I-Team: Black Gold in the Silver State? - 8 News NOW

Chief Investigative Reporter George Knapp and Chief Photojournalist Matt Adams

I-Team: Black Gold in the Silver State?

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LAS VEGAS -- Drills in Elko County are usually searching for gold. The one in the hills above Diamond Valley is a sign that the search for black gold in the Silver State is finally getting serious. Fasken Oil, a small Texas company, will probably make a $5 million roll of the dice on this operation. It costs about $20,000 a day just for the leased drilling rig.

The company has good reason to believe the gamble is worth it. Just down the road in neighboring Eureka County, two older, oil stained wells are still producing in a field just off the highway. The same rig is bound for Lincoln County, where Cabot Oil will plunge into what it hopes will be a massive gusher.

After that, the rig will go to the White River Valley, where a wildcatter with 50 years in the oil business thinks there's an ocean of up to two billion barrels.

"There is no doubt in my mind whatsoever. In my opinion, Nevada will be the largest oil state ever to have happened in the U.S., including Texas and California," said Chuck Laser.

Laser, a Florida oilman, has spent the last nine years gathering the best geological data he could find about Nevada's petroleum potential. The same geologist who discovered one of the world's largest fields in Russia told him the eastern Great Basin in Nevada would be the future Kuwait of the U.S.

"He's right. You have their same exact conditions in Nevada as Kuwait, Saudi Arabia, Iraq," he said.

One telltale sign is the presence of chainman shale, rich in compressed hydrocarbons. Kuwait has deposits of chainman shale hundreds of feet thick. In Nevada, there are places where its more than 1,000 feet thick.

Few Nevadans are aware, but a small patch in Nye County's Railroad Valley was for many years the single most productive oil field in the entire country, averaging 4,000 barrels a day for an astounding 10 years. It is still producing.

If it's all true, where are the big boys -- BP, Shell or Exxon? Laser says the majors were in Nevada years ago, poked a few holes then gave up when oil prices plunged. Today, more than a million acres of public land in Nevada is leased to oil companies, but the big names, including BP, are not here. Laser says the majors prefer to let the little guys find most of the oil, and then they scoop it up.

"They like to keep their stock strong. They don't like to take the high risk by drilling for themselves," he said.

Six years ago, federal records show that of the tens of millions of public acres leased for oil and gas, more than three-quarters had no development at all. In Nevada, its more than 90-percent. Critics say big oil gobbles up acreage at cheap prices and sit on it. The leases become an asset on the company books. They are more likely to go after a surer thing, even though the risks for the environment can be much greater. BP, for instance, was sitting on nearly half a million acres as of 2004.

Laser says if he is right about the White River Valley, the majors will be banging down Nevada's door soon enough.

"It's going to make world history because you have so much oil, generating billions and billions of barrels of oil," he said.

Laser says Nevada is a great state for oil exploration, because the BLM and state officials go out of their way to help companies that want to drill or explore. The BLM has auctions for oil leases every year in Nevada at a minimum price of $2 per acre, per year.

The oil industry vigorously disagrees with the idea that it is sitting on leased land. It argues that more than 60% of public land is off limits.

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