A Houston-based oil company plans to spend as much as $130 million for oil-and-gas exploration in the Elko area and sees potential production of as much as 50,000 barrels a day from the region.
Noble Energy Inc. executives say they view northeastern Nevada as a high-risk region with potentially game-changing implications.
Susan Cunningham, Noble's senior vice president for exploration and business innovation, said last week the company thinks it has a 55 percent chance of success in discovering oil and gas in the area.
Noble has acquired leases on 350,000 acres in northeast Nevada. The leases cover a swath of land that runs north and south between Elko and Wells.
About 66 percent of the leases are on private land, and the remainder is on federal land. Noble owns a 100 percent interest in the leases and hasn't brought in partners to help pay for exploration or development.
The $130 million that Noble has budgeted for exploration includes the cost of those leases, three-dimensional profiles of the area's seismology and the drilling of eight wells. The seismic work is expected to be complete late this year. Assuming that the company likes what it sees in that data and finds success in its drilling, Cunningham said production could begin by late 2014.
Noble officials acknowledge that the heart of many oilman has been broken in exploration in Nevada through the years. The Railroad Valley in Nye and White Pine counties is home to most of the state's oil production, including the Grant Canyon well that for a time was the most prolific producer in the nation at 4,000 barrels a day.
A few small fields have been discovered in Eureka and Elko counties.
But hundreds of dry holes also have been drilled in the past three decades. Cunningham says Noble believes that modern exploration and drilling techniques give the Texas company optimism about its Nevada project.
Noble drilled a shallow well southeast of Elko in recent months and liked what it saw, especially in combination with the data from seven old wells plus some other seismic data that's already available.
The company believes that wells drilled 6,000 to 12,000 deep in northeastern Nevada may prove to be successful. But its geologists say that they still have lots of questions.
The potential resource, the company estimates could range widely anywhere from 190 million barrels of oil to 1.4 billion barrels. (Those figures include natural gas, which is measured as an equivalent to a barrel of oil.)
The company has been doing preliminary work, including assembly of leases in the region, since 2010.
"It took really good detective work," Cunningham said of the company's decision to invest in northeast Nevada. "We did our work, and we saw that there was oil."
While specialists are analyzing seismic and drilling data, Noble executives also are talking with political and community leaders in northeastern Nevada to build their support.
Noble Energy, an S&P 500 company, owns petroleum reserves worth more than $16 million and produces oil and gas in the United States, the Mideast and west Africa.
Northeast Nevada is one of three potential big opportunities identified by the company the others are offshore Israel and offshore Falkland Islands that Noble is calling "potential game-changers."
On the other hand, Cunningham said the company is willing to cut its losses and exit quickly if any of the opportunities disappoint.