Sunday, November 6, 2011

Efforts to Delay Michigan’s Natural Gas Development Would Inhibit Job Creation in Michigan

Much excitement exists for the potential massive expansion of natural gas production in Northern Michigan in the Utica and Collingwood shale formations. Energy companies in May, 2010 spent $178 million at a single auction to buy oil and gas leases for state-owned land, more than seven times the state's previous auction record of $23.6 million set in 1981.

This flurry of interest was spurred by the results of a test well owned by Petoskey Exploration LLC, a subsidiary of Canada-based Encana Corp., a leading North American natural gas producer which produced about 2.5 million cubic feet daily in natural gas in its initial 30-day test period.

Energy companies have also acquired many mineral leases on private lands, all in anticipation of what new horizontal drilling and hydrologic fracturing technologies can squeeze from the Utica Shale, a formation beneath much of northern Michigan. (The Utica and Collingwood shale formations are not the only gas producing shale in Michigan, as the gas industry has been exploiting the shallower Antrim Shale for many years, which has produced more than 2.6 Tcf of gas since development began.)

Similar deposits in Ohio are estimated to create more than 200,000 jobs, increase Ohio’s economic output by $22 billion and increase tax revenues by more than $478 million per year according to an independent study commissioned by the Ohio Oil & Gas Education Program. The hope is that Michigan could benefit much the same.

“Michigan DEQ [Department of Environmental Quality] officials today announced a series of new regulations for the oil and gas industry that will increase public disclosure and better protect public health and the state's natural resources.

Hydraulic fracturing, or ‘fracking,' is a process used to extract natural gas by pressurizing underground wells with water and sand and chemicals to break-up formations and maximize well production. The process came under national scrutiny in recent months as other states discovered environmental damage from the ways that certain operators disposed of used ‘fracking fluid' and constructed their wells.

Fracking began in the 1940s. Michigan oil and gas operators have used the system on nearly 12,000 wells around the state since the 1960s without any instance of environmental harm from the fracturing process. Michigan's environmental safety record is attributable in large part to the state's tight standards for well construction and water disposal.

. . .

In recent Congressional hearings, Michigan has been lauded as a regulatory model for responsible production of gas and oil reserves. Today's announcement is part of the state's effort to further ensure environmental protection and public transparency.”,1607,7-135--256844--,00.html, May 25, 2011.

The U.S. Environmental Protection Agency (“EPA”) in a 2004 study concluded, “. . that there was little to no risk of fracturing fluid contaminating underground sources of drinking water during hydraulic fracturing of coalbed methane production wells.”

The EPA is doing an exhaustive study about fracking, with the preliminary report expected in late 2012 and a final report sometime in 2014. See

Meanwhile, a group of Michigan legislators have filed House Bills 5149, 5150 and 5151 with the intent to prevent any permit being issued that allows fracking in Michigan until well after the EPA study is concluded. A Michigan study would need to consider the EPA study, engage an advisory committee, hold public hearings on its proposed study findings or report, wait for the advisory committee’s recommendations, etc. 2015 is likely the earliest date that any permit could be issued under that timeline, and perhaps well past 2015.

We all want to protect our environment. And it makes sense to keep a keen eye on the study that the EPA is conducting. However, when Michigan needs to develop jobs for its citizens and produce revenue for the state to pay for education and other important needs, it seems unnecessary to delay increased production of our domestic energy resources when the Michigan DEQ, our environmental watchdogs in the state, believe it is safe to proceed under our rigorous current regulations.

Update December 9, 2011:

Additional support for the development of our resources using fracking comes from Pennsylvania, with the following report:

EPA: Drinking Water in Dimock, PA Uncontaminated by Fracking

December 5, 2011 at 2:10 pm

“EPA’s findings comport with administrator Lisa Jackson’s previous statements regarding the effects – or lack thereof – of hydraulic fracturing on drinking water. Earlier this year, Jackson told a House committee that she was “not aware of any proven case where the fracking process itself has affected water.”

Scott Perry, director of the Pennsylvania Department of Environmental Protection’s Bureau of Oil and Gas Management, echoed that position. “There has never been any evidence of fracking ever causing direct contamination of fresh groundwater in Pennsylvania or anywhere else,” Perry said in April.”

It is noteworthy, however, to see APNewsBreak: EPA theorizes fracking-pollution link. where it is reported that,

“The U.S. Environmental Protection Agency announced Thursday for the first time that fracking — a controversial method of improving the productivity of oil and gas wells — may be to blame for causing groundwater pollution. . . .

The EPA said its announcement is the first step in a process of opening up its findings for review by the public and other scientists.

"EPA's highest priority remains ensuring that Pavillion residents have access to safe drinking water," said Jim Martin, EPA regional administrator in Denver. "We look forward to having these findings in the draft report informed by a transparent and public review process."

The EPA also emphasized that the findings are specific to the Pavillion [Wyoming] area. The agency said the fracking that occurred in Pavillion differed from fracking methods used elsewhere in regions with different geological characteristics.

The fracking occurred below the level of the drinking water aquifer and close to water wells, the EPA said. Elsewhere, drilling is more remote and fracking occurs much deeper than the level of groundwater that would normally be used. . . . “

Nonetheless, we can expect the environmental groups jumping on this “possible” link as “PROOF” that fracking should not be used. In fact, the article goes on to say, “Environmentalists welcomed the news of the EPA report, calling it an important turning point in the fracking debate.” It sounds strange for an environmental group to celebrate possible pollution. But, it is all politics….. – and it does aid the environmental groups’ fundraising efforts.

For more information, see:

  1. Record amount spent on oil, gas leases: Energy companies spend $178 million at single auction, Traverse City Record-Eagle, May 8, 2010,
  2. Hydraulic Fracturing of Natural Gas Wells in Michigan, Updated May 31, 2011,
  3. Hydraulic Fracturing in Michigan,,4561,7-135-3311_4111_4231-262172--,00.html 
  4. Hydraulic Fracturing in Michigan,
  5. Horizontal Wells – Hydraulic Fracturing in Michigan,
  6. For a pictoral history of gas wells in Michigan by five year increments, see,4561,7-135-3311_4111_4231-146189--,00.html 
  7. Map showing the distribution of the Utica-Collingwood Activities and a
    List of Utica-Collingwood wells
  8. Research & Commentary Hydraulic Fracturing in Ohio, by John Monaghan, Heartland Institute, October 24, 2011,

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