The petroleum industry led by Shell and Arco offered over $571 



million in high bids for leases on 81 of 189 tracts offered in the 



25 

 northern Gulf (Fig. 3). Oil comapny bids failed to reach Interior's 



$1 billion pre-sale estimate. Industry claimed the projected high costs 

 for drilling and development in the northern Gulf were responsible for 

 the low bids. 26 



The successful lessees have indicated that they plan to begin 

 exploratory drilling soon in the northern Gulf. Three companies, Shell, 

 Arco and Mobil (SAM) hope to begin drilling by the end of 1976. Shell 

 Oil, operator for the combine, will drill the first well in Block 106 

 (Tract 4-2) on a structure in the western Icy Bay area. 27 Two semi- 

 submersible rigs are being built by Kaiser Shipyard near San Francisco 

 specifically for use in the Gulf of Alaska. Other rigs are available in 

 Japan, the North Sea and Southeast Asia. 8 



• 2 9 



The rigs under construction at Kaiser are of the Sedco 700 Series. 

 A Sedco 706 was completed for use by SAM in the fall of 1976 and a 708 

 will be completed in early 1977. These rigs have been designed for 

 year-round work in the Gulf of Alaska and will have a drilling capability 

 of 25,000 ft with an ability to operate in waters up to 1,000 feet. 

 Operating these rigs will be expensive; current estimates place the cost 

 at $100,000 per day. 30 



The Sedco 706 rig will be serviced out of Yakutat, 145 miles east 

 of the drilling operations (Fig. 2). Support facilities for explora- 

 tory drilling are currently being built at Yakutat by the SAM consortium. 31 



15 



