Starting at 9am this morning, the Michigan Department of Natural Resources will hold an auction to lease state-owned drilling rights for oil and natural gas.
The state is offering drilling rights on more than 108,000 acres in 23 counties. These auctions are usually held twice a year. The minimum bid is $12 dollars an acre.
Mary Uptigrove is the acting manager of the DNR’s Minerals Management Section. She says acquiring drilling rights is the first step in exploring for oil and gas.
“The lease is just a proprietary right that’s administered by our department. It does not give them the right to actually start drilling a well. They have to seek other approvals from the Department of Environmental Quality for the drilling permit.”
The leases last five years, and the companies have the option to extend them.
Uptigrove says industry groups usually nominate parcels for the auction. The state gets 1/6 of the royalties of any oil or gas that comes out of the ground. That money is used to maintain state and local parks and to buy land.
Maryann Lesert lives near the Yankee Springs Recreation Area in Barry County.
She’s worried the auction will lead to drilling under the park land... especially a kind of drilling for natural gas called horizontal hydraulic fracturing, or fracking. (To learn more, check out this recent article by Michigan Radio's Lester Graham about the benefits and risks of fracking)
“It’s beautiful land, it has beautiful bodies of water and the environmental and water impact threats from fracking are of great concern.”
Protesters are expected Tuesday morning outside of a planned auction of oil and natural gas lease rights on public land.
Lease rights on more than 100 thousand acres of public land will be available in the auction in Lansing.
Mary Uptigrove is the acting manager of the Minerals Management Section of the Department of Natural Resources. She says much of the land on the auction list is there by the request of the drilling industry.
“They may know…areas where… current development is occurring….and they want to explore for additional development,” says Uptigrove.
Hydraulic fracturing or "fracking" has created no shortage of controversy recently. And as Michigan Radio's Rebecca Williams reported last week, debate over this controversial method of extracting oil and gas from deep inside shale deposits has made its way to the Michigan statehouse.
Oil is hovering around $100 a barrel. In 2002, oil was about $20 a barrel.
Natural gas is currently at 2002 prices. In fact, the price of natural gas is half of what it was one year ago.
Why? Because of abundant supplies of natural gas, what the U.S. Energy Information Administration calls “robust inshore production.”
There is a glut of gas.
This increased supply is mostly due to hydraulic fracturing. More importantly, a newer way to use the drilling method, horizontal hydraulic fracturing. Horizontal ‘fracking’ has made it easier and cheaper to extract natural gas from shale deposits in the U.S. and other sites around the globe.
Horizontal fracking has meant a boom in gas drilling and production. It’s meant more jobs in certain areas of the country. It’s meant greater dependence on domestic energy, and less dependence on foreign energy.
Because burning natural gas emits about half of the CO2 emissions of coal or oil, it means less of the greenhouse gases that are causing climate change.
It’s meant families can heat their homes more cheaply.
Hydraulic fracturing is getting some attention this week in Lansing. You’ve probably heard it called fracking. It’s a method of drilling for natural gas.
Drillers use fracking to get to the gas that’s trapped in tight shale rock formations below the water table.
Fracking pumps a mixture of water, sand and chemicals into a well under high pressure to force open the rock and extract the gas.
In Michigan, drillers have used the fracking method for more than 50 years and the state regulates the industry.
But what’s new... is that drillers want to turn their drills and dig horizontally along the shale rock. That makes the well site much more productive. But it also uses a larger amount of chemicals and much more water - anywhere from a few million gallons of water to as much as eight million gallons of water per well. After it’s used, that water is usually disposed of in deep injection wells.
Right now in Michigan, there are two experimental wells that are using the horizontal fracking method.
This week the Michigan House of Representatives’ Subcommittee on Natural Gas put out a report encouraging more natural gas production in the state.
Michigan politicians are beginning to wrestle with an issue that's proven to be contentious in other parts of the country.
"Fracking" or hydraulic fracturing is a controversial method of extracting natural gas by pumping water, sand and chemicals into deep underground wells. Both opponents and advocates of the process have started taking action in the state legislature.
An overflow crowd filled a public meeting last night in Brooklyn, south of Jackson. Many in the crowd are worried about the environmental impact of a growing oil drilling operation in the Irish Hills.
"There is nothing they can do here to keep from having an accident...It's going to happen," proclaimed one of the people in the audience.
The crowd at the public meeting demanded answers from a panel of oil industry executives and state officials about drilling going on in the Irish Hills. The region is becoming one of the leading crude oil production centers in Michigan.
Tim Baker is a vice president with West Bay Exploration, the company doing much of the drilling. He admits they need to do a better job explaining how they are trying to drill safely.
