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COLUMN ONE : Quenching the Thirst of the West : Tap into an underground river? Capture rain in hillside faults? These speculators’ schemes may sound all wet. But with water needs rising, officials are keeping an ear open for any option that works.

TIMES STAFF WRITER

Robert (Wally) Spencer is a former rocket scientist who claims to have unraveled the greatest riddle in the torrid West. For a price--maybe $5 million--he may even tell you the secret.

Scouring the dusty desert floor with satellite maps and a secret contraption loaded in his four-wheel-drive truck, Spencer says he has found a 500-million-year-old river running beneath Utah, Nevada and Southern California.

The ancient sunken waterway is so huge, as Spencer tells it, that it could quench the thirst of 100 million people and forever lay to rest worries about droughts and water shortages from here to Los Angeles.

“I am willing to help the western United States overcome its water supply problems, but I feel I should be compensated for my efforts,” said the 63-year-old chemical engineer, who for three years has refused to divulge the river’s location.

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Spencer is an unabashed water speculator, one of a hardy breed of entrepreneurs hoping to cash in on the West’s most endemic and confounding scarcity. With the era of big dams and ambitious aqueduct projects slipping into memory, officials are looking with interest at the prospectors and their sometimes unconventional claims about new sources of water.

“In the old days, only big public agencies could provide water because it was all done through massive engineering projects,” said Timothy H. Quinn, an economist with the Metropolitan Water District of Southern California, the largest local wholesaler in the West. “Now you have a degree of competition that was unheard of before. That is very new in the world of water.”

Many of the private schemes are as simple as a rancher offering to sell his irrigation water to a nearby town or, through a domino of exchanges, to a more distant megalopolis. Some involve investors buying up barren land and piping its underground water to sprawling housing developments at a handsome profit.

Other projects are more grandiose. A team of prospectors in northern Nevada wants to capture millions of gallons of mountain rainfall by drilling deep wells in hillside faults, funnel the water into the Humboldt River, and transport it to cities and farms downstream. The scheme, organized as Eco-Vision Inc., involves years of research and would cost tens of millions of dollars to pull off.

Although some of the schemes are more improbable than others, the West is growing too fast for water officials to simply dismiss what might be a major new source.

“Nevada has a lot of water, but unfortunately it is not near the populated areas,” said Nevada state engineer Mike Turnipseed, who is required to judge the merits of all water schemes. “We have to look at all of our options.”

In Las Vegas, the water district itself has filed 147 claims in remote desert basins in central Nevada in the hope of someday finding a way--perhaps through a public-private partnership--to pump an untapped source of water to casinos and retirement communities to the south.

“You can’t just say to a town: ‘Well, that is it. No more water,’ ” said Patricia Mulroy, general manager of the Southern Nevada Water Authority, which draws most of its supply from the Colorado River.

It is that almost desperate thirst that has inspired many prospectors to take on the seemingly foolhardy goal of finding new water in arid outreaches of the West. Nowhere is the pursuit more dogged than in Nevada, the driest state in the nation and one of the fastest growing.

By far the most extraordinary of the prospecting efforts is that of Wally Spencer, who devoted two years to the quixotic pursuit of his prehistoric subterranean river, originally believing that it may be gushing with oil.

His resume reads like an insider’s guide to the aerospace and chemical industries. He has worked for Lockheed Propulsion Co., Aerojet General Corp., Rockwell International, Atlantic Richfield, Gulf Chemical and Metallurgical Corp., and Thiokol Corp. He once directed propellant operations for the space shuttle boosters.

But Spencer now believes that his fortune lies beneath the Earth’s surface, not above it.

Using tools of his trade, including Shuttle Imaging Radar and LANDSAT maps, Spencer pinpointed likely liquid deposits beneath the Nevada desert, where the supposed ancient river runs within several hundred feet of the surface and could be most easily intercepted.

To find the buried treasure, he built a makeshift detector that combined ion accumulator technology, mass spectrometry and electromagnetic spectroscopy, all scientific applications he learned in his 33-year career.

The device, powered by a generator and piled in the back of his Ford Bronco, indicated that the river was brimming with water, not oil, he said. With the West mired in the worst drought of the century, Spencer was not disheartened; he figured that the ultimate drought-buster would be hailed as a hero.

“It is crude, but what can I say--it works,” Spencer said of the device, which he will not display or allow to be photographed. “All this equipment has been around for 20 years. I just put it to a different use.”

So far, Spencer has found no takers for his $5-million demand. Undeterred, he persistently hawks his potential discovery to everyone from President Clinton to the producers of TV’s “Unsolved Mysteries.” Last spring, he unsuccessfully tried to enlist Ross Perot, offering a share of his profits in exchange for the Texas billionaire’s political muscle.

“You just have to keep at it,” Spencer lectured from his plush motor coach parked at the edge of Cedar City, where he earns six figures annually as a chemical company consultant. “If more people know about it, they will eventually demand that I have the chance to prove it.”

Most water officials have denounced Spencer’s requested finder’s fee as outlandish. He says he would waive the fee if Nevada granted him exclusive rights to the water, but that demand has been equally unpopular.

Some have said Spencer’s ideas are on the fringe of science. Few, however, have dared dismiss his claim as pure folly--a reflection, some say, of how furious the search for water has become.

“Our best science indicates he is wrong, but science is never perfect,” said Mulroy of the Las Vegas water agency, which interviewed Spencer about his discovery and attempted--unsuccessfully--to verify it. “There is always the chance he could be right.”

