I-Team: More Interest in Nevada's Oil Find - 8 News NOW

I-Team: More Interest in Nevada's Oil Find

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LAS VEGAS -- Officials with Nevada's Division of Minerals are bracing for what they think will be a big and busy year as the eyes of the oil industry focus on Nevada.

Oil experts have long suspected that Nevadans could be sitting atop an ocean of petroleum, though our state is one of the least explored in the country.

Now, two projects in different parts of the state have captured the attention of the energy industry and the state officials who oversee oil leasing.

Last October, the I-Team told you about a discovery by U.S. Oil & Gas, an Irish company, and there was a lot of speculation about whether the find was real. The company said it found oil though it didn't know how much. That's still true, but much has happened since last year.

Another major player has entered the picture and is ready to plunk down a pile of money to find oil in Nevada. And now, there are on-the-record comments from state overseers about the legitimacy of these operations.

"This is a map of all the oil wells that have ever been drilled in Nevada, for all time," said Alan Coyner with Nevada Division of Minerals. "Something less than 1,000 wells."

But Coyner and his staff are bracing for what could be an oil onslaught, the equivalent of a gold rush, as wildcatters and major players focus their attention and drilling rigs on Nevada's tortured, twisted geology. Until now, it's always been a safer bet for oil explorers to put their money into places with proven reserves. Nevada has oil but it's hard to find. Now, change is in the air.

"I am excited myself. I think we might be on the cusp of breaking out the new frontier… believe me, if one of those companies finds oil, that will probably cause a stampede to Nevada," said Lowell Price with the Nevada Division of Minerals.

Two oil projects have the potential to change everything, state regulators say. In Hot Creek Valley, in the middle of the state, the pounding noise of an oil rig cuts through the air.

U.S. Oil & Gas, a small Irish firm, told the I-Team last year that it had found oil there. Last week though, the Iraqi oilman in charge of the site barred the I-Team from the property and said even photos were forbidden. The company CEO had told the I-Team in an interview last October that a unique technology helped U.S. Oil & Gas find oil in the first place it looked.

"We are looking at two oil systems: light sweet crude with gas condensate and the normal heavier oil that is found in Nevada," U.S. Oil and Gas CEO Brian McDonnell said. "We are quite confident we are looking at a new discovery."

McDonnell declined to speak to the I-Team how far his project has progressed, and with good reason. His previous announcement that his company struck oil ended up working against him. The stock price tumbled after harsh critics in Europe accused the company of lying about its find. McDonnell went to court to stop the whisper campaign and will no longer comment at all, but the company files daily reports with the state.

Officials are under confidentiality restrictions but were be to say the discovery is legit.

"I think Hot Creek Valley does have potential. During the drilling and testing of this well, they have done exactly what we've asked them to do. We review the manner in which they want to drill and the manner in which they want to test. I am not sure if they have found the mother lode, so to speak, but they have found some oil," Price said.

"We have seen significant interest in that well, more so than any other well in the 15 years I've been here," Coyner said.

The size of the find in Hot Creek is still being determined through testing. A second exploratory well is planned, perhaps within weeks. The state confirms the discovery is real.

In Elko County, an even bigger oil project is being launched. Noble Energy, an international oil firm, is investing up to $300 million to look for oil in the shale-rich deposits near the town of Wells.

"Noble Energy is pretty excited about our position. We've established 350,000 acres in leases in Elko County. We have a tertiary age project. We think it could be full of oil," Jeff Schwarz.

The company will start drilling later this year and is confident the oil is there, with an outside chance it is could be as big as the massive Bakken discovery that has transformed North Dakota.

"What we think we may be sitting on top of is something that might be on the order of hundreds of millions of barrels, possibly over a billion barrels if we are successful," Schwarz.

What it means is that Nevada's long-rumored ocean of oil is a step or two closer to being exploited.

"Nobody has ever come in with this approach. If they are successful, it will be a new day in Nevada," Coyner said.

Sources familiar with the Hot Creek Valley operation have told the I-Team that, in addition to light crude and the thick gunk, Nevada is known for a third grade of oil, something akin to the Texas-quality crude that is the standard in the industry. The company needs time, perhaps months, to figure out how much is out there. Noble Energy said when it sinks its first well, the I-Team will be allowed to get a look at it.

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