Bumper corn crop fuels US energy dilemma
and...US energy fuels Bumper corn crop dilemma
(unless a heat wave like last year kills the crop)
Full fields, empty tanks
BY PHYLLIS JACOBS GRIEKSPOOR
The Wichita Eagle
Diesel shortage could hinder wheat harvest
Forget about high fuel prices. As harvest nears in western Kansas, the bigger concern is fuel supply. "I'm telling our producers to get their tanks full," said Pat Peterson, general manager of the United Plains Ag cooperative in Sharon Springs. "Supply is more important than price."
A shortage of diesel fuel supplies is the result of a combination of weather and maintenance problems at refineries and terminals in the region that have caused slowdowns in production and problems with delivery.
Storms the weekend of the Greensburg tornado severely damaged the loading rack and two above-ground storage tanks at the Magellan terminal near Great Bend.
Refinery problems in Colorado and Oklahoma have caused a short supply of fuel, leaving the Magellan terminal near Scott City -- which supplies most of the cooperatives in an 80-mile radius -- short of fuel. Problems in eastern Colorado have sent producers there into Kansas looking for fuel, putting further pressure on supplies at Scott City.
When Scott City runs short, the first place Kansas producers traditionally turn to is Great Bend. With the terminal there shut down, the options are hauling fuel from the Coffeyville Resources terminal at Phillipsburg or the NCRA refinery at McPherson.
Bruce Heine, a spokesman for Magellan, said the company is doing the best it can to keep up with demand.
"We are just the transportation company," he said. "We have no control over the supply available."
The company is assessing damage to the terminal at Great Bend, Heine said, and weighing its options when it comes to a decision to rebuild.
Problems in the system
Ken Peterson with the Kansas Petroleum Council said the problem with supplies are systemwide and are driven by the same forces that sent gasoline prices above $3 earlier this spring.
"Anytime you have a disruption, it ripples through the system," he said. "There have been refinery fires and outages as well as the terminal problems at Great Bend. It all adds up to a short supply."
With the region looking at what appears to be its best wheat harvest in a decade, producers are increasingly concerned about having enough fuel to keep the combines and trucks rolling.
This year's harvest is estimated at 400 million bushels statewide. With prices around $5 a bushel, the crop could be worth close to $2 billion.
Co-op manager Pat Peterson said the shortages are likely to affect most of the western third of Kansas -- the area expected to have the heaviest wheat harvest.
Hauling diesel fuel by truck, he said, will drive the price up -- about 8 to 9 cents a gallon if it comes from McPherson, or 5 cents from Phillipsburg.
"We know that it's not really anybody's fault. You can't control the weather," Peterson said. "But it really is frustrating."
At Goodland, Frontier Ag petroleum manager Dennis Taylor said supplies are a huge concern with harvest approaching.
"We just merged with another cooperative about the same size, so now were about a $130 million co-op with 13 or 14 fueling locations," Taylor said. "We go through a lot of diesel fuel and it will go up big time when harvest starts."
He said the terminals at Scott City and Phillipsburg have both run out of fuel in recent weeks, forcing them to send trucks all the way to McPherson for fuel.
"It's a four-hour drive one-way," he said. "With the restrictions on driving hours, that means only one truckload a day can come back. When harvest comes, there won't be enough trucks or hours in the day to keep up."
Long lines in McPherson
The NCRA refinery at McPherson has seen long lines and long waits for truck drivers, said Dana Kresky, manager of product distribution.
"We noticed it immediately when the terminal at Great Bend went down," he said.
He said the problem has been made worse by refinery problems in Oklahoma that have left the terminal at Turpin, Okla., short of fuel.
"That terminal serves a lot of southwestern Kansas -- Garden City, Liberal, that area," Kresky said. "With Turpin down, those areas have to go elsewhere. Normally, that would be Great Bend. With it down, they just have to keep coming farther."
There are not a lot of choices when it comes to terminals in western Kansas. Scott City, Phillipsburg and Great Bend are the only ones west of Salina.
Other options include Hutchinson, Wichita, Valley Center or Concordia -- all long trips for truckers in western Kansas.
The loading rack at McPherson has been pumping about 28,000 barrels a day -- about 1.1 million gallons, Kresky said. At 8,000 gallons per truckload, that's nearly 140 trucks a day.
He said the best advice he can offer western Kansas truckers is to time their arrival in the nighttime hours when there is less of a wait.
"If they get here at 2 in the morning, they can probably move right through," he said.
The terminal, which processes about 38,000 barrels a day, also ships by pipeline into western Kansas. He said the refinery will be running "strong and hard" through the harvest season.
The most disturbing aspect of the current situation is that terminals are running out of fuel and the lines are long -- and harvest has yet to begin.
"We are trying to stock up and encourage everybody to store what they can," said Taylor, of Frontier Ag in Goodland. "But it's going to go fast when harvest starts.
"It's a scary thought to think about combines or trucks at the side of the field waiting on fuel. When that happens, it's the retailer who takes the heat. And that's us."
Reach P.J. Griekspoor at 316-268-6660 or at pgriekspoor@wichitaeagle.com.
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