SD producers: Keystone XL pipeline not a cure-all for rail delays that have plagued farmers

Energy Associated Press

South Dakota farmers are nearing the end of a record corn harvest this week, but they have serious concerns about grain prices, storage options and rail congestion heading into spring. And they're looking for more options than the Keystone XL pipeline to help.

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The proposed pipeline became emblematic during election season as a cure-all to the railway backups and delayed grain shipments that peaked this year thanks to trains transporting oil. But it remains on hold after being narrowly defeated this month in the U.S. Senate.

When producers run out of storage space and rail cars aren't available, they store certain grains on the ground — which can reduce the quality of the grain and affect the price, said Steve Domm, general manager of Central Farmers Cooperative in Marion, South Dakota.

"I'm looking out the window as the conveyor is piling corn on the ground as we speak," Domm said Wednesday.

The amount of rail capacity the Keystone XL would free up would be "a blip on the radar," added Keith Alverson, president of the South Dakota Corn Growers Association President.

Alverson said the pipeline would be helpful as part of a larger suite of solutions, including working with the railroads in the short term to prioritize grain shipments during harvest periods and pushing for more rail infrastructure investments.

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The pipeline would cut through South Dakota and several other states to move Canadian oil to the Gulf Coast. The line is planned to transport as much as 100,000 barrels of North Dakota crude oil a day.

Advocates of the pipeline, including many Republican lawmakers, say the project will lessen congestion on the rail lines that South Dakota farmers use to ship crops. Railroad companies say the backup is part due to the sharp increase in oil production in North Dakota, now the country's second largest oil-producing state behind Texas.

Shortly before Election Day, U.S. Sen. John Thune and Sen.-elect Mike Rounds met with agricultural workers at the Central Farmers Cooperative. They were pressed for more solutions — not just building Keystone — to the rail delays.

Thune has put forward legislation that would give the Surface Transportation Board, which regulates freight rail prices, more power to address delays and other problems.

The Burlington, Northern & Santa Fe Railway Company has also pledged $6 billion in capital improvements for their system wide infrastructure in 2015, spokeswoman Amy McBeth said in a statement. The railroad has been shipping record amounts of corn, wheat and soybeans.

"We clearly understand that for much of 2014 we did not meet the expectations for service of our agricultural customers," she said.