SOME palaeontologists use tweezers and scalpels for excavating prehistoric fossils. When Peter Larson goes dinosaur hunting, he clears his sites with a Bobcat mini-bulldozer and digs up promising bones with the bayonet from an M16 rifle.

His methods have upset numerous academics, but Larson has become the world’s most successful dealer in the bones of Tyrannosaurus rex and countless other prehistoric specimens retrieved from the great western plains of Montana, Wyoming and South Dakota.

Ten years after his release from a federal prison when he fought off damaging allegations of bone-stealing, Larson is riding a new palaeontology boom that has turned the hunt for dinosaur skeletons into a thriving multi-million-dollar industry.

Soaring worldwide demand for museum-quality dinosaur exhibits has come at a pivotal moment for many western ranchers, who graze their cattle across millions of acres of what is known to geologists as the Hell Creek Formation, where vast numbers of dinosaurs expired 65m years ago.

After almost a decade of severe drought, ranchers are becoming a “dying breed”, Larson explained last week. As land values have risen, so have property taxes. “But the only thing you can grow out here is grass,” he said. “That limits your options to cattle or sheep, unless you can find another source of income.”

Some ranchers earn modest sums from tiny oil wells dotted about their land. Others take second jobs in towns. But a third group has turned to dinosaurs to help to save their farms.

From selling dinosaur bones on eBay to offering tourists “fossil adventures”, western ranchers are slowly shedding their traditional reserve and opening their lands to dino-diggers. Leading the charge is this 55-year-old geologist adventurer who has become known as the Indiana Jones of South Dakota.

“I’m sure some of my academic colleagues would cringe to see how we hunt for bones,” Larson said, grinning broadly as he watched his Bobcat scoop away soil several inches at a time from the edge of a gully on a ranch near Faith, South Dakota.

There was a faint clunk as the bulldozer hit a submerged object. “Whoa, let’s see,” Larson said, squatting in the dirt and gingerly probing the earth with his trusty bayonet.

The bulldozer’s blade had sliced away a small portion of what was clearly bone, but Larson was unapologetic. He once excavated a T rex skeleton from a site almost as large as a football field. “No one in their right minds could dig a hole that big by hand,” he said.

Within minutes of the Bobcat strike, Larson and his team were lying flat on the ground, scraping earth away from what was increasingly looking like a very large and only slightly damaged bone. “I think there’s a really good chance this could be T rex,” Larson said.

Neal Larson, his brother and business partner, came over to look. “Holy s***,” said Neal. “Something big.”

Based a few miles from the Mount Rushmore monument in the Black Hills of South Dakota, Larson’s headquarters look at first glance like any of the other tourist traps that line the streets of Hill City (pop: 860). Yet once you pass the cheesy cut-out dinosaur sign and enter through the “Cretaceous coffee bar”, an extraordinary spectacle awaits. Crammed into a small side room is the museum of the Black Hills Institute of Geological Research, run by the Larson brothers.

It is filled with the specimens that Larson has been collecting since he was an eight-year-old growing up on a South Dakota ranch. Pride of place goes to the towering skeletons of a T rex, a vast acrocanthosaurus and a magnificent triceratops.

Framed newspaper cuttings on a wall also tell the story of the T rex named Sue that turned out to be Larson’s greatest triumph and almost his ruin. Discovered by one of his team on a ranch near Faith in August 1990, Sue was the largest and most complete T rex ever excavated.

She was eventually bought by the Field Museum in Chicago for a record fossil price of $8.36m, but not before Larson had been arrested on bone stealing charges that might have earned him 353 years in prison and $13m in fines.

A jury eventually dismissed all charges relating to the excavation of Sue, which turned out to have been taken from land that a private rancher was leasing from the government. But Larson served 18 months for an unrelated currency offence arising from the sale of fossils abroad.

The Black Hills Institute not only survived its owner’s incarceration; it has also emerged as one of the world’s leading suppliers of both dinosaur skeletons and museum quality replicas made from resin. Larson has sold nine copies of his acrocanthosaurus at $120,000 each and nearly 40 skeletons of Stan, another T rex excavated in South Dakota, at $100,000 each.

His customers are museums, theme parks and art collectors, some of whom have been inspired by the works of Damien Hirst to invest heavily in objects from the natural world. “We’ve sold one full-size T rex for someone’s living room,” Larson said.

Increasing interest in fossils has prompted several of the world’s leading auction houses to hold palaeontology sales: a series of Bonhams sales in Los Angeles is expected to bring in $3.5m this year.

This is all good news for Kris-ten Stauffer and her husband, Chad, who have turned part of their Wyoming ranch into “Paleo Park”, a kind of adventure camp for amateur fossil hunters.

Like many other ranchers in the area, the Stauffers have been forced to diversify to survive. They have so far found eight complete dinosaurs on their ranch, including two triceratops excavated by Larson. With a triceratops skull fetching

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