Great Lake Bulletin Spring 1998

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Terra Prohibited From Leasing
State Lands
As a consequence of the state's audit findings, Terra Energy will not be allowed to lease minerals onpublic lands. The action, taken last December by the Department of Natural Resources, followed Terra'srefusal to pay back $2.3 million that the state says it owes taxpayers and the Natural Resources Trust Fund. Itis the most severe sanction ever issued by the DNR for a violation of state leasing provisions.
"This is an enforcement tool," said Mindy Koch, chief of the DNR's Real Estate Division. "We won't signany new leases with Terra. We won't extend any existing leases."
The DNR's sanction, which will be lifted upon the completion or settlement of the state's lawsuit seekingrepayment of the $2.3 million in royalties and interest, is a severe blow to Terra. The Traverse-City basedcompany, which was founded in 1981, has relied on leasing state minerals for its business. The companyoperates 81 Antrim production units, covering 1,959 wells across northern Michigan. Of that number, the statesays 529 wells (Terra says it's closer to 400) are on state-owned land and involve tapping state minerals.
K.L. Cool, director of the DNR, has said he is committed to auditing all of the wells Terra operates onstate lands. According to current estimates by DNR auditors, Terra may owe millions more dollars totaxpayers than the amount covered by the pending lawsuit.

Year #3:
The Industry's Assessment

IMAGE imgs/glbsp9820.gif

For three years the Institute and its partners in theMichigan Energy Reform Coalition have worked tostrengthen public oversight of the oil and gas industry,reduce environmental damage from operations, and requirecompanies to be more accountable to communities.
Depite the Coalition's efforts to forge a constructivepartnership with the industry on behalf of the publicinterest, executives have insisted on maintaining anadversarial position. Martin G. Lagina, founder of TerraEnergy and outgoing chairman of the Michigan Oil andGas Association, provided a compelling glimpse of thisattitude in a letter printed in the Michigan Oil and GasNews on December 19, 1997:

To Association Members and Friends:

As my term as your Chairman draws to a close, I would like to take this opportunity to set forthall of the great things that have happened to our industry in 1997. The truth is, however, 1997 wasnot the industry's best year. Our critics proved to be tenacious and they seem to have excellentmedia access. We have been attacked on H₂S issues, drilling under the Great Lakes, PPC's,royalty payments and even force pooling standards.
And yet, despite this onslaught, the Michigan Oil and Gas Association continued to fight for yourrights. Given the magnitude of our opposition, we achieved several victories. As I write this, we arefinally on track for a State lease sale, thanks to the untiring efforts of our Leasing Committee. Wehave successfully defeated local control legislation. We have begun our PR initiatives and it is myfervent hope that all of the membership supports this effort such that it can be expanded 10 fold in the coming year. Continuing our PR is our number one priority... .
As I began my term as Chairman, I hoped in two years all our problems would be solved.Unfortunately that isn't quite the case, but I have recently decided that it would be very uncharitableof me not to pass a few issues on to my successor!
I have the highest respect and confidence in the upcoming Chairman and new officers of MOGA.With your help, this excellent organization and the fine people who work in the oil and gas industrywill prevail... .



			Terra Prohibited From Leasing State Lands As a consequence of the state's audit findings, Terra Energy will not be allowed to lease minerals onpublic lands. The action, taken last December by the Department of Natural Resources, followed Terra'srefusal to pay back $2.3 million that the state says it owes taxpayers and the Natural Resources Trust Fund. Itis the most severe sanction ever issued by the DNR for a violation of state leasing provisions. "This is an enforcement tool," said Mindy Koch, chief of the DNR's Real Estate Division. "We won't signany new leases with Terra. We won't extend any existing leases." The DNR's sanction, which will be lifted upon the completion or settlement of the state's lawsuit seekingrepayment of the $2.3 million in royalties and interest, is a severe blow to Terra. The Traverse-City basedcompany, which was founded in 1981, has relied on leasing state minerals for its business. The companyoperates 81 Antrim production units, covering 1,959 wells across northern Michigan. Of that number, the statesays 529 wells (Terra says it's closer to 400) are on state-owned land and involve tapping state minerals. K.L. Cool, director of the DNR, has said he is committed to auditing all of the wells Terra operates onstate lands. According to current estimates by DNR auditors, Terra may owe millions more dollars totaxpayers than the amount covered by the pending lawsuit. Year #3: The Industry's Assessment

			For three years the Institute and its partners in theMichigan Energy Reform Coalition have worked tostrengthen public oversight of the oil and gas industry,reduce environmental damage from operations, and requirecompanies to be more accountable to communities. Depite the Coalition's efforts to forge a constructivepartnership with the industry on behalf of the publicinterest, executives have insisted on maintaining anadversarial position. Martin G. Lagina, founder of TerraEnergy and outgoing chairman of the Michigan Oil andGas Association, provided a compelling glimpse of thisattitude in a letter printed in the Michigan Oil and GasNews on December 19, 1997: To Association Members and Friends:
		As my term as your Chairman draws to a close, I would like to take this opportunity to set forthall of the great things that have happened to our industry in 1997. The truth is, however, 1997 wasnot the industry's best year. Our critics proved to be tenacious and they seem to have excellentmedia access. We have been attacked on H₂S issues, drilling under the Great Lakes, PPC's,royalty payments and even force pooling standards. And yet, despite this onslaught, the Michigan Oil and Gas Association continued to fight for yourrights. Given the magnitude of our opposition, we achieved several victories. As I write this, we arefinally on track for a State lease sale, thanks to the untiring efforts of our Leasing Committee. Wehave successfully defeated local control legislation. We have begun our PR initiatives and it is myfervent hope that all of the membership supports this effort such that it can be expanded 10 fold in the coming year. Continuing our PR is our number one priority... . As I began my term as Chairman, I hoped in two years all our problems would be solved.Unfortunately that isn't quite the case, but I have recently decided that it would be very uncharitableof me not to pass a few issues on to my successor! I have the highest respect and confidence in the upcoming Chairman and new officers of MOGA.With your help, this excellent organization and the fine people who work in the oil and gas industrywill prevail... .