Big announcements could help U.S. produce more oil

HOUSTON President Obama's announcement is not an embrace of the Republicans 'Drill, baby, drill' ideas.

"The answer is not drilling everywhere all the time," said President Obama.

But the president is opening a huge part of the country's coast line to new oil exploration.

"We are going to need vital energy sources to maintain our economic growth and our security," President Obama said.

The president wants to allow drilling offshore from Delaware to mid-Florida, a small part of the Gulf of Mexico off Florida's panhandle and off Alaska's coastline. You won't be able to see any of it from the coast and it's all likely years away. President Obama also protected some areas the industry previously thought would open up. Some industry observers suggest this was likely a political calculation.

"I think it's a gesture toward oil and gas supply that will be useful in the politics for broader energy legislation elements of which will include climate change mitigation," said Bob Tippee with the Houston Oil & Gas Journal.

Houston-based Shell is already working in Alaska and seems excited about the prospect of moving forward to increase oil production in the U.S.

"This is an important step forward, something that surely will help us as a country produce more of our own energy," said Marvin Odum of Shell US.

Also on Wednesday, Shell announced that after 14 years of work, the company's massive Perdido project produced its first oil and natural gas. Perdido sits in 8,000 feet of water, 200 miles south of Galveston. The $3 billion project sits on top of the deepest wells ever drilled in the Gulf.

"The important part for anyone listening is that it's a very large scale resource," said Odum.

Perdido will produce 100,000 barrels of oil every day. That's enough to make 900,000 gallons of gas every day. But the U.S. consumes nearly 20 million barrels of oil every day. So by itself, Perdido doesn't change the oil industry, but it opens up a new area of the Gulf and Shell won't be the only ones out there for long.

"We continue to push this boundary in terms of what's possible to bring reliable energy to this country," Odum said.

Neither of these announcements will lower the cost of your commute, but they do decrease the amount of oil we need to import and that could help protect us from some upswings.