With all the changes to the United States' energy landscape recently, it's easy to overlook one of the country's most important petroleum-producing regions: the Gulf of Mexico.
For energy investors, drilling in the Gulf is hardly a new story.
U.S. oil companies have been producing in this part of the country for years. Out of the 5 million barrels of crude the U.S. brings to the surface each day, 33% -- or 1.5 million barrels -- comes from this petroleum-rich region.
But if you think this means we're done seeing growth in the Gulf, then you're sorely mistaken.
According to the U.S. Department of the Interior (DOI), the Gulf of Mexico is home to roughly 75% of the nation's undiscovered offshore resources -- the bulk of which has been off limits to U.S. oil companies for years. But starting June 20, 2012, that's all about to change.
Here's the story…
In January, President Barack Obama pledged to open up 38 million acres of virgin drilling territory off the coasts of Texas, Louisiana and Mississippi. Collectively, this central and western Gulf acreage is believed to hold about three-fourths of the nation's potential offshore oil and gas resources.
Former President George W. Bush had already opened this same area for exploration in 2007 before leaving office. But due to political pressure, Obama cancelled the lease sales when he took office.
Now dogged by soaring gasoline prices, which could be a liability during the presidential elections in November, the White House has decided to take down the "closed" sign and replace it with an "open" one.
This could have a dramatic effect on energy production in the Gulf.
Here's what we know so far:
The U.S. Department of the Interior (DOI) is planning to auction off 7,250 unleased blocks. These tracts are 3 miles to 230 miles offshore in water that are as shallow as 9 feet and as deep as 11,000 feet. The leases cover an area spanning 38 million acres. That's roughly the size of Florida.
The auction is scheduled for June 20 in New Orleans... and the stakes are huge.
As Director the Bureau of Ocean Energy Management (BOEM) Tommy Beaudreau said, "The Central Gulf of Mexico remains the area with the greatest oil and gas potential in the entire United States outer continental shelf."