NEW YORK/DETROIT (Reuters) – The U.S. government is likely to take a loss on General Motors Co in the first offering of the automaker's stock, six people familiar with preparations for the landmark IPO said.

Subsequent offerings of the government's holdings may be profitable depending on how investors trade the newly listed stock, the sources said.

But the question of whether taxpayers are ultimately made whole on GM's $50 billion bailout could be left open for years, the people said.

It could take more than three years for the Treasury to sell down its remaining stake in GM after the IPO, one person said. That would push a final accounting into the next presidential term.

A decision to price the initial GM shares below the cost to taxpayers would follow the usual Wall Street practice of giving the first investors in a new stock a discount, but it could also help allay investor concern in the face of the grudging pace of the U.S. recovery and flat auto sales.

Preparations for GM's IP0 remain confidential. Both GM and the U.S. Treasury have consistently declined to comment, citing restrictions by U.S. securities regulators.

The Obama administration has pledged to exit its investment in GM as quickly as possible while holding out the prospect that taxpayers could ultimately be paid back in full.

Treasury spokesman Mark Paustenbach declined to comment. GM spokesman Tom Wilkinson also declined to comment.

GM plans to begin a roadshow for its IPO immediately after the November 2 U.S. midterm congressional elections, paving the way for a stock debut on November 18, sources have said.

GM in August filed paperwork for an IPO that could potentially be worth as much as $20 billion, making it one of the biggest IPOs of all time.

The U.S. Securities and Exchange Commission is now reviewing the automaker's S-1 filing.

Analysts and potential investors have projected a market value for GM in a wide range between $50 billion to around $90 billion, based on projections for the automaker's cash flow, comparisons with rival Ford Motor Co and trading in bonds in the old GM which are convertible into shares in the new company.

A market value at the high end of that range would be above the roughly $70 billion in market capitalization that GM needs to achieve for the U.S. government to break even on its $43 billion remaining investment in the automaker.

But IPOs typically price at a discount of 10 percent to 15 percent to theoretical fair value to reward investors for taking a risk on a new issue and pave the way for future stock floats. In tough market conditions, that discount can be even larger.

"You have to sell people on the notion that there is an upside to what they are buying," one of the sources said.

Another of the sources said the discount could be as much as 20 percent on the GM IPO compared with the U.S. Treasury's break-even point.

Preparations for the GM stock offering remain in the early stages. A number of the sources cautioned that the size and value of the deal and the size of the stake to be sold by the U.S. government have not been determined and will not be set for weeks.

ANCHORAGE, Alaska (Reuters) – Interior Secretary Ken Salazar said on Friday he cannot predict whether Royal Dutch Shell, which has invested $3.5 billion in an offshore Arctic oil-development program, will be allowed to drill the five wells it plans next year in Alaska's Chukchi and Beaufort Seas.

"We will be making that decision in the several months ahead," he said at an Anchorage news conference, citing pending reports on offshore drilling safety and the results of an investigation into the Deepwater Horizon disaster.

As to whether a decision will arrive in time for Shell to prepare a drilling program for the brief 2011 open-water season, "I don't know today whether I can give you the answer to that," he said.

Salazar held the news conference at the end of a brief visit to Alaska, including the North Slope, where the mostly Inupiat Eskimo residents are staunchly opposed to offshore oil development.

Arctic Alaska was not formally included in the moratorium slapped on deepwater drilling in the aftermath of the Gulf oil spill disaster, but a related decision by Salazar delayed exploratory drilling in the region that Shell had expected to conduct this summer and fall.

Officials are not yet confident about drilling safety and oil-spill prevention and response capabilities in the Arctic, Salazar said. "Until we have answered several questions, no drilling will be allowed in the area," he said at the news conference.

Previous analysis by the Minerals Management Service, now renamed and reorganized, estimated that the Beaufort Sea off northern Alaska holds about 8 billion barrels of recoverable oil and the Chukchi Sea off the state's northwestern coast holds about 15 billion recoverable barrels.

But pack ice, extreme remoteness and other forbidding conditions make offshore Arctic drilling "a very different kind of challenge" than anything in the Gulf of Mexico, Salazar said.

"If you look at the Chukchi, nothing or very little is known about the reservoir pressure that would be encountered," he said. "If you look at the Chukchi, it would be very difficult to mount the kind of spill response that was mounted in the Gulf."

Salazar struck a more optimistic note about potential onshore oil development on federal land.

He said he hopes to strike a compromise that will allow ConocoPhillips to move forward with oil-field development in the National Petroleum Reserve-Alaska that has been stalled by permitting problems.

ConocoPhillips' had planned to start production as early as 2012 at a relatively small field called CD-5, with oil feeding into facilities at the large Alpine field on state land to the east. CD-5 is envisioned as the site of first commercial production in the vast petroleum reserve, and the gateway to additional development.

But the U.S. Army Corps of Engineers, heeding advice from the Environmental Protection Agency and U.S. Fish and Wildlife Service, late last year denied a permit that would have allowed ConocoPhillips to build a road and bridge to the project over the ecologically sensitive Colville River. The Corps said ConocoPhillips should avoid the bridge and road entirely by establishing a pipeline system beneath the river floor, an option the company considers impractical.

Salazar said he hopes to break the stalemate.

"I want to see whether there is a way that we can address the issues that have been raised by the EPA and the Fish and Wildlife Service. I don't know that we will be able to do that," he said.

