news-miner.com: Shell dominates Beaufort lease sale: “Shell Oil Co. dominated a federal offshore lease sale in Alaska that tallied $46.7 million in winning bids” (ShellNews.net) 2 April 05

The Associated Press

ANCHORAGE--Shell Oil Co. dominated a federal offshore lease sale in Alaska that tallied $46.7 million in winning bids.

A global oil giant that abandoned Alaska several years ago, Shell stormed back at the bid opening Wednesday.

Shell accounted for $44.4 million in bids on 86 blocks within the vast Beaufort Sea sale area, which spanned most of the top of Alaska from Barrow east to the Canada border.

Shell paid more than $12 million on a single block off Point Thomson, some 60 miles east of Prudhoe Bay, a spot where a drilling partnership including Shell struck oil in 1985. The remote discovery, known as Hammerhead, was never developed, even though it was estimated to hold as much as 200 million barrels of oil. 

The bid results excited officials with the U.S. Minerals Management Service, which ran the sale and regulates offshore oil and gas activity. The bid total was the most for a federal offshore lease sale in Alaska since 1988 but well below the record of nearly $2.1 billion raised in a Beaufort Sea sale in 1982.

Especially encouraging was Shell's big-money play, which someday could lead to exploratory drilling and even production, said John Goll, Alaska director for the MMS. "It's a very strong signal to us and to the state," he said. "We've been encouraging new companies to come to Alaska. We hope it's for the long term."

The results were not completely rosy. Of the 127 blocks that drew bids, covering nearly 619,000 acres, not a single block drew bids from more than one company. Shell, in submitting 11 bids of $1 million or more, never had a competing bid to worry about.

Gov. Frank Murkowski welcomed Shell back.

"This sale again demonstrates Alaska's competitiveness. Oil and gas activity means careers for Alaskans and money in our economy."

Murkowski said Shell's bids on acreage off the coast of the Arctic National Wildlife Refuge demonstrate the industry's strong interest in that area. Goll said he was not ready to draw conclusions about ANWR from the sale.

A spokeswoman for Shell Exploration & Production Co. in New Orleans, Kelly op de Weegh, said the lease sale marks an Alaska comeback for her company.

"We're committed to growing through exploration," she said. "And certainly because of its large resource potential, Alaska is an area that we have been investigating."

Shell once was a major explorer in the Beaufort Sea and elsewhere around Alaska. The company's roots go back to drilling and oil discoveries in Cook Inlet beginning in the 1950s.

Shell was not able to score the elephant-sized discoveries it hoped for along the North Slope, and by the late 1990s it completed a slow pullout, selling off its Cook Inlet platforms and relinquishing its leases.

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