Obama Administration Announces New Gulf Oil Exploration Deal

Jason Koebler

The Obama administration announced plans Thursday morning to lease out 38 million acres of the Gulf of Mexico for oil drilling and exploration in hopes to increase domestic oil production.

According to the Department of the Interior's Bureau of Ocean Energy Management, the areas to be leased out could hold 1 billion barrels of oil and 4 trillion cubic feet of natural gas. They'll begin taking bids on June 20, according to a Department of the Interior announcement.

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"Expanding offshore oil and gas production is a key component of our comprehensive energy strategy to grow America's energy economy, and will help us continue to reduce our dependence on foreign oil and create jobs here at home," Secretary of the Interior Ken Salazar said in a statement.

The announcement makes good on Obama's State of the Union remarks. "Over the last three years, we've opened millions of new acres for oil and gas exploration, and tonight, I'm directing my Administration to open more than 75 percent of our potential offshore oil and gas resources," he said Tuesday. Obama is set to speak in Nevada to discuss the deal.

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The sale will include areas between three and 230 miles off the coasts of Louisiana, Mississippi and Alabama. The administration has put new rules into place that are designed to prevent another spill like the Deepwater Horizon disaster that crippled the gulf coast in 2010. The administration also increased the minimum bid for deepwater acres from $37.50 to $100, to "ensure that taxpayers receive fair market value for offshore resources." The increased price is also designed to encourage oil companies to begin drilling as soon as possible, rather than sit on the area until it's needed.

Bureau of Ocean Energy Management Director Tommy Beaudreau said in a statement that the Gulf of Mexico likely holds the greatest potential for offshore oil drilling. "The Central Gulf of Mexico remains the area with the greatest offshore oil and gas potential in the entire United States' outer continental shelf, and this proposed sale is another important step in making this area available for safe and environmentally responsible exploration and development," he said.

Read State of the Union trivia and history.

Moratorium on offshore drilling is killing Gulf Coast economy.

See photos of the Obamas behind the scenes.