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By:
Ann-Marie Fleming
June 2005
Nevada
Oil is perhaps not as well known as oil plays in other areas around the
world, but according to recent data and current discoveries, this area has
the potential to become a North American oil hotbed. Oil discovery in
Nevada
has been hampered in the
past by the lack of a detailed and precise geological survey. In fact, the
State of Nevada is one of the only states that has never had a geological
survey, which is why Dr.
Alan Chamberlain
, President of oil and gas exploration company Cedar Strat,
has spent the past 25 years creating the first detailed geological map of
Eastern Nevada, correcting and significantly expanding on the cursory maps
completed in the seventies by the U.S.
Geological Survey.
With
the lack of accurate mapping,
Nevada
has not been successfully
explored for oil, but that is changing as Dr. Chamberlain explains, “Most
of the anticlines have not been surveyed with gravity and seismic data.
Mostly the valleys have been surveyed because of the
misinterpretation of the cursory geologic map of
Nevada
.
People have been looking in the synclines for years and years out
here which have resulted in commercial oil seep teasers like
Grant
Canyon
.”
Equipped
with his geological map, Chamberlain is exploring fault fold anticlines
avoiding previous exploration errors caused by the lack of accurate mapping.
Mr. Chamberlain’s work has helped to break down the
existing barriers to exploratory success with recent interest and discovery
in
Nevada
and
Utah
helping to validate his arguments.
Until
recently, little significant drilling had been completed in the Great Basin
area of Eastern Nevada and Western Utah, which is why the near billion
barrel discovery made by Wolverine Gas & Oil (see Figure 1) has opened
the eyes of many, and established credibility for those companies already
pursuing opportunities within the Great Basin area. As described in an Oil
and Gas Journal article dated
January, 17, 2005
, the Wolverine discovery
in the Covenant field has the potential for 896 million bbl from the Navajo
No. 1 (current producing zone) alone.
Figure
1: Wolverine Discovery
North
American Thrust Belt Success:
Two
very successful oil producing regions along the North American thrust belt
include Western Canada as well as Wyoming and with the recent discovery by
Wolverine, Utah can be added to the mix. The discovery made by Wolverine in
the
Utah
area has been identified
as producing oil typed as Paleozoic or Mississippian aged coming from the
west, leading many experts to evaluate the potential of that westerly region
into
Nevada
where the oil source rocks
are richer and thicker. “Do these undrilled structures contain oil to the
west where the best
Central Utah
thrust belt oil and gas shows were noted prior to
Wolverine’s success? We have geochemical data that indicate yes,” states
the Oil & Gas Journal. As stated by Doug Strickland, Exploration Manager
for Wolverine, “The source for the oil is the Mississippian system in west
Utah
. We have a lot of
biomarkers and isotope data to show that.”
Several
oil exploration firms are hoping to take advantage of this western potential
for oil discovery through operations in
Nevada
. FX Energy Inc. (Nasdaq: FXEN) has made a small shallow discovery in
Nevada’s Railroad Valley and plans to drill up to three additional
exploratory wells in Nevada this year, and Eden
Energy Corp (OTCBB:
EDNE) is currently developing a 210,000 acre lease block in Eastern
Nevada where they have 100% working interest in the block they call Noah.
Eden
feels that their Noah
project is the best of the
Nevada
plays, based upon Dr.
Chamberlain’s ground-breaking research. According to Mr. Donald Sharpe,
CEO of Eden Energy, “The Noah area was identified based on a combination
of ideal oil generating source rocks, world-class reservoir rocks, and large
over thrust structures that he (Chamberlain) had identified.” Mr. Sharpe
continued by explaining that Eden has identified at least six structural
features within their 210,000 acre block, each one having the potential to
become a giant or super giant oil field and with Wolverine’s discovery,
Eden’s Noah Project which looked ‘pretty good’ when first identified,
now looks even better.
Fasken
Oil and Ranch is also in the
Nevada
area and according to
local sources, the
Texas
based private company has just begun drilling a deep well
approximately 12 miles Northwest of
Eden
's Noah anticline on a
smaller anticline structure. According to OGSN
(OilandGasStockNews.com)
sources, Eden Energy and Fasken Oil and Ranch are drilling deeper over
thrust structures, while FX Energy has tested the area’s shallow
structures. The well (see Figure 2) is thought to be the first of at least
two $5 million wells that Fasken plans to drill on the structure. Seen
below, is an aerial view
with Eden Energy’s Noah project in the background.
Figure
2
According
to Dr. Chamberlain, “Wolverine’s oil comes from the Mississippian source
rocks and the Mississippian source rocks in Utah where the discovery was
made, are very lean, they are less than one percent average organic content
and are only a couple of hundred feet thick. The Mississippian source rocks
to the west of that area in
Nevada
, have average organic
content of 5-6% and are thousands of feet thick. If you have a billion
barrel field over there, then there is a big chance that you’ll get that
over here in
Nevada
. If Fasken makes a
discovery, that means everything between here and
Central Utah
, all 400 miles, becomes
extremely high potential.”
Figure 3: Cretaceous Sevier Belt
As the level of discovery heats up in Utah and Nevada (see Figure 3), what
was once considered theoretical in that over thrust structures coinciding
with Mississippian Lacustrine shales as source rock would host major oil
pools, appears to be proving itself a reality, and a potentially lucrative
one at that. For those companies that have chosen to operate off the beaten
path of main stream oil exploration, this wildcat area may soon become the
next North American oil hotbed. If the growing number of well commitments
through Dr. Chamberlain’s Cedar Strat is any indication, with current
commitments for ten wells in place and an anticipated year end total of
twenty-five wells, then Nevada may be on the lips of oil and gas investors,
companies and industry professionals before too long.
Ann-Marie Fleming
Ann-Marie
Fleming
completed
her MBA in the
United States
, where she attended
Webster
University
. She also holds an Honors B.A from the
University
of
Toronto
. She has over fifteen
years of experience spanning the brokerage, banking, and mortgage industries
within the United States and Canada.
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