By DAVID BROWN
EXPLORER Correspondent

Covenant Field Keeping Promises

Utah Play Makes Lots of Headlines

Photos courtesy of Wolverine Gas & Oil and Utah Geological Survey; cross section courtesy of the Utah Geological Survey

Click map to enlarge

Photos courtesy of Utah Geological Society

If this were a mystery story, you might call it

The Kings Meadow Ranch 17-1 discovery well at the Covenant Field in early 2004, which may open a new frontier

There's no mystery about what Wolverine Gas & Oil Corp. found in central Utah, even though results went unannounced for more than a year.

Its Covenant Field discovery opens up the most promising new onshore play in the United States in recent memory.

"I honestly expect this to be a billion-barrel province -- I expect that we'll find another 10 fields out there," said Doug Strickland, exploration manager for Wolverine in Grand Rapids, Mich.

For AAPG member Strickland, the Covenant find is a gratifying payoff after more than 25 years of paying attention to a prospective area.

From Play to Pay

If this were a business article, you might headline it

Wolverine's discovery well, the 17-1 Kings Meadow Ranch, hit 1,000 feet of Navajo Sandstone pay in Utah's Sevier County in late 2003.

Strickland said the company's Covenant area of interest is a strip about 75 miles long and 20-30 miles wide along the Central Utah Overthrust.

The entire thrust belt system extends north into Canada, where it is flanked by numerous Alberta fields. Another productive province lies on both sides of the Wyoming-Utah border.

Wolverine completed and began producing the Covenant discovery well in May 2004, and its second well in September 2004.

To date, those wells have produced a cumulative total of 210,00 barrels, Strickland said.

Covenant wells produce good-quality, 40-degree gravity crude and show a very low gas-to-oil ratio, he said. Production from each of the field's first wells now averages 850 barrels per day.

"We're stepping up that production systematically -- we're designed for 1,500 barrels a day," Strickland said.

Nearest significant production is from fields at the edge of the Uinta Basin, about 120 miles to the northeast and unrelated to thrust belt geology, he said.

He sees the Anschutz Ranch East Field in the Wyoming-Utah trust trend as a closer analog. On the Wyoming side, the productive zone is called the Nugget, the Jurassic equivalent of the Navajo Sands.

Wolverine, currently drilling its fourth Covenant well, directionally drills several development wells from one pad.

Strickland expects the company will drill nine wells on 160-acre spacing this year, with the possible addition of a water-disposal well.

For future drilling, Strickland said the 500,000-acre play area could contain at least 25 structural closures, five of them on the producing unit.

Should field sizes range from 1,000-4,000 acres, as he expects, the Central Utah Overthrust will yield years of fruitful exploration in multiple producing areas.

A Hingeline History

If this were a historical account, the headline might be

"I've worked the Utah hingeline and looked at it for 25 years. First of all, I did my graduate work, my dissertation, in western Utah," Strickland said.

Chevron drilled a key well in the area in 1981. The well evidenced the presence of both a hanging wall and a foot wall, he said.

That structural clue helped define the idea for the Covenant prospect almost 20 years later.

Strickland kept his eye on western and central Utah drilling and stayed active in the region.

"Off and on through the years, I've leased out there maybe four times during my career," he said.

Wolverine's first big break in the Central Overthrust came in 1999, when Chevron approached Wolverine owner Sid Jansma Jr. to offer its large and up-to-then uneconomic acreage position, according to Strickland.

"Chevron pulled out of the Rockies altogether at that time. I think they had one landman there. This was right before their merger with Texaco," he said.

When Chevron put its 80,000-acre holdings on the table, Wolverine was quick to express an interest.

"From that initial contact, we ended up taking the acreage deal from Chevron. We bought them out of it. We ended up with a 65,000-acre Federal unit," Strickland said.

More than that, the company got Chevron's 2-D seismic data.

Wolverine reworked the data under the direction of company geophysicist Keith Johnson, also an AAPG member.

