OCR Text |
Show Cyan Magenta Yellow Black A2 Sanpete Messenger/Gunnison Valley Edition Wednesday, April 20, 2005 Oil (Continued from A1) A year ago, oil wasn’t much talked about in Sanpete. But whisperings of an oil boom began after Michigan-based Wolverine Gas and Oil Companybegan producing oil near Sigurd last May. The company tried to keep as low a profile as possible, but a discovery as significant as the Sigurd strike couldn’t be kept quiet. Word of it soon produced what the Messenger described last summer as “a flurry of activity” of landmen descending on the county seeking to lease mineral rights from local property owners for potential oil development. Last January an article appeared in Oil and Gas Journal, considered by many to be the Bible of the oil industry, characterizing Wolverine’s discovery as “stunning” and presenting impressive information about the company’s find. About the same time, an exhibit at the North American Prospect Expo, sponsored by the American Association of Professional Landmen, presented similar information and blew the lid off Wolverine’s discovery. Since then, oil in Central Utah has been at the forefront of both industry and local interest, and what started as a flurry has turned into a full-fledged cyclone, not only of leasing activity but also of questions, rumors and speculation. The hype “It’s all anyone talks about anymore,” says Sanpete County attorney Ross Blackham. Wolverine president Sid Jansma Jr. says, “We just can’t believe all the hype that’s going on.” The first question, then, is whether that hype is warranted or just speculative fever. The answer is both. Tooele Wasatch Duchesne Utah Juab NEPHI Carbon Sanpete Millard Emery SALINA SIGURD Sevier COVENANT OIL FIELD Wayne Overthrust fault The area where oil companies are focusing their efforts. On one hand, Jansma says he doesn’t want to feed unreasonable speculation. “Raising people’s expectations is something I don’t want to participate in.” He says that the article in Oil and Gas Journal contained incorrect and exaggerated information. On the other hand, Jansma’s Sigurd operation received the North American Discovery of the Year award from Oil and Gas Investor Magazine (see “Eureka moments” below ). On one hand, Michael Pinnell, exploration manager for Pioneer Oil and Gas in Salt Lake City, was one of the authors of the article in Oil and Gas Journal that added to the hype. On the other hand, Pinnell admits that for purposes of writing the article he was “positive and optimistic,” but that in reality he is more cautious. “In a talk to the Sevier Lions Club,” Pinnell says, “I told them that only 1 percent of the land will be oil and gas productive. Hardly anyone you know will be Barley Qualityeeds S & Oats Competetive Pricing Pick-up & Delivery Area of current oil interest Beehive Brand rich.” That begs the next question: just how big is Wolverine’s discovery? The discovery With few exceptions, anyone in a position to know about the discovery says it is “huge” (the exceptions used the word “enormous” instead). One way of interpreting that would be to examine production figures Wolverine has submitted to the Utah Division of Oil, Gas and Mining to determine how much oil is coming out from the company’s two wells currently in operation. However, DOGM associate director John Baza says those figures won’t be publicly released until May or June. He explains that the state allows companies to keep production numbers confidential for one year after the start of production in order to protect the company’s investment in the fiercely competitive oil industry. (435) 864-2300 • (800) 898-7333 Staff writer The Sanpete Messenger The Voice of Sanpete County since 1893 Sanpete News Company, Inc., publishing the GUNNISON VALLEY EDITION Member Utah Press Association Deadlines, Post Office & Contact Information UPS# 232-020 Copyright, Sanpete News Company, Inc.©2004. All rights reserved. Reproduction, re-use, or transmittal of all matter herein is prohibited without prior written permission of the publisher. Published each Wednesday for 75¢ each, $24.00 inside Sanpete County, $27.00 outside Sanpete County, by Sanpete News Company, Inc., 35 S. Main, Manti, Utah 84642 Phone 1-866-620-1935, 435-835-4241, fax 435-835-1493 E-mail publisher at: suzanne@sanpetemessenger.com E-mail sports to: sports@sanpetemessenger.com E-mail school items to: school@sanpetemessenger.com E-mail news to: news@sanpetemessenger.com E-mail ads to: ads@sanpetemessenger.com Deadline: Thursday, 5 p.m. Manti: 35 S. Main, Hours: M-F, 9 am to 6 pm Periodicals Postage Paid at Manti, Utah 84642, and at additional mailing offices. POSTMASTER: Send address changes to: Sanpete Messenger, 35 S. Main, Manti, Utah 84642 Editor & Publisher ......................................................................... Suzanne Dean Associate Publisher .............................................................................. Lloyd Call Associate Editor .................................................................................. Sean Hales Copy Editor ........................................................................................... Lori Smith Senior Reporters .................................................... John Hales, Kathy Eggleston Gunnison Edition Editor ................................................................ Tery Robertson Office Manager ............................................................................... Jacque Marsh Circulation Manager ......................................................................... Lindsey Kjar Administrative Assistant ........................................................... Lindsay Kogianes Webmaster ................................................................................. Dave Armstrong Sales Associate ....................................................................................... Ben Fox Ombudswoman ........................................................ Karen Buchanan (835-5711) Staff Political correspondent ..................................................... C. R. Truitt (445-3326) Snow College correspondent Stacie Parker (283-6944) Manti ............................................................................. Judy Chantry (835-8010) Ftn. Green, Moroni ....................................................... Brenda Bailey (445-3473) Gunnison ................................................................... Karen Prisbrey (528-7710) Centerfield ...................................................................... Elva Jensen (528-3382) Axtell ............................................................................ Audrey Boore (528-3309) Staff Writers .......................................................... Susan Browning, Craig Cook, Cindy Beck, Geoffrey Pace, Darlene Agren, Scott Bagley, Patti Robertson, Nelson Hazelbaker Sports Writers ........................................................ Doug Johnson, Jeff Ericksen, Anne Forester, Mitch Peterson, Karmal Mandel, Craig Cox Photographers ........................................... Bruce Van Der Riet, Vern Buchanan, Gene Chantry, Peter Goss, Russ Beck Columnists ........................................................ Roger Baker, Corrie Lynn Player The chances A final question then is, will Sanpete share in that discovery and—perhaps more importantly— any economic boom that results from it? As unsatisfying as it is, the only possible answer is wait and see. The county is certainly well within the boundary of the discovery’s “province,” a broad geologic area with potential to produce oil. That area runs from northern Piute and Beaver Coun- ties, through portions of Sevier, Millard, Sanpete and Juab counties, and up into Utah County (see map this page). The province lies along a geologic structure known as the Overthrust Belt, also known as the Hingeline, which is the same structure that contains the major oil fields of southwestern Wyoming and Alberta, Canada. Further, some of the same geologic characteristics that led to discovery of oil in Sevier County most likely exist in Sanpete as well, although further scientific exploration is necessary. Geologically then, Sanpete probably can produce oil. Whether it does or not will depend on if oil companies decide to drill here. Wolverine has initiated the same exploratory process in Sanpete that it conducted in Sevier County prior to drilling, says exploration manager Strickland. In Sevier, that process took about two years before any drilling began. “Sevier has been the focus of what we’ve done,” Strickland says, “but Sanpete has a lot of potential. We have some interest in Sanpete, and we will do exploration work in Sanpete.” But Strickland follows the lead of boss Jansma in being careful to not raise expectations. “My honest assessment is that there’s a 20 percent chance of success in that exploration.” Of course, Wolverine isn’t the only company showing an interest in Sanpete. Several oil companies—most notably Hewitt Energy Group, International Petroleum Company, Paradise Energy and Petro-Hunt—are actively and competitively leasing mineral rights on public and private land. Some of those have said they intend to drill in Sanpete by mid to late fall. Oil discovery near Sigurd named North American Discovery of the Year By John Hales You’re reading... The challenge Answering the “potential” question is difficult since, as Pioneer’s Michael Pinnell says, “The oil companies don’t know where the oil is,” meaning that companies suspect oil is around somewhere but can’t pinpoint where it is or know for sure that it can be extracted. “You don’t know it’s there until you drill for it, says DOGM’s Baza. Science and exploration can only provide educated guesses, which sometimes turn out to be wrong. For instance, says Tom Chidsey, geologic program manager for the Utah Geological Survey, an oil field discovered in southwestern Wyoming in the 1970s was estimated to be a billion-barrel field. In 30 years, the field has produced 128 million barrels. “It’s a lot of oil,” Chidsey says, “but not the 1-billion-barrel field it was supposed to be.” Further, Chidsey and Pinnell both warn of “one-field wonders,” areas that look promising because of an initial discovery but turn out to not yield much else. Chidsey explains that actually finding oil is difficult because of all the geological conditions that must coincide to create an oil field. Not only must geological conditions be right, but the people looking for the oil must be on target in their analysis and interpretation of scientific data. But as cautious as they try to be, experts like Chidsey have a hard time masking their enthusiasm about the discovery. “All indications are it’s the biggest discovery in Utah, and possibly the lower 48 states, in the last 30 years,” says Chidsey. Some have said it’s the biggest on-shore discovery in the lower 48 in 50 years. Eureka! moments processed and Sold by Morrison Fertilizers Inc. Delta, UT Wholesale • Retail • Bagged • Bulk Jansma says he may make some kind of announcement this summer regarding his company’s production in Sevier, but that’s he’s not necessarily committed to doing so. Wolverine’s exploration manager, Doug Strickland, says that the first Sigurd well