Magellan Midstream Partners LP has completed the construction of a pilot biodiesel injection-blending system at its terminal in Alexandria, Minn. Blending and distribution of biodiesel blends at the terminal began in January 2005. The new injection-blending infrastructure includes an insulated, heated 2,000-barrel tank and insulated, heated lines to the loading rack, said Bruce Heine, director of government affairs.
The primary objective of the pilot unit is to analyze results from a variety of cold weather tests to ultimately determine the best temperature at which to blend various biodiesel proportions with its petroleum counterpart "during Minnesota's coldest months," Heine said. Once testing is complete, the company plans to install similar injection-blending units for biodiesel in its four other Minnesota terminals and two terminals in North Dakota. Magellan's goal is to maximize dispensing and distribution efficiencies to meet Minnesota's demand once the B2 mandate goes into effect.

Once Minnesota's B2 law becomes effective, state testing to ensure the consistency of the biodiesel blend would occur at the retail level. Heine said Magellan's decision to invest more than $5 million into its Minnesota and North Dakota terminals will assist to meet those standards. Since biodiesel and petroleum diesel have different gravities, splash blending the biodiesel with diesel in the tanker invariably leads to inconsistent blending, more often than not resulting in a higher biodiesel ratio at the bottom of the tanker. Injection blending, however, provides a more accurate blend by injecting the biodiesel into the petroleum diesel line as the petroleum diesel is filling the tanker. "The other benefits of having blending inside the terminal gate are that we can load both [biodiesel and diesel] at the same location, which is more efficient, and it eliminates the additional stop charges," Heine said.

If the Minnesota mandate were to be repealed or halted for any reason, the company's investment in the biodiesel blending infrastructure throughout its regional terminals would be reimbursed by the state. "One of the issues that we looked at in our decision to invest in this infrastructure was the provision in the statute called the DERD-the Distributor's Expense Reimbursement Decision," Heine said. This provision acts as a mechanism to protect the distributors' investments should the mandate get struck from state law.

agellan is a transportation company in the pipeline and terminal distribution business, with no stance on any renewable fuels standard. Magellan provides services that its customers desire, so affiliations with biodiesel or any renewable fuel is, as Heine said, "to maximize the efficiency and fungibility of our system."