Nearly three years after Michigan Governor John Engler ordered a moratorium on drilling for oil and gas beneath the Great Lakes, the state Department of Natural Resources wants to lift the ban. The first step occurred on February 8th, when a Michigan Natural Resources Commission subcommittee formally opened new discussions about allowing energy companies to tap publicly owned oil and gas reserves beneath the Great Lakes. See Recent History of Oil and Gas Development in the Great Lakes.

The NRC’s discussion on coastal drilling prompted broad news coverage and federal and state lawmakers immediately introduced legislation to block Great Lakes drilling. In addition a new public opinion poll in late February found 59 percent of state residents opposed drilling beneath the Great Lakes. See State and Federal Legislative Action.

The Engler administration’s action came as President George W. Bush and Energy Secretary Spencer Abraham, a former U.S. senator from Michigan, voiced their support for new Congressional legislation to expand domestic supplies of oil and gas. Natural gas prices are at record levels in the United States.

In 1998, when the moratorium on coastal drilling was established in Michigan, the DNR said it needed time to work with the state Department of Environmental Quality and communities to establish a plan for future development. See DEQ Action.

The DNR also said it wanted to study how to implement recommendations made in 1997 by the Michigan Environmental Science Board, a panel of experts appointed by Gov. Engler. See Michigan Environmental Science Board Findings.

Among the Science Board’s recommendations: Strengthen protections for residents and shoreline habitat by establishing a comprehensive land use plan for oil and gas development. The Science Board also urged the DNR and the DEQ to limit future development to areas where drilling has already occurred. The recommendations were ignored. See State Assurances Not Fulfilled.

The Michigan Land Use Institute opposes any efforts to tap oil and gas reserves beneath the Great Lakes until state regulatory agencies enact the stronger standards that the Science Board recommends. Until then, the Institute supports an indefinite ban on oil and gas drilling beneath Michigan's Great Lakes. See Michigan Land Use Institute Position.

Recent History of Oil and Gas Development in the Great Lakes [top]
In the spring of 1997, the DNR issued drilling leases to Newstar Resources, a Canadian energy company, for nearly 200 acres of state owned Lake Michigan bottomlands. That summer, the Department of Environmental Quality, which regulates energy development, issued Newstar a permit to drill for oil and natural gas beneath Lake Michigan from wells on the shore of Manistee County.

The Institute studied the issue. Together with the Lake Michigan Federation, the West Michigan Environmental Action Council, and other organizations the Institute called for a moratorium on drilling new wells to allow time for a full analysis of the potential risks and to establish more effective regulations.

The Newstar leases are still active and provide an opportunity for oil and gas exploration beneath Lake Michigan. Newstar has announced plans to use directional — or "slant"— drilling technology to tap energy reserves that are 5,000 to 5,800 feet deep, and up to 2,000 feet offshore.

For background on drilling in the Great Lakes see:
http://www.lakemichigan.org/oil.html

Michigan Environmental Science Board Findings [top]
At the direction of Gov. Engler, the Michigan Environmental Science Board studied how directional drilling under the Great Lakes would pose risks to land and water. The Governor’s charge to the Board — to assess the impact that directional drilling of oil and gas wells has on the Great Lakes — was broad enough to incorporate all of the issues that citizens raised.

A copy of the governor’s charge to the Science Board is here: http://www.mesb.org/pubs/dd/dd-chg.html

In October 1997, the panel issued its findings in a seven-page report. It concluded that current state policy was not adequate to protect one of the world’s superb scenic coasts from the land use risks associated with new wells, roads, pipelines, and processing stations.

The panel members, all of whom Gov. Engler appointed, issued specific recommendations for improving the planning and oversight of hydrocarbon development from the shoreline, and the governor publicly embraced them.

. The MESB offered a number of recommendations, including:

• Ensure developers use existing surface wells, service roads, and pipelines rather than install new equipment in fragile coastal areas.
• Establish a drilling setback of at least 1,500 feet from the shoreline.
• Develop a comprehensive inventory of natural features along the coast.
• Prepare energy development plans that include the input of local residents, elected officials, property owners, and conservation groups.
• Strengthen regulations for waste disposal and geological evaluation during permitting of wells.

