Ethanol, and the unit train vs carload conundrum

[Murphy Siding]

QUOTE: Originally posted by futuremodal

This particular thread isn't focussed on the plusses and minusses of ethanol, rather that there is a push by railroads to force any potential ethanol plant to be large scale so that unit train operations can be employed.

Quothe up829:

QUOTE: Small ethanol plants are popping up like wildflowers as venture capitalists see a great investment opportunity...

This is a great example of why such proposals might end up getting squelched by the railroads due to the forced "big or nothing" approach.

If all future ethanol plants are forced to be large or nothing, then those local co-ops won't have a chance to succeed unless their end market is also local. If the railroads would willingly provide carload service, it could be a different story..........

Or it's all done with trucks. See post by tomtrain above.

[Anonymous]

This particular thread isn't focussed on the plusses and minusses of ethanol, rather that there is a push by railroads to force any potential ethanol plant to be large scale so that unit train operations can be employed.

Quothe up829:

QUOTE: Small ethanol plants are popping up like wildflowers as venture capitalists see a great investment opportunity...

This is a great example of why such proposals might end up getting squelched by the railroads due to the forced "big or nothing" approach.

If all future ethanol plants are forced to be large or nothing, then those local co-ops won't have a chance to succeed unless their end market is also local. If the railroads would willingly provide carload service, it could be a different story..........

[Murphy Siding]

QUOTE: Originally posted by CSSHEGEWISCH
[br]Considering the amount of subsidies involved in the production of ethanol as an automotive fuel, I'm not sure that the consumer isn't already being stiffed. E85 may be a fraction cheaper than the current gasoline-ethanol blends due to the subsidies, but it gives you less mpg so you wind up using more gallons of it for a given distance than gasoline.

My sentiments exactly.

[CSSHEGEWISCH]

Considering the amount of subsidies involved in the production of ethanol as an automotive fuel, I'm not sure that the consumer isn't already being stiffed. E85 may be a fraction cheaper than the current gasoline-ethanol blends due to the subsidies, but it gives you less mpg so you wind up using more gallons of it for a given distance than gasoline.

[Anonymous]

I'm not sure what you mean by large scale mixing facility, but gasoline generally gets to the local and regional distribution facilities by pipeline and ethanol is added there. AFAIK, ethanol whether it's E10, E85, or E100 can't travel by pipeline. The various blends required by EPA also vary by region.

Many parts of the Midwest have had E10 for quite a while so the farm, plant, and distribution networks are already established. I suspect the bigger problem is how to serve the west coast and other areas of the country that don't grow corn in abundance. Part of the answer may be in using something that can be grown regionally, but in the mean time there needs to be a fairly large scale distribution network for those parts of the country.

Small ethanol plants are popping up like wildflowers as venture capitalists see a great investment opportunity, but in terms of volume, ADM is by far the dominant player and also has the resources and political clout to build large scale plants and a distribution network.

Ethanol may run into some of the same problems as MBTE. Wisconsin has already or is the process of outlawing E10 outside of the Milwaukee air quality region due to concerns about what it will do to the states many fresh water lakes. It was also causing major problems in boats with molded-in fiberglass gas tanks and that may become an issue in other states with large numbers of registered boats.

[Murphy Siding]

Dave-you must not have too many ethanol plants where you live. All the ones around here have a big parking lot for the overflow of trucks bringing corn in. Typically, if you stood on the highest building of the facility and looked in every direction, all you would see is corn fields. You would also probably see the grain elevators in every small town-spaced about 6-10 miles apart. You would also find it near impossible to count the number of grain bins on farms within a few miles of nearly any ethanol plant.

[Anonymous]

Here's the conundrum:

Assuming all product in and out is brought by unit train, you are going to have at least 4 unit trains of inputs for every 1 unit train of output. And those 4 unit trains of inputs (aka corn) will be a relative shorthaul for the railroads, compared to the long hauls to export facilities. Since it is unlikely that acreages of corn plantings will increase much due to ethanol plants sprouting up, that corn will simply be diverted from long haul unit trains headed for ports, to short haul unit trains running from shuttle elevator to ethanol plant.

Isn't one unit train cycling a thousand miles more profitable than four unit trains cycling 100 miles at a shot?

[Anonymous]

The ethanol plant near us isn't even served by rail. All the production is trucked.

[tree68]

Considering that most of the ethanol production will be concentrated where it can be most economically made, and the blending will likely be done where the petroleum part of the mix is already being handled, unit trains should fit most of the operating scenarios.

That's not to say that there might not be some carload handling from smaller facilities, but even that can be gathered into unit blocks at some point, much as coal is now.

[Murphy Siding]

You vastly underestimate how much corn is grown in South Dakota, Nebraska, Minnesota, Iowa,Missouri, Illinois, Indianna...........

[Anonymous]

There's a good article in Railway Age from the President of Iowa Interstate Railroad regarding future prospects for ethanol transporation. He makes a valid point that new ethanol plants will have to be large scale to accomodate unit train operations because smaller carload facilities cannot expedite the cycle of tankers to and from the plant:

http://www.railwayage.com/B/xpov.html

The question is - if even ethanol is subjected to a railroad desire for unit train only size and track layout requirements, doesn't that instantly kill off most start up ethanol plant proposals in the first place? How many areas of the country have enough corn growing acreage available to feed the required size of plant?

What's going to happen is that in order to effectively run such a plant, they will have to end up trucking in feedstock from hundreds of miles away just to have enough input product to produce the output at optimal economies of scale. Then the end product will only be able to be shipped to a large scale fuel mixing facility, so forget local and regional blending. This will result in higher costs, which will be passed on to the consumer.

Is it possible the unit train concept can actually cause an increase in consumer prices rather than a decrease (ostensibly passed on to the consumer via unit train economics)?