By opening parts of the Atlantic and the Gulf of Mexico to oil drilling, the Obama administration wants to tap a huge energy resource that could keep fuel costs in check.
But don't expect gasoline pump prices to fall anytime soon because of the new drilling.
The offshore areas are located along relatively pristine parts of the U.S. Outer Continental Shelf, a new frontier for oil companies. It could take years before drillers will know how much oil can be pumped from these areas, and when.
A report by the federal Minerals Management Service noted that most of the seismic data used to evaluate oil and natural gas resources there are more than 25 years old. So the information "may not be adequate" to build maps or develop leases for drilling operations.
Where will companies be allowed to drill?
President Obama said Wednesday he'll push for opening offshore areas in the Gulf of Mexico and off the mid and southern Atlantic coast. Oil and gas resources would be developed about 50 miles off the Virginia coast and more than 125 miles from Florida's coast in the eastern Gulf of Mexico. The government also will allow oil exploration in the Arctic Ocean. The President doesn't support drilling at Bristol Bay in Alaska because of environmental concerns. He said proposed leases in that area would be canceled.
It's always tough to say exactly how much oil and gas lies under the ocean. But if drillers are able to tap as much as the government estimates, they could pump enough to cover a 15-year supply of oil and a 23-year supply of natural gas for the nation.
In the Gulf, there's anywhere from 36 billion to 41.5 billion barrels of undiscovered, recoverable oil and 161 trillion to 207 trillion cubic feet of undiscovered natural gas, according to the Minerals Management Service.
There's another 39 billion to 63 billion barrels of oil and 168 trillion to 294 trillion cubic feet of natural gas in eight planning areas in the Arctic and Atlantic oceans that are under consideration for leases between 2012 and 2017.
When will drilling begin, and when will we see oil flowing to U.S. refineries?
Exploratory drilling could begin as early as this summer in the Chukchi and Beaufort seas in the Arctic. That is only for a preliminary study to determine if those areas are suitable for future leases. Elsewhere, the Department of the Interior plans to hold sales for leases in the Gulf of Mexico, off the Virginia coast and in the Cook Inlet in Alaska by 2012.
It will take years for oil companies to find the right pockets of oil and gas, build deepwater platforms and begin pumping crude to onshore refineries.
Which companies will be most interested in the new areas?
Offshore drilling is expensive, and analysts expect the new leases to be filled by oil giants such as Exxon Mobil, BP and Shell. BP, which already has numerous drilling projects in the Gulf of Mexico, welcomed Obama's announcement on Wednesday. But a company spokesman wouldn't say whether the company planned to bid for any of the new leases.
Will this affect gasoline prices?
Don't hold your breath. Even if oil exploration in these areas goes exactly as planned, "you're looking at seven or eight years down the road" before that oil can be pumped in large quantities for U.S. refiners, said Mark Gilman, an oil and gas analyst for The Benchmark Company.