A summary of the Science Board’s report is here:
http://www.mesb.org/pubs/dd/dd-fc.html

A copy of the complete Science Board report is here:
http://www.mesb.org/pubs/dd/dd-rpt.html

A copy of the Institute’s 1997 testimony to the Science Board is here:
Text-->Text | Word Doc-->Word Doc | PDF-->PDF

A copy of the Institute’s 1997 testimony to the DEQ is here:
Text-->Text | Word Doc-->Word Doc | PDF-->PDF

State Assurances Not Fulfilled [top]
On October 29, 1997 the DEQ and the DNR issued press releases announcing that "the state will move swiftly to implement the science panel's key recommendation." In its statement, the DEQ specifically committed to limiting new wells to those areas where oil and gas development infrastructure already exists.

The DEQ press release is here: http://www.deq.state.mi.us/pr/1997releases/971029.html

Weeks later, the DEQ issued a Supervisor of Wells Instruction to put several of the Science Board’s recommendations in effect. The Instruction prohibited new oil and gas wells, or related industrial installations, unless the following conditions were satisfied:

1. New oil and gas wells must be located at least 1,500 feet from the shoreline.
2. No new wells or related infrastructure are allowed in areas zoned primarily for residential or recreational purposes.
3. No new wells or infrastructure are allowed on public land along the shoreline that is used primarily for recreation.
4. New wells and equipment can not be visible from the shoreline or from public recreation areas. Companies can satisfy this condition by building berms or planting vegetative screens.
5. New wells and related equipment are barred from environmentally sensitive areas and from designated "critical dunes."
6. "Mud pits," which are used to dispose of oil and gas wastes, are barred along the shoreline.

In April 1998, the DNR also enacted a temporary administrative prohibition against leasing Great Lakes bottomlands for oil and gas exploration to give the agencies time to implement the Science Board's findings.

To date, though, neither the DNR nor the DEQ have taken steps to act on the Science Board’s central recommendations to:

1. Establish a process to conduct comprehensive inventories of environmental features and existing uses of land in areas where drilling is proposed.
2. Prepare a careful energy development plan to avoid land use conflicts in areas used for recreation and tourism, and where industrial development could harm environmentally sensitive areas.
3. Invite citizens, property owners, elected leaders, and conservation groups to participate in the planning and oversight of oil and gas development.

For a copy of the Institute’s Critique of the Engler administration’s response to the Science Board’s recommendations see:
Text-->Text | Word Doc-->Word Doc | PDF-->PDF

Michigan Land Use Institute Position [top]
Well-qualified geologists assert that directional drilling does not directly endanger Lake Michigan. Companies propose to drill new wells through bedrock thousands of feet beneath the bottom of the lake. Bedrock acts as an impermeable seal that will not allow gas or oil to leak into the water, according to petroleum engineers.

After months of research in 1997, and after reviewing available data since then, the Institute can find no credible evidence that contradicts this view.

The Institute concludes that directional drilling gives oil and gas companies much greater flexibility in locating well heads on the surface so they can avoid sensitive environmental areas. We also conclude that wells drilled 4,000 feet beneath the Great Lakes bottom have scant likelihood of leaking oil or gas into the water.

The greatest potential risk to the environment and public health, the Institute finds, 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 the state needs to address:

• If directional-drilling development is successful, it will be possible to construct many more sites in a coastal ecosystem already under intense development pressure.
• The Niagaran formation, which the energy industry wants to tap, is a known source of hydrogen sulfide (H2S), a poisonous gas. Other wells in the Manistee area contain high concentrations of H2S. Hydrogen sulfide is a public safety concern and merits much greater state oversight.
• Significant legal issues remain. The office of the U.S. Attorney General for western Michigan stated in 1998 that the DNR and DEQ may not have authority to allow exploration beneath the Great Lakes without federal involvement. Also, Jim Olson, the Institute’s general counsel, argued 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. Only the Legislature can approve the leasing of Great Lakes bottomlands, said Mr. Olson.

With these considerations in mind, the Institute has repeatedly called on state government to take the following steps before issuing any new permits for drilling under the Great Lakes.

