A Wyoming-based company is moving ahead with a plan to explore Skull Valley for oil, and is scheduled to begin drilling a $1 million test well by as early as June.
Walt Merschat said he put the Skull Valley drilling plan together over several years with his Casper-based company, Geochem Exploration, before selling the prospect to Ameriwest Energy, another Casper-based company. Merschat is currently president of both companies.
"When I sold the prospect to Ameriwest, they offered me the opportunity to run the company and become president and CEO of Ameriwest," Merschat said. "Ameriwest had expressed interest in helping me drill it, and they have offered to put up some of the money working toward the project. They will also now become the main operator of the project."
According to Merschat, this will be the third drilling to take place in the Skull Valley area. He said Ameriwest will drill the well on BLM land located 8 miles south of I-80 and 7 miles west of SR-196 in Tooele County.
Merschat, who has worked as a consulting geologist for several drilling operations, said he expects drilling to begin in June or July.
"I used to work in Gulf Oil research, and back in the 1970s we had detected this area of Skull Valley as a geochemical anomaly that would be good for finding oil," he said. "I have waited a long time to do this. I have a permit and have already gone through the BLM, so now I just have to focus on finding a rig used to help drill the well. We'll be ready to go once we find the rig."
Merschat said that renting a rig for an affordable price could be an issue. He said he prefers to find one located close to Tooele County to avoid the substantial costs of transporting one from farther away.
"It could cost up to a couple hundred thousand dollars just to move a rig, depending on where you have to get it from, so two of my engineers who are stationed in Utah and Colorado are trying to find one available in Utah or Nevada," Merschat said. "It will be a much cheaper process when there are not as many miles to drive, and because we'll probably get it in the spring or summer, we won't have to worry about driving it through snowstorms or anything. We've already had a couple people with rigs respond to us."
Merschat also said he would like to rent a rig that is able to drill at least 8,000 feet into the ground. Because of its massive size, the rig would be transported with the help of several large trucks.
"We don't want to go with a rig that is too small, so to be safe we might want to get a rig that is bigger than we actually need," Merschat said. "It would be transported in pieces on the flatbeds of about eight or nine trucks."
Mershat has estimated it will cost $1 million to drill the test well, and $500,000 to $650,000 to pump oil from it if tests prove successful. However, he said the actual well drilling process will not be as lengthy as one might think.
"It only takes a week to build a road and put up a rig, and it only takes about two weeks to actually drill the well," Merschat said. "If we find something promising, then we'll deal with buying tanks and pumps. We'll have about 12 guys on site at all times, and my two engineers will also make it out to the site to make sure the well gets drilled properly."
If oil is in fact discovered in Skull Valley, Merschat said Tooele County would benefit greatly.
"The county will receive tax money and would get part of the revenue," he said. "They could build a school or gymnasium or fix roads, and the discovery of oil would also bring more employment because we would need to get people to maintain the well."
Merschat said he is optimistic that he'll hit black gold.
"We will be going down 7,500 feet into the ground and expect to find something at the end of the two-week period," Merschat said. "I'm optimistic that we'll find something there. I think there's a good chance for oil in that area."
Doug Radunich: dougrad@tooeletranscript.com
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