Ethanol requires the gas to be refined a different way, resulting in increased refining expense for the ethanol conversion.
Who told you that?
I work for the country's largest refiner, and that's news to me.
The only thing that could possibly be related is certain oil companies (like ARCO) using subgrade base gas (cheaper) and adding ethanol to bring the octane up to specs. But that isn't done at the refining level. It gets added at the terminals.
Ethanol is corrosive to pipelines, but the reason it doesn't get transported that way is that it doesn't interface well with other products, like gas, diesel or JP-8. It just cuts right through it, and it absorbs water like crazy. In my neck of the woods, it moves via railcar, barge, or ship. Sometimes by truck in some situations. I wish it moved via pipeline, it would make my life much easier.