“These people have a lot of good questions. This is a beautiful area. There’s a lot of beautiful lakes and streams here," Baker said after the meeting, "We wanted to communicate to them that we are trying to develop (the oil) the best way possible.”
Many Irish Hills residents are worried oil drilling may end up lowering their property values.
Critics say it has caused pollution and dried-up water wells in other states.
State Representative Jeff Irwin thinks the procedure needs to be more tightly regulated as it becomes more common in Michigan.
He said more study is needed on the potential effects of deep-rock fracking on the world’s largest supply of fresh water.
“We have a tremendous amount to protect here in Michigan with our surface waters and our Great Lakes,” Irwin said. “When you think about what makes Michigan a special place to be, it’s really our water. It’s the one thing that we have that makes us unique over and above anyplace in the world. We have the best water resources in the world.”
Irwin said new rules should include limits on groundwater withdrawals and full disclosure of all chemicals used.
Brad Wurfel with the state Department of Environmental Quality said Michigan has some of the strictest fracking regulations in the country, and that the process has been safely used in the state's shallow rock for decades.
“If you look around the state, you’ll see where oil and gas producers over the past 60 years have fracked probably on the order of around 12,000 wells,” said Wurfel.
Wurfel said the state updated its drilling regulations in May to address hydro-fracking deeper into the rock.
Consumers Energy says its natural gas customers will be paying less this winter to heat their homes.
Dan Bishop is a Consumers spokesman. He says more plentiful supplies are leading to a 3 percent cut in natural gas prices.
“In recent years there’s been a large amount of new natural gas discoveries in the United States and in Canada. And that extra increase of supply has really put downward pressure on prices," says Bishop.
Lynna Kaucheck is with Food and Water Watch in Detroit. She says northern Michigan is a current hotspot for fracking exploration.
“The northern part of the lower Peninsula sits on the Collingwood-Utica shale which is very deep deposits of shale gas. And so right now a lot of out of-state-companies are purchasing mineral rights so they can begin horizontal fracking for natural gas.”
Kauchek says that could to lead to chemically-contaminated groundwater, and pose a risk to the state’s agricultural and tourism industries.
“We don’t believe that fracking can be done safely. Especially not the way that they’re doing it right now.”
State environmental regulators say the gas is so deep in the ground that fracking shouldn’t affect water supplies. They acknowledge some concerns, but say the practice is generally safe.
Since producing a Michigan Watch series on the "hydraulic fracking" boom in Michigan last September and October on Michigan Radio, not much has been said or done about this method of drilling for natural gas.
It's not yet clear whether it will damage underground water sources. It does raise questions as to whether Michigan regulations are adequate to protect the environment while exploiting the gas reserves in the state.
Hundreds of brokers for oil and gas companies are offering landowners in northern lower Michigan contracts to drill for natural gas. Energy companies are betting the access to deep shale gas reserves will pay off big. But landowners don't always know about the risks.
An exploratory well has produced good results from a new source of natural gas in northern lower Michigan. So, energy companies have hired agents, called landmen to go knocking on doors of private landowners, trying to get them to sign contracts to lease their land for drilling.
A regulatory agency in Michigan says it can handle a new type of drilling for natural gas. That's what regulators in other states said before complaints about water contamination and leaking gas started coming in.
When the Great Lakes water levels fell a few years ago, people began thinking more about how much water we use. Now, this new kind of drilling, called horizontal hydraulic fracturing, again is causing concern about how we use water.
Water already has been used for vertical hydraulic fracturing in thousands of gas wells in Michigan. It takes about 50,000 gallons to drill each well and fracture shale layers underground to release the natural gas.
Horizontal fracturing, also called horizontal fracking, uses a hundred times more water.
Lester Graham of Michigan Watch and Rebecca Williams from the Environment Report are bringing us a series of reports on what might be a big part of Michigan's future: energy companies moving in and using a practice called hydraulic fracturing, or "fracking," to get at gas deposits buried deep under Michigan.
Just how interested are energy companies in these gas deposits? Graham reports
Environmentalists are concerned drilling for new sources of natural gas in Michigan could contaminate water. They're basing that on reports from other states that blame a new method of drilling for contaminating their water.
This new kind of drilling is called horizontal hydraulic fracturing. Until recently in Michigan, it was only used in vertical wells. Drill down, pump water, sand and chemicals at high pressure into a layer of shale, fracture it and release the natural gas trapped there.
Michigan could be seeing the beginning of a new boom in drilling for natural gas. Leases for drilling rights are going for unheard of prices in northern-lower Michigan.
Drilling for natural gas in Michigan is not new. The first natural gas production began in the 1930s according to the Michigan Public Service Commission. Since then we've seen drilling booms come and go.