SIGURD, Sevier County — The discovery of a major oil field has people in this tiny farm town on the edge of anticipation, driving property values and speculation, real-estate agents say.
The find is easing tight supplies at Salt Lake refineries and providing work for welders, electricians, roughnecks and pump jacks.
But the payoff could make millionaires out of some landowners who never knew there was oil under Sigurd, a Sevier County town of 431 with no traffic lights, grocery store or home mail delivery. The town center is defined by Dave's Country Trading Post, where ranchers' retired greasy cowboy hats hang from the rafters. The ranchers, if they're selling any land, are keeping the mineral rights.
Hope came more than a year ago, when tiny Wolverine Gas & Oil Corp. made an unlikely find that could rank as the biggest onshore discovery in 30 years. Although no one knows for certain how much oil Wolverine will find — and some industry analysts are skeptical — the potential has townsfolk giddy.
"People are convinced there's oil 2 inches under their property," said Malcolm Nash, Sevier County's economic development director. "If Wolverine wanted to put a drill rig in their living room, they'd do it."
Ranchers hadn't seen a land agent for any oil company show up for more than 15 years after major producers abandoned exploring the region of complex geology 146 miles from any of Utah's other oil fields.
Wolverine, backed by 14 investors, snapped up leases for as little as $5 an acre and sank a producing well in May 2004. Now the Grand Rapids, Mich., company is sitting on a roughly 1,000-acre oil deposit more than a mile underground that shows no sign of quitting. It's paying one extended Utah family, which owns the land and declined comment, one-eighth royalties on the production.
Wolverine believes the deposit could contain 100 million to 200 million barrels of oil in sandstone pores. One of the wells is producing oil on its own pressure, without a pump. Other wells are producing oil consistently without a hiccup — a sign of a large reservoir.
"It was a true wildcat — a very risky well," said Bill Armstrong, president of Armstrong Oil & Gas Inc. of Denver.
Bidding by oil and gas players at government auctions has intensified, and competitors are dangling leases to private landowners worth hundreds of dollars an acre. But they're finding Wolverine snapped up rights to about 600,000 key acres of private and government land spread across central Utah, claiming a near monopoly over a mountainous region about 50 miles long and 20 miles wide.
"The whole industry wants to get in on Wolverine's play," said Sidney J. Jansma Jr., the company's president and chief executive, who could hardly contain his enthusiasm on a tour of his wells and 10,000-barrel tanks. "They think Wolverine is smart and has found something no one else has found."
From its first field just outside Sigurd, Wolverine expects to be producing 105,000 barrels a month by the end of September, worth more than $6 million at today's prices. That oil is helping solve a supply bottleneck for refineries on the north end of Salt Lake City, which are limited by the amount of oil that can arrive in pipelines from Wyoming.
Wolverine is trucking oil to ease the shortage, said Fred Dunbar, economics and planning manager for Holly Refining & Marketing Co., which is happy to take more crude for refining.
"For years Chevron had all those leases down there, and they didn't produce anything. It was a surprise Wolverine found oil there. It's going to help the Utah economy and the supply of oil," he said.
The key for Wolverine, a business with just a few dozen employees that got its start making big gas strikes in Michigan, was Chevron's failure.
In 1999, Wolverine bought Chevron's leasing rights and seismic data and started poking around, leasing more land and spending $10 million to bounce more seismic waves deep underground to draw a picture of likely gas or oil traps.
Jansma said the evidence suggested his odds of finding oil were 50-50, an investment one of his own sons questioned when he put up $1 million of his own money. Undeterred, Jansma replied, "It will be the finest dry hole we ever drilled."
In late 2003, he struck oil, but it would take another five months to start producing. Wolverine is still drilling wells.
Jansma said he could make money faster drilling one well per pad, then clearing more land for another pad. Instead, he's drilling multiple wells, one at a time, from each of two pads, delaying maximum production but keeping his oil field tidy.
Jansma is so convinced he's tapped into a major system of oil deposits he's moving 15 miles from Sigurd to drill another set of wells, making another $5 million bet for the company and its investors. Jansma and his company geologist, Doug Strickland, believe a geologic belt from Mexico to Montana contains 1 billion barrels of mostly untapped oil in tricky deposits, and they hope to grab some of it.
Some analysts doubt Wolverine's optimism, saying the Rocky Mountains already have been "picked clean" for major oil and gas deposits.
Fadel Gheit, senior oil analyst at Oppenheimer & Co., likened Wolverine's ambitions to finding a wallet on a busy subway car after the cleaners move through it — "possible, but very unlikely."
Jansma said the analysts are half right.
"We loved it," Jansma said. "He's right in saying the U.S. has been picked over, but at $60 a barrel I promise you there still are major discoveries to be made."