With Oil Fever, Fear of a Meltdown

By Bonnie Miller Rubin, Chicago Tribune

Oct. 9–SIGURD, Utah — With one diner and no stoplights, it would be easy to dismiss this sleepy rural town as just one more place that time forgot.

But since last spring, when word leaked out that this tiny community (population: 450) was sitting atop a major oil discovery, it has found itself poised to reap the benefits of a black gold rush.

“We’ve had people here from all over the country,” said Neoma Fordham, co-owner of Dave’s Country Trading Post, which offers live bait and ammunition, along with home cooking. “We can’t handle it all. It would be a good time to sell.”

The find by Wolverine Gas and Oil Corp. has everyone talking transactions. Perhaps that’s because some experts predict that Sigurd–130 miles south of Salt Lake City–could be at the epicenter of the biggest onshore oil discovery in 30 years.

The Grand Rapids, Mich., company is cranking out 4,000 barrels of high-quality crude a day and expects to have 10 fields producing by December. From May 2004 through September of this year, the company produced more than 600,000 barrels. “We are talking about being here not for years, but for decades,” said Paul Spiering, district land manager in Utah.

A casual observer would have a difficult time detecting a bonanza. No subdivisions are popping up outside of town, and there’s no traffic jam of trucks headed to the next rig.

In fact, the 38 new jobs have gone mostly to Wolverine employees and subcontractors rather than locals. Other than some extra work for the area’s engineering firms, an uptick in photocopying and cell phone sales and more burgers and BLTs served at Dave’s, life appears to be as languid as before.

But the fact that this struggling region has the potential to be an oil hotbed is enough to bring speculators with checkbooks in hand.

“Up until now, there really hasn’t been much to buzz about,” said Malcolm Nash, development director for Sevier County, which includes Sigurd. Annual economic growth has hovered at about 2 percent for years. Unemployment is at 4.7 percent. The problem is more underemployment than unemployment, Nash said. Not enough work that pays a decent wage, with many folks working two jobs.

But that all changed in May, when the headlines hit about Wolverine’s windfall. Oil and gas leases that once went for $2 an acre were now being snatched up for $1,250 an acre, and real estate agents started fielding calls from out-of-towners eager to invest.

“Now, everyone wants a piece of the pie,” said Mark Tucker, president of the Chamber of Commerce.

This is the kind of news that civic leaders fantasize about, but Sevier County is proceeding cautiously, knowing that a boom can stretch resources, from utilities to schools.

Last spring, Nash and Tucker traveled to Evanston, Wyo.–a town that went through an energy boom-and-bust cycle in the 1980s. With drilling came dollars, but it also brought an increase in crime and a housing shortage so dire that oil workers were camping on the riverbank, they found. And while the petroleum dried up, the industrial sites still remain.

“They weathered it pretty well, but, like any community, there are things they wish they did differently,” Nash said. “We want prosperity, but we need to ask: ‘What do we want this place to look like when it’s all over?’”

Many don’t care. A recent survey found 91 percent of the business community welcomed Wolverine.

“Some people said if you need to put an oil rig in my living room, go ahead,” Nash said.

But Dave Anderson, associate editor of the Richfield Reaper, the local newspaper, feels that such a bonanza would inextricably alter the area’s character.

“Most people are here because they don’t want to live in a big city. They don’t care about bistros or the opera. They care about the mountains . . . and letting their kids play in the front yard,” said Anderson, a lifelong resident. “If things get too big, we’ll lose that small-town charm.”

One of the first beneficiaries was Ken Dastrup, who owned the land where Wolverine found oil deposits. While he declines to say how much he received, he will say that he’s not getting as rich as people think because his ranch was owned by his extended family, with proceeds split among 30 people.

But he has landed a job with Wolverine as the lead pumper, while his wife runs the Wolverine business office in Richfield, about 10 minutes away, where a sign lauds employees for passing the half-million barrel mark.

Central Utah is hardly new territory for oil exploration. Indeed, major companies had already been over this swath of land, with little to show for it.

In 1999, Chevron Corp. put its acreage on the block and Wolverine picked it up, at the urging of a company geologist who was convinced that deep deposits lurked below the sandstone. Thanks to new seismic technology not available to earlier prospectors, Wolverine hit pay dirt.

Initial reports said the overall area could yield 1 billion barrels of oil, although the company doesn’t put much stock in those claims.

“We don’t know if this is a one-field wonder or something really big,” Spiering said from his comfortably cluttered trailer just yards away from the discovery well. “We’re trying not to count our chickens.”

Still, with oil going for $65 a barrel, a lot of people are getting carried away, according to Perry Gardner, a real estate agent with Coldwell Banker in Richfield.

He has seen a flurry of cash buyers to the county. Most are interested in buying land, but houses–generally in the $90,000 to $150,000 range–are hot too.

Still, he insists, he’s not yet ready to pop the champagne.

“I’ve been down this road before, and I know the importance of keeping a penny in your pocket,” he said, citing previous economic ups and downs. “Some of these folks are already spending money they’re not going to get.”

—–

To see more of the Chicago Tribune, or to subscribe to the newspaper, go to http://www.chicagotribune.com.

Copyright (c) 2005, Chicago Tribune

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.