It an effort to turn-around its struggling renewable fuels operations, Kinder Morgan Energy Partners has agreed to purchase three ethanol terminals for nearly $195 million in a joint venture with U.S. Development Group as reported by the Wall Street Journal. Kinder Morgan Energy has more than 28,000 miles of pipelines and 170 terminals and estimates that with this new deal, will handle around 218,000 barrels of ethanol per day in 2010.

U.S. Development Group, a storage and distribution company, in partnership with Kinder Morgan Energy, will create a nationwide network of ethanol-handling facilities that are connected via various modes of transportation including rail and pipelines. Ultimately, this network will provide easier access for major markets. Despite the current Obama administration’s support of alternative energy, such as second and third generation biofuels, most pipeline companies are sitting by the sidelines waiting for the ethanol play to be executed.

In addition to this new deal, the Journal reports that Kinder Morgan Energy, the division that oversees their renewable fuels strategies, has spent now spent approximately $500 million to build its ethanol and biodiesel business through facility acquisitions, upgrades and expansion projects. While biofuels are still considered a small part of their business “the company said that higher revenue from biofuels for its Central Florida Pipeline and West Coast facilities had “positively impacted” earnings in the third quarter.”

In another effort to improve the distribution of ethanol, Poet LLC and Magellan Midstream Partners announced that they would be building a 1,800 mile ethanol pipeline from South Dakota to Linden, New Jersey. The project is expected to cost $4 billion and be completed in 2014.