"We found a series of hanging-wall anticlines, and from that we were able to put together this play," Strickland said.

To search out future prospects, Wolverine continues to rely primarily on 2-D seismic, he commented.

"Three-D out there really triggers a whole series of events," he said. "It's quite a bit easier to permit and acquire 2-D."

The company has shot 120 miles of 2-D seismic in the Covenant area and plans to add about 350 additional miles of data in 2005.

Strickland said 3-D seismic will be used for final imaging of structures once they've been identified.

Sensing a Trap

If this were a journal paper, you might call it

Wolverine's cross-section schematic for Covenant shows an anticlinal trap along the deformation front of the thrust belt.

Cretaceous through early-Tertiary compressional deformation in the evolving foreland basin resulted in structural systems that include large-scale thrust sheets.

Local features include complex back-thrusting, duplexing, tectonic-wedge formation and extensive faulting.

The seal for the system is the Arapien formation, locally defined by salt, gypsum, hydrite and shale, according to Strickland.

"This area is highly deformed, and in the Covenant field area it is in a triangle zone," he said.

"It's fairly complex, in that the foreland Cretaceous deposits change very rapidly. The marine section is on the east side, the alluvial plain-fluvial plain section is on the west," Strickland observed.

"On top of that is a Miocene basin-and-range extensional fault system," he added.

One upshot of the scrambled transition is that the Cretaceous rock systems "just don't correlate," Stickland noted.

Despite the difficulties of analysis, Strickland said the discovery well found a structure explicitly foreshadowed by Chevron's 1981 attempt.

"It's called a fault-bend fold or a hanging-wall anticline," he said. "That's exactly what we were looking for."

Strickland countered earlier speculation about possible sourcing of the Covenant crude.

"The source for the oil is the Mississippian system in west Utah," he said. "We have a lot of biomarkers and isotope data to show that."

Anyone Interested?

If this were a comedy, you might call it

Using mostly 2-D seismic, Wolverine pieced the Utah play together from the ground down.

"We spent a year and a half putting the technical work together," Strickland said. "We usually keep a quarter to a third of a project and then bring in partners."

Once Wolverine had a well-defined play package, the company showed it to potential industry partners and offered it at the North American Prospect Expo (NAPE).

"We took it to NAPE twice. We had people who were interested in looking at it, but we never had any of the conventional companies take an interest in it," Strickland recalled.

"We ended up breaking up the package and selling it to private investors and small companies," he added.

The frontier-wildcat nature of the play may have curbed the enthusiasm of larger independents, and the general area already had a history of uneconomic prospecting.

Also, major oil companies began abandoning exploration in the Rockies to small independents years earlier.

Wolverine ended up funding the Covenant attempt with money from a mixture of industry insiders, individual investors and intrigued independents, according to Strickland.

"Some of them were industry people, some of them were not," he said.

Investors got a share of the first well and the right to take an interest in the Federal unit.

Asked if he wanted to emphasize anything in the Covenant story, Strickland said he'd like to thank the technical people "who made this happen" -- Keith Johnson (geophysics) and the Wolverine staff, Dan Schelling (SGI) and David Wavrek (PSI). And he'd include "a tribute" to Sid Jansma Jr., and the investors who took a chance on the play.

"Those people were very courageous," he explained.

Booming Exploration

In this EXPLORER story, we called it

Utah Play Makes Lots of Headlines

because it's got a lot of news angles maybe with more coming.

Wolverine's Covenant find opens up a promising, southern extension for Western U.S. thrust-belt exploration.

"We kept this very quiet and confidential for the first year," Strickland said, enabling Wolverine to extend its position before published reports began to appear.

Lease fees in the area have already climbed to $1,000 an acre, he noted.

Obviously, Covenant's success has already touched off a mini-boom of interest in the Central Utah Overthrust.

That's both a happy ending and an opportunity for future exploration and development for Strickland.

"This is by far the most exciting thing I've ever been involved in in my career," he said.