announced separate plans to invest in ethanol projects amid record demand and after the U.S. mandated increased higher use in gasoline in 2016.

Houston-based Kinder agreed with Archer-Daniels-Midland Co., the largest U.S. ethanol producer, and Bailey Feed Mill to develop a new ethanol hub in Selma, North Carolina. Kinder will construct the new facilities and pipeline to distribute ethanol in the region. The whole project is expected to be complete by the end of 2016, Chicago-based ADM said in a statement Monday.

Separately, Andersons said it plans to double the capacity at an ethanol plant in Michigan because of “very favorable” supply and demand in the state. The project is scheduled to be completed in April 2017, the Maumee, Ohio-based grain merchant said in a statement.

The announcements come three weeks after President Barack Obama’s administration said it will require historic amounts of the fuel to be consumed. From next year, refiners must use ethanol in amounts exceeding 10 percent of U.S. motor-fuel demand -- the so-called blend wall, a level that oil companies have said is dangerous to exceed because of potential damage to engines and catalytic converters.

Changing driving habits and improved vehicle efficiency are being outweighed by the impact of cheaper gasoline. Lower fuel prices are boosting usage, and that in turn is helping to stoke demand for ethanol. Gasoline use will reach 140 billion gallons this year and push ethanol demand to a record 14 billion gallons, the Energy Information Administration forecast on Dec. 8.

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