A decline in Bakken oil trains isn’t likely to spell good things for Montana grain farmers, according to rail observers.
Getting grain on trains has been a struggle for Montana’s $1.5 billion wheat economy for more than a year, during which time critics have faulted Burlington Northern Sante Fe for leaving grain at the station while hauling more than a half-million barrels of oil daily.
Now oil production seems poised to decline. The number of active drilling rigs in North Dakota has fallen by 14 in the last three weeks, according to the Bismarck Tribune. The price per barrel for oil hit a five-year low Monday.
A slowdown isn’t likely to free up the rails for grain, analyst Terry Whiteside told farmers gathered Tuesday in Billings.
“You would think it would,” Whiteside said. “However, they are telling me in Wyoming they have not found as much oil through horizontal drilling as they have in the Bakken, and that’s probably all going to go westbound. I don’t see it lightening up very much, and then if coal comes on. We’ve just got a very tight capacity problem for a while.”
Whiteside does rail research and lobbying for several state grain commissions. He said the key to improving rail traffic would be getting railroad companies in the Pacific Northwest to share infrastructure in order to move grain better. Both the BNSF and Union Pacific have rail lines running along the Columbia River. If they would agree to run Pacific-bound grain trains down one track and return trains up the other, grain traffic would improve, Whiteside said.
In the past year, grain shipments from northern states have arrived to port several weeks to more than a month late. Oil shipments have taken some of the blame, but so have bad weather and construction delays. Speaking to farmers Tuesday during the 2015 Barley Symposium, Whiteside dismissed weather and construction as causes for delay and put the blame on oil.
Shipping conditions have improved for the wheat, but oil hasn’t played a role, said Lochiel Edwards of TTMS Group, which does rail consulting and trade organization representation for farm commodity groups.
Conditions have improved for 100-plus car grain trains because there isn’t as much corn being shipped from the Midwest to Pacific Northwest ports. Corn prices have fallen dramatically in the past year and farmers have held onto their corn hoping for a better price, Edwards said.
Weather conditions have also been better for rail shipping, Edwards said. At extremely cold temperatures, air brakes on trains don’t seal up well, which means trains have to travel slower. The slowdown snowballs into other problems as crews hit their maximum allowed hours at the train’s controls before reaching their normal stops.
But not all grain shipments move in 100-plus-car units. Smaller shipments also have slowed considerably in recent months. After falling to a few hundred delayed grain cars in mid-2014, BNSF now reports 1,507 Montana grain cars at least two weeks past due. The number of delayed cars in North Dakota has crept to 4,133.
This article was written by Tom Lutey from Billings Gazette, Mont. and was legally licensed through the NewsCred publisher network.