The history of the petroleum reserve and its mandate to generate oil and gas production "makes it worthwhile to spend some of my own personal time to see if I can bridge some of the differences," he said.

The Indiana-sized petroleum reserve, located on the western North Slope, was established in 1923 as a potential source of energy for the nation's military forces. However, there has never been any commercial oil or gas production in the reserve because the big oil discoveries and resulting development were on state land in the central North Slope.

(Editing by Bill Rigby and David Gregorio)

WASHINGTON – What now for the Gulf?

News of another oil rig fire in the Gulf of Mexico, so soon after the BP oil spill, has set off a wave of anxiety along the Gulf Coast and prompted calls for the government to extend its six-month ban on deepwater drilling.

Just when it seemed the Obama administration might be ready to lift the unpopular ban, the fire raises new questions about the dangers of offshore drilling, leaving the industry wondering when it can get back to work.

"Anything that casts any kind of shadow on the industry right now certainly complicates lifting the moratorium," said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in Texas. "It makes it difficult to continue to say that (the BP spill) is an aberration."

But while initial reports were frightening, Bullock and other experts said Thursday's platform fire is unlikely to have a lasting effect.

Unlike the April explosion of the Deepwater Horizon rig — which killed 11 people and led to the largest offshore oil spill in the nation's history — the fire at the Mariner Energy Inc. platform 100 miles south of Louisiana killed no one and sent no crude gushing into the water.

"There's over 100 fires in the Gulf in a given year. Were it not for the BP incident this would receive very little coverage," Bullock said. "This could have happened in a meat factory or a paint factory or anywhere else."

Even so, environmental groups and some Democratic lawmakers rushed to denounce offshore drilling and urged the Obama administration to extend the six-month deepwater ban to shallow water as well. The current ban has shut down drilling at 33 ocean wells, but there still are more than 7,300 active leases in the Gulf of Mexico, 58 percent of them in deep waters, according to the American Petroleum Institute.

There are about 3,400 platforms operating in the Gulf, pumping about a third of America's domestic oil.

The latest fire "is another reminder that drilling accidents happen all too frequently. We cannot afford to lose any more human lives, nor can we tolerate further damage to the Gulf and its irreplaceable ocean ecosystems," said Jacqueline Savitz of the environmental group Oceana.

Rep. Edward Markey, D-Mass., a leading critic of BP, said the fire highlights the risks associated with offshore drilling. Lawmakers "have a duty to ... all oil workers to make sure the oil industry's drilling practices are safe and sound," Markey said.

The Interior Department has said it is considering lifting the ban for certain categories of rigs before the scheduled Nov. 30 expiration. But after Thursday's accident the department may hesitate to act.

White House press secretary Robert Gibbs said he didn't think the incident would affect the drilling moratorium. Gibbs resisted any effort to link the platform fire to the BP spill.

"At this point, based on what we know, I don't want to marry those two up," Gibbs told reporters Thursday.

Interior Secretary Ken Salazar said Friday that the platform fire appeared to be an industrial accident.

"At this point, it doesn't seem like there was any oil that was released out so the oil pollution is not an issue, and it's not another Deepwater Horizon issue," Salazar said at a news conference in Anchorage.

Industry representatives also distinguished between the two incidents, saying that the fire did not involve drilling and occurred on a production platform where wells have already been drilled and sealed, rather than a drilling rig like the Deepwater Horizon.

Mariner Energy said there were seven active production wells on its platform, but they were shut down for maintenance shortly before the fire broke out. A crew was on the platform painting and sandblasting when the fire occurred, a company spokesman said Friday.

Lee Hunt, chief executive of the International Association of Drilling Contractors, said those urging tighter restrictions on offshore drilling were overreacting.

"These things have happened and been reported before" and generated little media attention, Hunt said.

Still, Hunt conceded that the timing of the fire was "not fortuitous," adding that he expects upcoming congressional hearings on the Mariner fire to be a "minor circus."

Hunt called the fire a "major blast" similar to one at a land-based refinery.

"As a geographical workplace, you would expect some fires. Just like you'd expect some chemical storage facilities ... will occasionally have three-alarm fires on land," he said. "They do happen."

Federal authorities have cited Mariner Energy and related entities for 10 accidents in the Gulf of Mexico over the past four years, according to safety records from the Bureau of Ocean Energy Management, Regulation and Enforcement. The accidents range from platform fires to pollution spills and a blowout.

A day before the fire, the American Petroleum Institute held a "Rally for Jobs" in Houston to protest the drilling moratorium. Mariner official Barbara Dianne Hagood was among those in attendance, according to a Financial Times report.

"I have been in the oil and gas industry for 40 years, and this administration is trying to break us," she told the London-based paper. "The moratorium they imposed is going to be a financial disaster for the Gulf Coast, Gulf Coast employees and Gulf Coast residents."

Charlotte Randolph, president of the Lafourche, La., Parish and an outspoken critic of the moratorium, said the outcome of Thursday's platform fire proved that the oil and gas industry has effective safety procedures.

"The people were safely recovered. The oil did not spill. It's everything the Deepwater Horizon was not," she said.

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Associated Press Writers Erica Werner in Washington, Chris Kahn in New York, Michael Kunzelman in New Orleans and Dan Joling in Anchorage contributed to this story.