The Commstock Report

By David Kruse

May 10, 2022

I wrote several commentaries researching the pros and cons of CO2 pipelines as part of my analytical process preceding making a decision on selling Summit Carbon Solutions an easement. I said that when I began negotiations that I would go dark on the subject. Now that they are concluded I can open up again. I can confirm that we made an agreement but the terms are confidential. I had no idea then how the negotiations would go and I do now. They went very well. I have signed an easement as are several of my relatives and a neighboring high school classmate. That adds up to a nice little stretch of pipeline that will be buried on all our individual properties. The negotiations exceeded my expectations. If I have one piece of advice to give, it is that landowners impacted by the request for easements should talk to Summit representatives. Have a conversation. Give them a fair chance.
I think that I have heard just about every concern and reservation expressed that is out there relative to these pipelines, discussing them in detail in previous reports. I concur with almost all of them and share their concerns. There are a great many. They are real. I recently commented that Summit has to deal with all of the sins of their predecessor… Dakota Access. Summit founder Bruce Rastetter agreed with that statement. They do not like the comparison but they understand that it is a widely held opinion. The thing that they can do is to mitigate the concerns in their easement. Dakota Access, in my opinion, did not respect farmers or the land. If I thought that Summit was no better than Dakota Access, I would have been far more reluctant to agree to an easement. I also commented that of all of the concerns that I have heard expressed over the CO2 pipelines, that they could be mitigated in the easement contract. Maybe Dakota Access was not cooperative but I found Summit to be open to whatever it took, within reason, to assure landowners that they would respect them and their property. Rastetter is a farmland owner and I believe that he will treat others how he would expect to be treated. As a farmland owner and operator, he understands the nuanced risks relative to tile and drainage systems, what conditions they should and should not operate in during construction and will assist farmers in returning their impacted farmland to full productivity as professionally quickly as possible. Do I trust them? My answer is yes so that they would have to prove me wrong otherwise.
Summit founder Bruce Rastetter is a “high profile Iowan”. Those who take the arrows often shot out of jealousy. He is a successful entrepreneur who has at times failed. I think that I can relate to that. I am still around and I have failed before as well. Some failure is good for you as it deflates hubris providing humility. Those who have never failed are usually those who never tried anything. I do not think that this pipeline project will fail. I think that Rastetter has been good for Iowa Agriculture. I know that will be a controversial statement that many will contest but so be it. I think that these CO2 pipelines are good for Iowa Agriculture. My son, Matthew and I hosted Bruce on a fact-finding tour in Brazil before he built an ethanol plant in the Mato Grosso. I have never invested with him primarily because I needed the capitol for my own projects.
I will repeat my previous statement that “I think that these CO2 pipelines are good for Iowa.” Ethanol has been good for Iowa. I find it curious as to what opponents expect when they flip on a light switch. I have talked to opponents who contest everything…fossil fuel, wind turbines, biofuel. They are in the ‘Cave-man’ (Citizens Against Virtually Everything) group that contests all progress. It gets pretty old hearing them beat up on everything after a while. Some appear to support nothing. You cannot thrive that way.
Let me explain how CO2 pipelines will benefit Iowa. I was an initial investor in a number of start-up biofuel projects in Iowa years ago. Over the years my investments sorted out with some merging, others being sold and a couple failing. I am now down to investments in 3 good ethanol plants that I think have good prospects of producing consistent dividends. Investing in ethanol plants was not where my largest return from the ethanol industry came from however. That has come from selling my corn to an ethanol plant. Half the corn produced in Iowa goes through an ethanol plant today producing ethanol along with 40% of the output being DDGs and CO2. DDGs feed our livestock. The CO2 carbonates soft drinks or other industrial uses or is emitted from plants. The world now keeps a carbon score. The lower the carbon score of whatever that you are producing, the more valuable that it is. Transporting CO2 from ethanol plants through a pipeline to ND reduces the carbon score of ethanol to where it competes with EVs. The world is decarbonizing and if you do not want to be squeezed out of the market you had better find ways to reduce your carbon footprint. CO2 pipelines will open markets in California and Europe to Iowa ethanol and make biofuel environmentally competitive with EVs. Ethanol plants now use over 5 billion bushels of corn which we produce profitably. They have improved historical basis levels so that farmers get higher local prices for their corn. My local ethanol plant has often been paying me premiums over and above CBOT prices. Biodiesel adds value to soybeans. If biofuel industries disappeared tomorrow, our rural economy would collapse. I much prefer getting paid by the market for my corn because of ethanol production rather than being subsidized by the government to grow it. This is home-grown fuel. Would you rather import more foreign oil? Would you rather have $2 corn and farmers so broke that there is no future in rural communities? Why in the world would I wait for eminent domain to force me to do something that I should be doing of my own accord as it is in my interest and in the interest of my community and state as well?
So, getting paid well for an easement by people that I know understand the Ag economy and sustain markets is no hardship for me. I prefer to see that as a blessing. It is a necessity if we intend to extend the life of the biofuel industry that is feeding us farmers. I read lamentations of some who own farmland that has been in their family for generations who think that their ancestors would roll over in their graves if pipes are buried in their land. I am sorry that they feel that way. There is Kruse farmland that goes back over a century that is still being farmed by the family and I expect to see other of our farms qualify as century farms in my lifetime. My son is now transitioning into managing our farms and this is about his future and the future of the new grandson that I am told I am supposed to get this summer. I think that my decision to sell Summit as easement would have the blessing of my late grandfather and father so I made a deal.

This article from The Commstock Report (a twice daily market report by Commstock Investments) is approved for Summit Carbon Solutions’ use by Commstock Investments Chairman and Co-Owner David Kruse.