Testimony by Keith Schneider
Executive Director of the Michigan Land Use Institute
Before the Department of Environmental Quality
Grand Rapids
July 14, 1997

Good evening. I am Keith Schneider, executive director of the Michigan Land Use Institute, a nonprofit environmental research and advocacy organization based in Benzonia. On behalf of our board, staff, and more than 700 member organizations, businesses, and families, I commend you for holding this hearing.

During the past two years, as many of you are aware, the Institute has been a leading voice for more effective oversight of energy development in Michigan. Our work, in collaboration with 20 other citizens groups and local governments, has helped to identify several important flaws in the state’s management of the oil and gas industry. We believe that a hasty review and permitting of oil and gas wells beneath Lake Michigan falls into that category.

The DEQ is now reviewing applications by a Canadian company, Newstar Energy USA, to drill two more oil and gas wells beneath Lake Michigan. The Institute has undertaken a thorough review of the Newstar application. Our assessment was driven by the understanding that Lake Michigan is globally unique. It is the principal drinking water source for millions of people, a prime recreational resource, and is part of an ecosystem that contains 20% of the planet’s fresh water.

Thus we are convinced that drilling beneath Lake Michigan requires a far more intensive level of scrutiny than the DEQ has yet mustered for oil and gas development. The DEQ’s hands-off policies toward the energy industry during the 1990s leave significant doubts about the agency’s resolve to effectively oversee oil and gas development on Lake Michigan’s shoreline.

Background on the Drilling Proposal
Newstar already drilled one well in March 1997, from a site along the Lake Michigan coast north of Manistee. Newstar is using directional drilling technology to tap energy reserves that are 5,000 to 5,800 feet deep and up to 2,600 feet offshore.

Nine other directional oil wells have been drilled without much public notice under Lake Michigan since 1979. Statewide interest in the drilling was sparked in May when property owners along Lake Michigan contacted environmental organizations, and the news media.

In June, the Department of Natural Resources issued leases to Newstar for nearly 200 acres of state-owned Lake Michigan bottomlands for the two new wells.

The DEQ asserts that directional drilling does not endanger Lake Michigan. Newstar’s wells will be drilled through bedrock thousands of feet beneath the bottom of the lake, and that the rock acts as an impermeable seal that will not allow gas or oil to leak into the water.

The greatest potential risk to the environment, though, comes at the well site. A fire, blowout, or explosion at the well-head could cause oil and gas to escape into Lake Michigan.

Our research identified an array of other safety and legal issues that need to be addressed by the state, such as:

• It is not known how many new coastal sites will be proposed if Newstar’s directional drilling development is successful. Many more sites could be constructed in a coastal ecosystem already under intense development pressure.
• The Niagaran formation, which Newstar is seeking to tap, is a known source of hydrogen sulfide (H2S), a poisonous gas. Other wells in the Manistee area contain high concentrations of H2S. Safety issues associated with H2S have not been adequately addressed.
• Jim Olson, the Institute’s general counsel, also has raised some significant legal questions in a letter to the DEQ. Mr. Olson said that the Great Lakes Submerged Lands Act, a cornerstone of the state’s public trust doctrine, prohibits Michigan from entering into lease agreements for the benefit of private interests. The leasing of Great Lakes bottomlands, said Mr. Olson, can only be undertaken with legislative approval.

"The leasing or permitting for hydrocarbon exploration of our Great Lakes waters and bottomlands in such instance constitutes an impermissible plundering of the public trust, and any request should be denied," said Mr. Olson.

MLUI Proposal
With these considerations in mind, we call on state government to take the following steps before issuing any more permits for drilling under Lake Michigan:

1. Undertake a formal environmental impact statement that addresses the potential risks to drinking water, the coastal environment, fisheries, land use, and communities from coastal directional drilling.
   The environmental impact statement also should review the feasible and prudent alternatives to drilling along the coast.
2. Conduct a thorough examination of the requirements of the Great Lakes Submerged Lands Act, and issue a formal opinion about the legality of allowing directional drilling beneath Lake Michigan.
3. Complete an assessment of the potential risks to public safety from coastal wells that contain high concentrations of hydrogen sulfide, and establish formal guidelines prohibiting wells that pose an unacceptable risk to residents from being installed in populated areas.