Small oil firm may have struck it rich in Sevier

A tiny oil company has snapped up leasing rights to a half-million acres in central Utah that it says could yield a billion barrels or more of oil.

Geologists are calling it a spectacular find — the largest onshore discovery in at least 30 years, located in a region of complex geology long abandoned for exploration by major oil companies. It's turning out to contain high-quality oil already commanding a premium at Salt Lake refineries.

With the secret out, industry players expect a bidding war to break out at the next Utah leasing auction, set for May 17 in Salt Lake City.

"This is huge for the state of Utah," said Larry Nation of the American Association of Petroleum Geologists. "The budget for the entire state of Oklahoma is virtually built on oil revenues. I could see that happening in Utah in the future."

At today's prices the oil reserve could bring Utah $5.6 billion in royalties, state auditors conservatively estimate. Although the discovery is still playing out, the oil will take years to recover, and some skeptics question the company's projections for a region yet to be fully surveyed.

"It's just very highly unlikely because the U.S. onshore has been picked clean, if you will," said Fadel Gheit, senior oil analyst at Oppenheimer & Co. in New York.

"That's like finding a wallet in the subway after all the cleaners went through it. It's possible, but very highly unlikely," he said.

Gov. Jon Huntsman said he was aware of the discovery, "and we are tracking the progress with great interest. If the prospects prove to be true, it will be important that the resources are developed responsibly."

Nation said the discovery is "very real" and signals a new beginning for oil production in Utah.

"We're talking about a very large oil deposit in Utah," Nation said. "It was a very big risk on their part, and it looks very very very promising."

The discovery is playing out just outside Sigurd, Sevier County, more than 100 miles from any of Utah's other major oil fields and 45 miles from the nearest operating well.

The find, 130 miles south of Salt Lake City, was made by Wolverine Gas & Oil Corp., a privately held company with just 25 employees improbably located in Grand Rapids, Mich.

Wolverine's test well hit "pay" in late 2003, and by May 2004 it started producing from a single deposit estimated to contain 100-200 million barrels of oil.