1. Continue the moratorium on leasing bottomlands for exploration or permitting any new wells beneath the lakes.
2. Conduct an environmental inventory and a comprehensive development plan as recommended by the MESB. Without such plans, rampant industrialization of the shoreline could harm many coastal communities that are heavily reliant on tourism.
3. 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.
4. 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.
5. 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 from being installed in populated areas that pose an unacceptable risk to residents.

In the 1990s, as more than 6,000 Antrim natural gas wells shredded hundreds of thousands of acres of forest and damaged streams across northern Michigan, the state did not exhibit enough interest to require more sensitive management of oil and gas development.

The cost of repeating this mistake along Michigan’s coast is too great. Drilling beneath Lake Michigan requires a far more intensive level of oversight than the DEQ or the DNR mustered for oil and gas development across Michigan’s north woods. Further, the DEQ’s hands-off policies toward the energy industry during the 1990s leaves significant doubt about the agency's resolve to effectively oversee oil and gas development on Lake Michigan's shoreline at the start of the 21st century.

As a result of these concerns, the Institute supports an indefinite ban on directional drilling beneath the Great Lakes until a far more rigorous hydrocarbon development plan is completed that weighs competing interests along the coast and protects the environment, communities, and citizens.

State and Federal Legislative Action [top]
In February 2001, Senator Gary Peters (D-Bloomfield Twp.) reintroduced a measure, Senate Bill 9, to ban new drilling for oil and gas beneath the Great Lakes. Also in February 2001, Senator Bill Schuette (R-Midland) reintroduced a competing proposal, Senate Bill 214, to affirm the DEQ position to allow oil and gas exploration beneath the lakes, but with tighter restrictions.

To read the full text of Senate Bill 9, see:
http://michiganlegislature.org/isapi/nls_ax.dll/BillStatus?
LegSession=20012002&DocType=SB&BillNum=0009

To read the full text of Senate Bill 214, see:
http://michiganlegislature.org/isapi/nls_ax.dll/BillSearch

On March 14, 2001, Michigan Congressman Bart Stupak (D-Menominee) reintroduced a measure, first introduced in 1998, to ban directional drilling.

Rep. Stupak questioned the Engler administration’s previous efforts to block his bill. "I've seen inconsistent policies from the DEQ and DNR," said Mr. Stupak. "Their arguments against my legislation show a total lack of sensitivity to the overall impact on Michigan's environment and its people."

DEQ Action [top]
The state Department of Environmental Quality is pressing to open Michigan's world class coastline to more wells. In December 1998, the Engler administration sent Hal Fitch, the chief of the DEQ Geological Survey Division, to Salt Lake City. Mr. Fitch’s assignment: Gain a formal resolution of support for Great Lakes drilling from the Interstate Oil and Gas Compact Commission, a national association representing the governors of the 37 oil and gas producing states.

The IOGCC found that "setback requirements and other appropriate protective measures are imposed by the states to provide proper and effective protection of the shoreline areas" and "minimize impacts on the environment and on other natural resources," — a direct contradiction of the findings of the governor's Science Board.

To read the IOGCC resolution see:
http://www.iogcc.state.ok.us/MISCFILE/
Reauthdoc.htm#RESOLUTION 98.122
(Reauthorized 2000)

To learn more about the IOGCC see:
http://www.iogcc.oklaosf.state.ok.us/

The Permitting Process [top]
In order to tap reserves beneath the Great Lakes, Michigan oil and gas developers must lease a specific parcel of lake bottom from the DNR. They must also secure a permit to drill a well from the DEQ.

The DNR leases the right to develop oil and gas reserves beneath publicly owned lands. They act as a manager for the citizens of Michigan who own more than two million acres of bottomlands. The leases either are offered at an auction or through a direct arrangement with a specific company. In either case, the company pays an up front fee or "bonus" to the DNR and then pays a portion of future revenues.

The DNR uses this money for administrative purposes and to fund the Natural Resources Trust Fund, which pays for the purchase of recreational lands.

After securing a lease, the developer also must secure a well permit from the DEQ's Geological Survey Division. Current rules limit well sites to the "uplands" — or on-shore areas — and must be at least 1,500 feet from the water.