US midwest ethanol bumps against barge capacity

27 February 2008 17:37  [Source: ICIS news]

ORLANDO, Florida (ICIS news)--Expanding ethanol production in the US midwest is bumping up against constraints on barge capacity, an ageing fleet, and a waiting list for new units, a barge operator said on Wednesday.

"There is tremendous demand right now," Dave O'Loughlin, vice president of liquid sales at shipping firm Ingram Barge, told the National Ethanol Conference in Orlando.

US ethanol production and consumption is focused on the corn-producing midwest, and the industry is seeking to expand its markets in high demand centres on the coasts.

Because of technical constraints impeding ethanol transportation through pipelines, barges play an important role in the so-called virtual pipeline of ethanol distribution.

The US liquid barge industry is primarily focused on northbound movement of petroleum products and chemicals, and is already running at around 95% capacity, O'Loughlin said.

Ethanol has mainly been a back-haul opportunity for barge operators returning their units southbound. But the recent growth in ethanol shipments is creating new challenges, he said.

These include tank cleaning, which because of ethanol's physical properties can be more difficult than other cargoes.

Currently, the average age of a 10,000 bbl barge - typical of the kind used by the petroleum industry for up-river transportation - is 25.1 years, while the average age of a 30,000 bbl barge - used downriver and on the intracoastal waterway – is 16.4 years.

The smaller barges cost around $1.4m (€900,000), while the larger barges coast around $3.2m, O'Loughlin said.

Shipyards are at capacity, with around 132 new barges built in 2007 and a similar number coming in 2008, he said.

($1 = €0.67)

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By: Stephen Burns
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