The Gulf of Mexico Energy Security Act (S. 3711), an industry-supported bill that would allow drilling for natural gas in about 8.3 million acres of the Outer Continental Shelf (OCS) in the Gulf of Mexico, was passed by Congress on Dec. 9. According to The Fertilizer Institute, President Bush has indicated he will sign the bill into law.
The bi-partisan legislation, which was attached to a large tax-extender bill called the “Tax Relief and Health Care Act of 2006,” was passed by the House of Representatives with a vote of 367 to 45, and by the Senate with a vote of 79 to 9. The bill lifts a 25-year old statutory ban on natural gas exploration, including certain areas in the OCS that are currently under federal moratoria.
“Members of Congress have sent a strong sign of their desire to provide relief to the agribusiness community, which has been hit hard by volatile and skyrocketing natural gas prices,” said Ford West, president of The Fertilizer Institute. “As an industry, we have been telling our elected officials that we need relief, and with this bill’s approval they signaled that they have heard us. This legislation is a first step to ensuring that future generations have a source of domestically produced food and fuel.”
Specifically, the bill authorizes drilling in about 8.3 million acres of the eastern Gulf of Mexico, including 2.5 million acres within a section known as “Lease Area 181.” The bill protects much of Florida’s coast and secures a share of drilling revenues for coastal restoration in Gulf States. “The bill would allow access to 5.8 trillion cubic feet of natural gas, which could be enough natural gas to sustain 1,000 chemical plants for 40 years,” said West.
President Bush on Dec. 9 expressed his support for the measure. “I commend Congress for passing the Outer Continental Shelf legislation, which will help to reduce our dependence on imported sources of energy by increasing access to domestic sources of oil and gas,” Bush said. “Developing these reliable domestic resources in an environmentally sound manner will help address high energy prices, strengthen our energy security and protect manufacturing jobs. The bill also provides the producing States of Texas, Louisiana, Mississippi, and Alabama a share in the royalty revenues from OCS leases. I appreciate the commitment by the State of Louisiana to use revenues from these leases to restore coastal wetlands.”
TFI said 19 U.S. ammonia plants have closed permanently since fiscal year 1998/99 primarily as a result of the rise in natural gas prices, and an additional five plants are currently idled. Natural gas accounts for between 70-90 percent of the total production cost of one ton of ammonia, TFI added, noting as well that farmers depend on significant amounts of natural gas for food processing, irrigation, crop drying, and heating farm buildings and homes.
“Passage of this legislation was achieved through a targeted effort by a broad base of organizations and industries representing agriculture, manufacturing, labor unions, the chemical sector and many others,” said West. “We thank Reps. Adam Putnam (R-Fla.), Bobby Jindal (R-La.), John Peterson (R-Pa.) and Charlie Melancon (D-La.), and Sens. Mary Landrieu (D-La.) and Pete Domenici (R-N.M.) for their steadfast leadership to move this bill forward. Also, we thank those TFI member company employees who personally wrote to their elected members in support of the bill.”
Other trade organizations also expressed support for the bill, but added that more is necessary to boost the nation’s natural gas supplies. The Agricultural Retailers Association’s Richard Gupton said ARA will be advocating additional measures in future offshore energy legislation that will be submitted during the new Congress.
American Gas Association President and CEO David Parker said Congress has taken “an important step in the right direction, but there is still much work to be done as we move forward in our effort to enhance our national security by making America less reliant on unreliable foreign sources of energy.” American Chemistry Council President and CEO Jack Gerard noted that the American chemical sector has already lost approximately 100,000 jobs largely due to U.S. natural gas prices tripling in five years, and applauded Congress for sending an “important signal that the U.S. remains open for business.”
While hailing the go-ahead for expanded offshore exploration and development, the National Corn Growers Association and more than 100 growers and agribusinesses of the Agriculture Energy Alliance petitioned the Department of the Interior to allow more OCS gas exploration in the Gulf of Mexico and off the coasts of Virginia and Alaska. “As the U.S. agriculture industry becomes increasingly dependent on foreign fertilizer production, a real threat to our food security has been created,” AEA advised the DOI’s Mineral Management Service. “American farmers suffer every day the natural gas supply/demand situation remains unbalanced through lack of substantive policy changes.”