Despite low prices and a worldwide glut of oil and natural gas, Aztec Producing Company of Traverse City is teaming up with Newstar Energy, a Canadian firm, to convince the Engler Administration to lift a moratorium on coastal drilling and reopen Lake Michigan for aggressive energy development.

Meanwhile, the state Senate is considering two competing proposals:

• One bill would ban the practice of drilling wells from the shoreline to oil and gas reserves beneath the Great Lakes. Sponsored by Sen. Gary Peters (D-Bloomfield Crossing), it is nearly identical to a bill introduced in Congress last year by U.S. Rep. Bart Stupak (D- Menominee). (See the Spring 1999 issue of the Great Lakes Bulletin.) State Rep. Julie Dennis (D-Muskegon) has a companion measure to Sen. Peters' bill in the House of Representatives.
• The other bill, sponsored by Sen. Bill Schuette (R-Midland), is an industry-backed "protection" measure. It would do nothing more than make into state law a recent DEQ regulation to drill wells no closer than 1,500 feet from the water.

Public hearings on the bills will occur this fall in the Senate Economic Development, International Trade, and Regulatory Affairs Committee, which Mr. Schuette chairs.

High Stakes
The partisan debate in the Legislature reflects the extraordinary stakes in a historic clash over resource development, clean water, and the magnificent high dunes of the Lake Michigan coast.

The dispute also comes as local government officials consider the health effects of drilling into reserves containing high concentrations of hydrogen sulfide (H2S), a toxic byproduct of oil and gas production. Last May, Manistee County's Filer Township established the state's best H2S public health protection program — other coastal communities are likely to duplicate the strict new regulations.

Of the 13 wells "slant drilled" from the shoreline below the Great Lakes since 1979, 10 are in Lake Michigan. The practice of slant drilling to tap oil and gas reserves thousands of feet offshore was virtually unknown to the public until the spring of 1997, when the state Department of Natural Resources quietly leased 200 acres of state-owned bottomland beneath Lake Michigan to Newstar Energy.

Ever since, slant drilling beneath the lakes has been among the most visible environmental issues in the Midwest. Public opinion throughout the state is heavily opposed to it. Leading regional newspapers also are opposed, citing the extensive environmental damage that could follow a major accident.

"The legislators who represent northern Lower Michigan should support a ban on drilling for oil and gas under the Great Lakes," said the Traverse City Record-Eaglelast May. "If any issue should be immune from party politics, it should be the protection of this natural resource."

Playing Politics
In October 1997, Gov. John Engler publicly endorsed the findings of his Michigan Environmental Science Board, which said that current regulations fail to protect the coast and that a better planning process involving residents and local governments was needed. Then in April 1998, as the election campaign and public opposition to Great Lakes drilling both were heating up, the Governor ordered a temporary moratorium. The DNR stopped leasing Great Lakes bottomlands, and the DEQ suspended action on any pending drilling permits along the coasts.

Instead of using the time provided by the moratorium to implement the MESB's recommendations, however, senior Administration officials have been aggressively promoting development. For example, last December DEQ Geological Survey Division Chief Harold Fitch traveled to Salt Lake City to rally support for Great Lakes drilling from the Interstate Oil and Gas Compact Commission, a governmental association for Michigan and 36 other oil and gas producing states.

At Mr. Fitch's request, the group endorsed a resolution that asserts Michigan's regulations adequately protect the shoreline, and "supports and approves of the extraction of oil and gas underlying the waters of the Great Lakes."

Emboldened by the resolution, industry executives this spring stepped up their campaign to open Lake Michigan to drilling. In a letter to Gov. Engler last May, Aztec Producing said their 21-year-old well field along the Manistee County coast, which includes a well that taps under Lake Michigan, was going dry. The company's $15 million investment, they asserted, was in jeopardy unless 1,200 acres of state-owned lands at the bottom of Lake Michigan are leased for slant drilling. Saying they had "waited patiently" for the leasing moratorium to end, company executives argued that opening the coast to new drilling would "help maintain the survival of a vital industry."

"Not Worth the Risk"
It is not clear how many wells Aztec and other companies would drill under Lake Michigan from the Oceana, Mason, and Manistee county coasts. In recent public hearings industry executives said there would be no more than 30. But such predictions have proven unreliable in the past.

For example, in the mid-1980s state and industry officials assured local residents that the Antrim natural gas formation in northern Lower Michigan would be a "modest" development. By 1999 more than 6,500 wells had been drilled, and during much of the last decade the 10-county production zone was the most intensively drilled region in North America.

Sen. Peters, the Democratic sponsor of the proposed state ban on Great Lakes drilling, said he is counting on calls and letters from the public to convince the Republican-controlled Legislature to put politics aside and back his bill. Drilling under the Great Lakes is "simply not worth the risk of contamination," he said. "The Great Lakes are too important to our survival and our tourism economy to allow directional drilling."— With reporting by Arlin Wasserman

CONTACTS:Sen. Gary Peters, 517-373-7888; Rep. Bart Stupak, 202-225-4735; Sen. Bill Schuette, 517-373-3447; Harold Fitch, 517-334-6923; Aztec Producing Company, 231-929-0798.