Turnipseed, the Nevada state engineer, said the sheer volume of water Spencer claims to have found--the purported flow of his waterway would exceed that of the Colorado River--makes it difficult to believe. But he nonetheless encouraged Spencer to drill wells to prove the river’s existence.

But Spencer refuses to drill test wells without a financial commitment from Nevada. His lawyers advise against it, Spencer said, because other speculators, possibly the state itself, would probably try for a piece of the action once his wells divulged the river’s whereabouts.

Planting his boots in the sand, Spencer said he is prepared to take his secret to the grave. He nearly did when his motor coach was struck by lightning one day this summer, setting its tires ablaze and knocking his wife’s fillings loose.

“Man, some days I wish I had never even stumbled on it,” he complained in a voice made raspy, he said, by allergies and years of exposure to chemicals and propellants. “I didn’t do anything bad. I didn’t do anything crazy. Is it unfair to ask for a finder’s fee? I don’t think so.”

Even if Spencer’s river is never tapped, other grand dreamers and small-time speculators are eager to help cities meet their water needs. Over the next few years, residents throughout the arid Southwest are likely to get drinking water from a mosaic of new sources, water officials said.

Former newspaper reporter and Oakland attorney Franklyn Jeans has pocketed $2.5 million and stands to make millions more through a proposal to pump ground water from beneath his Fish Springs Ranch near the Northern California border to new housing developments north of Reno.

Jeans bought the ranch about 40 miles north of Reno as an alfalfa and cattle operation but realized its water rights were a far bigger prize. He sold Washoe County, Nev., an option on the rights and has been aggressively promoting the deal for five years.

Jeans has invested heavily in pushing the plan--an estimated $6 million to date--even launching a $100,000 TV and radio promotion campaign this spring. His tactics have so enraged some Nevadans that the state Legislature this summer passed a bill intended to make speculation more difficult by giving the state engineer greater authority to reject proposed water deals.

“We all consider water one of the public’s natural resources,” said Assemblywoman Vivian Freeman (D-Reno), who sought the legislation. “It belongs to all of us. For someone to make a large amount of money this way goes against the grain.”

East of Reno in the desert mining town of Elko, another big idea was born in the open pits of a gold mine.

Thomas H. Gallagher, president of Summit Engineering Corp., said he realized that there was money in water prospecting when mines in his native Elko kept flooding from an unknown source. Over two years, mine operators drained more than 500,000 acre feet of water, the equivalent of a 10-month supply for the city of Los Angeles, into the desert.

Gallagher and several associates formed Eco-Vision, and four years later, they have an elaborate proposal to collect enormous amounts of water being lost to desert evaporation and seepage. One of the partners is Sierra Pacific Resources, the parent company of Reno’s water and power utility, which put up $600,000 in hopes of making a killing for its stockholders.

A fifth-generation Nevadan who favors cowboy boots and neatly pressed blue jeans, Gallagher said his foray into water speculating has so far been a financial bust. He estimates that his engineering firm has suffered $10 million in lost business, mostly from distrustful clients in northern Nevada fearful that he is angling to steal their water. He has also sunk an estimated $600,000 into studies and exploration.

Still, Gallagher clings to the hope that his discovery will ultimately pay off. There is an almost blind faith among speculators, whose desire to strike it big keeps them going despite odds almost as unlikely as a snowstorm in summer.

“I am extremely optimistic that we are going to be able to develop this water and have resources we never even dreamed of,” Gallagher said from his hilltop office overlooking a sea of gray roofs in a new housing development west of Reno. “Now all I have to do is convince everyone else on the planet.”

Even if the big plans never deliver a drop, water agencies in the West are destined to begin buying their supplies from a growing variety of sources. Water is becoming a commodity, bought and sold on the wholesale market, then resold to homeowners and other customers--an increasing practice known as water marketing.

“It makes sense that if there are people who need water and are willing to pay a high enough price for the water, that someone . . . would find it attractive to sell the water,” said Jerry Gilbert, former manager of the East Bay Municipal Utility District in Oakland and now a consultant in the water marketing field. “There are a lot of people talking, negotiating, discussing and trying to complete water transfers.”

Water marketing has long been popular elsewhere in the country, particularly in Colorado, but arcane laws and entrenched bureaucracies have inhibited its spread in most of the West. In California, the recent long drought spurred the first widespread marketing through the state-run Drought Water Bank, but its deals were for one year only and no permanent rights were exchanged.

The new market in water has begun to raise troubling questions. Moving water from farms and ranches can mean transferring jobs and economic activity, and can alter the environment.

Officials in rural Yolo County said 400 to 500 jobs were lost in 1991 when many farmers sold their water to the California water bank and fallowed more than 45,000 acres of land.

“We just can’t be thinking of the fast buck to be made today,” Yolo County Supervisor Betsy Marchand said. “Water is not just something that can be mined and sent off. It is a community resource. Water belongs to everybody.”

Mulroy, the Las Vegas official whose parched area is among those with the most to gain, acknowledged that she is troubled that speculators will pay little heed to the consequences of their schemes. As water sales grow, Mulroy predicted, government agencies will be compelled to regulate the market to protect communities from overly aggressive prospectors.

“You have this amorphous thing known as a community that has a life of its own,” she said. “This is a dynamic that is as far removed from a Wall Street brokerage firm as you can get--there are families, businesses and heritage tied up in it. The private sector by definition is in it for profit. They want to make money.”


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