produced 230,000 barrels from May 2004 through March 2005. That comes out to about 700 barrels per day. Oil and Gas Investor Magazine this month reports that the well is now producing at 900 barrels per day. For comparison, Sen. Orrin Hatch says the average daily production for a well in the U.S. is 15 barrels. Wolverine’s second well is reportedly producing just as much as the first, if not more, and as many as five more wells may begin producing soon. Wolverine is currently building the third of those five, and there could be more on the company’s 63,000acre federal unit. The size of Wolverine’s current operation provokes the question: What is Central Utah’s total oil potential? Wolverine’s Strickland says he thinks there could be as many as a billion total barrels available. Sen. Hatch posed the possibility of up to four billion. GRAND RAPIDS, Mich.—Sid Jansma, Jr., president of Wolverine Gas and Oil, had a eureka moment in March when Oil and Gas Investor Magazine presented his company with the North American Discovery of the Year for its oil discovery near Sigurd. The presentation, which occurred at Wolverine’s headquarters in Grand Rapids, Michigan, came10 months after an earlier eureka moment on May 3, 2004, when the first Sigurd well began producing oil. As significant as the award was for Jansma, it was perhaps more meaningful for his close associate, Wolverine exploration manager Doug Strickland. “I’ve been interested in the area for several years,” says Strickland, “and I’m excited about this discovery. It’s the biggest discovery of my career.” To be more precise, Strickland has been interested in the possibility of oil in Central Utah for more than 25 years—ever since he did his doctoral dissertation on the area. He remained interested long after others gave up because exploration wells—58 of them to be exact—came up empty time after time. In fact, Strickland worked for one of those companies, Chevron, on a well dug in 1981. Like all the rest, it came up dry. Around 1999, Chevron sold its interests in Central Utah, including the seismic data it had compiled about the area, to Wolverine. That’s when Strickland convinced Jansma to take a chance on Central Utah’s Overthrust Belt, and Jansma consented, even though financing the project difficult; years of failed exploration made investors leery of getting involved. In 2000, the same well that he had worked on with Chevron 19 years previous provided key information about where and how deep to drill that clued Strickland in on the eventual discovery. “That was a defining moment,” he says. Another defining moment was when a petroleum geologist working with Wolverine, Dave Wavrek, discovered one of the reasons previous explorers had failed to find oil. Throughout the history of oil exploration in Central Utah, oil hunters had a preconceived idea, or paradigm, of the kind of rock the oil originated from, or the source rock LOU’S BARBER SHOP 19 N. Main, Nephi Hours: Tues. 9 to 5 Wed. 10 to 8 However, Wavrek and others reexamined Chevron’s old data, reinterpreting it independent of the old paradigm. They hypothesized that a different type of rock could be the source rock for oil. Wolverine president Jansma says that his first Eureka moment came on Dec. 24, 2003 when he received information that the new hypothesis was correct and an exploration well showed traces of crude. “It was when we learned this was something we really needed to pursue, that we were on the right track,” Jansma says. Strickland says that still another defining moment occurred when Wolverine and its consultants discovered two and possibly three sandstone structures capable of holding oil (called reservoirs). Strickland mentions a fourth revelation that led to the discovery, but for competitive reasons, he won’t say what it is. Wolverine proceeded cautiously, not starting to drill its first well in Sevier County until November 2003. “We spent two-and-a-half years doing the science. We have some of the best oil finders, in my opinion, in the United States,” Strickland says. Evidence of that is that Wolverine struck oil on its first try— after others had tried and failed 58 times over several decades. Just lucky? Probably not. Every well Wolverine has drilled so far, five total, is capable of producing oil, according to both Strickland and Jansma. Even so, Strickland is modest about Wolverine’s success. “We’ve been right so far, but I’ve been wrong a lot more often than I’ve been right.” Jansma says, “We thought that we could figure this out in Utah given a little time, and I think we did. The big issue was that so many wells had been drilled that were dry. Everyone was saying, ‘Well, there oughta be oil there,’ but there just wasn’t. It took us to figure it out.” Figuring it out was what led to the final Eureka moment—Oil and Gas Investor Magazine editors selecting Wolverine for the North American Discovery of the Year award. The magazine’s senior exploration editor, Peggy Williams, says, “Wolverine was selected because of its remoteness from existing production, and the fact that it opens up a whole new play in the Utah Hingeline. The combination of it being such a large discovery and being in a new area was what won the award for Wolverine. They were a clear choice. There was no discussion.” CALL FOR BIDS The Gunnison/Mayfield Cattle Assocaition is accepting bids for the 2005 riders job. We are also accepting bids for the 2005 fencing job. For more information, call 435-851-2645 (day), 435-528-7369 (after 6 p.m.). Send bids to David Childs, Box 503, Gunnison, Utah 84634. The riders job will run from June 1 to Nov. 1, 2005. 4/6-5/11 |