Any potential shutdown of the Dakota Access oil pipeline could literally derail grain and ethanol shipments in the Midwest, potentially costing the agriculture industry billions of dollars.

For years, a pending environmental impact statement has been hanging over the Dakota Access Pipeline, which takes oil from western North Dakota to a terminus in Illinois.Some fear the outcome of the EIS could affect the operation of the pipeline.

A study by Elaine Kub, a commodity market analyst in South Dakota, showed the Midwest agricultural sector could suffer more than $3 billion in annual losses.

“A sudden shift like that would be really detrimental to rail congestion,” Kub said in an interview.

Her analysis of the Dakota Access impact came out in July, examining what would happen if the oil flowing through the Dakota Access pipe stopped.

But Sen. John Hoeven, R-N.D., says such a shutdown is unlikely.

Hoeven said he met with representatives from the Army Corps of Engineers, which is doing the review, in early August. He said a draft of the much-anticipated environmental review could be filed by the end of the month.

“That statement will have a variety of options in it — operate as is, operate with enhancements,” he said.

A judge in 2020 ordered the environmental review and pulled back a key permit, but the pipeline, which became operational in 2017, has continued to carry oil — the equivalent of 1,100 rail cars per day.

The Army Corps of Engineers had halted construction of the pipeline in 2016 in order to issue an environmental impact statement about a specific crossing of the Missouri River after vocal protests. President Trump expedited the review process in early 2017, and the Corps announced that they would no longer have public comment or an environmental impact assessment. Construction of the pipeline resumed in February 2017.

Hoeven said because the pipeline has been operating safely for years, a shutdown is unlikely. And when the draft is issued, there will then be a comment period, likely at least 90 days, so it will be months before anything becomes final.

Energy Transfer Partners, the company that built Dakota Access, did not comment on the situation and referred questions on the study to Kub.

Study based on 2013, 2014 data

Kub bases some of her analysis of the oil boom years of 2013 and 2014, before Dakota Access was built, and how oil traffic dominated the rails in North Dakota and elsewhere in the Midwest.

Particularly hard hit would be the ethanol industry, especially in Iowa, because the oil shipments would take tanker rail cars away from ethanol plants. The same goes for renewable diesel as its production ramps up.

“The processors of finished agricultural products like ethanol and renewable biodiesel, they really need those tanker cars, and they really need reliable service from the railroads to the same degree that farmers do,” Kub said.

Rail infrastructure has improved

Dave Ripplinger, a North Dakota State University professor who specializes in energy markets, said the state has built out its rail infrastructure since those boom years, but a shift of oil would still be significant.

“If we go back to what was going on in the rail markets prior to DAPL being built, we had issues; congestion was one, but railcar availability and cost was the other,” he said. “When DAPL was built, all of a sudden you had that much fewer cars moving around or trains moving around, but it freed up a bunch of tanker cars.”

North Dakota Agriculture Commissioner Doug Goehring noted that 83% of the state’s agriculture commodities get shipped by rail.

He said he is concerned about the influence of environmental activists.

“I’m really fearful about how determined they are to shut this down,” he said.

The Dakota Access Pipeline travels across four states. Its construction was heavily protested throughout 2016 and 2017 by the Standing Rock Sioux Tribe and Cheyenne River Sioux Tribe, who get water downstream from where the pipeline crosses under the Missouri River.

The tribes said that the U.S. Army Corps of Engineers hadn’t consulted them before approving the pipeline, and were concerned about destruction of cultural sites and water contamination.

Goehring, who has been in office since 2009, said farmers should not only be concerned about rail shipments, but also about a spike in fuel prices.

Rising energy prices have been a driver of increased costs for other farm inputs, such as fertilizer, in recent years.

Hoeven said that if there were something in the environmental impact statement that had the potential to be impactful, a court battle is likely. And because the courts have allowed the pipeline to operate while the review was being conducted, it would likely be able to continue to operate in the next round of legal sparring.