Robert Pore's Ag Blog

Both of Nebraska’s U.S. senators voted Tuesday for legislation expanding domestic energy supplies.

The Senate approved legislation to open 8.3 million acres of federal waters in the central Gulf of Mexico to oil and gas drilling.

The Senate approved the measure by a vote of 71-25. It now must be reconciled with much broader drilling legislation passed by the House in June. Those negotiations are likely to begin in September.

Sen. Ben Nelson, D-Neb., said the legislation will help increase domestic production of natural gas.

He said that will help farmers who have had to struggle with dramatic price increases in fertilizer in recent years because of natural gas shortages.
Natural gas is estimated to account for 70 to 90 percent of the cost of producing fertilizer.

“Expanding the domestic production of natural gas in the Gulf not only holds hope for America’s energy security but also Nebraska’s agricultural producers,” said Nelson.

Increased production of natural gas is a tremendous relief for farmers and ranchers, directly affecting their fertilizer prices and supply in the next few years, said Bob Anderson, president of Nebraska Agri-Business Association.

“I is a much-needed change for the first time in 20 years,” Anderson said.

He said in recent years, 17 United States production plants for nitrogen fertilizer have permanently closed directly as a result of the rise in natural gas prices and an additional three plants are currently idle.

“As a result, U.S. nitrogen ammonia fell by more than 6 million tons or 34 percent in only five years, and U.S.-based production now relies on imports for more than 50 percent of nitrogen supplies,” he said.

According to a preliminary CBO analysis, the expansion will result in a net revenue gain of $926 million for the federal government.

Nelson said drilling already exists in the region and the existing extraction and transportation infrastructure already in place could result in more immediate production than other proposals.

Sen. Chuck Hagel, R-Neb., said it is estimated that area covered by the Senate bill contains 1.26 billion barrels of oil and 5.8 trillion cubic feet of natural gas. Hagel was a co-sponsor of the bill.

Hagel called the bill “common sense” legislation that has been long overdue, creating a dependency on other countries for U.S. energy needs.
“This has left us dependent on other nations in the most unstable parts of the world for our energy supply,” he said. “This bill is a responsible step toward expanding our domestic energy production.”

He said about 2.5 million acres of the 8.3 million acres will be opened within one year of the passage of this bill.

It would also place a moratorium on an area 125 miles from the west coast of Florida until 2022.

Hagel said the moratorium would not only protect the coastlines of Florida, but also preserve a strategic military training area in the Gulf of Mexico.

The legislation establishes a revenue sharing program with the Gulf Coast states affected by the drilling. The revenue will be used to strengthen and protect coastal wetlands that are necessary to minimize damage from hurricanes and also enrich the Land and Water Conservation Fund that is distributed to all 50 states.