Two U.S. oil products companies are looking into the possibility of building an ethanol pipeline that extends from the Midwest, where the majority of the ethanol is produced in the U.S., to the densely populated Northeast.

With U.S. ethanol capacity expanding, Magellan Midstream Partners and Buckeye Partners feel spending $3 billion to build a 1,700 mile pipeline might make sense. According to a statement, "the proposed pipeline could have the capacity to supply more than 10 million gallons of ethanol per day, enough to meet the needs of millions of northeastern motorists who purchase 10% ethanol blended gasoline or higher ethanol blends such as E85."

Todd Alexander, a climate change partner at law firm Chadbourne & Parke, said in a recent Reuters report that such a pipeline could lower costs for both ethanol producers and consumers because sending fuel by pipe is cheaper than sending it by truck, rail or barge.

In November, Purchasing reported that the Association of Oil Pipe Lines funded an $800,000 study to look into the possibility of an ethanol pipeline in the U.S.