Great Lake Bulletin Spring 1998

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Status Report on Antrim Drillingin Manistee, Benzie, andLeelanau Counties

Since 1987 the energy industry has installed morethan 6,000 natural gas wells in the Antrim Shalegeological formation. The first intensive developmentwas in the "high potential" areas of northeastMichigan. In recent years the industry has focusedits exploration and development efforts on severalcounties in northwest Michigan, even in areas wherestate geologists had anticipated "zero potential."

In the year since the first Antrim natural gas well was drilled near Cedar, in Leelanau County west ofTraverse City, industry agents have been leasing large blocks of mineral rights in Leelanau and in the LakeAnn area of Benzie County. Meanwhile, Lee's Petroleum, one of the state's most active Antrim producers,has proposed drilling three new wells in southern Leelanau County.
State geologists and industry representatives are unclear about what this activity means. Leelanau neverhas been a top producer of oil or gas, and virtually all Benzie production to date has been in Colfax Township,in the southeastern part of the county.
The new exploration reflects the increasing economic vigor of the industry. Financial returns from Antrimdrilling have been very strong in recent years. According to the Michigan Oil and Gas Association, total grossrevenues from Antrim gas have climbed to more than $600 million annually.
The expense of installing an Antrim well is relatively low. Leases generally are negotiated for less than$35 an acre. Drilling the well costs about $260,000, compared to an average of more than $1 million for awell into the much-deeper Niagaran geological formation. The result, say industry observers, is thataggressive companies like Lee's Petroleum are willing to drill a few exploratory wells along the known edgesof the Antrim formation.
However there is more financial risk for producers in drilling for Antrim gas on the northwestern side ofthe Lower Peninsula, since the reserve is not as consistent there as it is in northeastern lower Michigan.
For example, in 1994 leasing agents raced through Manistee County after two unusually productiveAntrim wells were tapped in Bear Lake Township. By 1995 more than 400 drilling permits had been issuedby the state for Manistee County, most of them in five north-county townships. The reserve in Manisteeturned out to be spotty -- 86 wells have come on line so far, according to the Michigan Public ServiceCommission.

Mason Co. Leases Fairgrounds,Airport... Action Taken Despite Health and Safety Risks
The Mason County Board of Commissioners has accepted a bid of $30,354 from a Charlevoix-basedenergy company for the rights to explore for oil and gas beneath 537 acres of county-owned land, whichincludes the county fairgrounds and the local airport.
The decision came at a February Board of Commissioners meeting in Ludington, which attractedsupporters and opponents of the leasing proposal. Despite calls from citizens to hold a public hearing on thematter, county officials accepted the oil company's offer and directed a subcommittee to negotiate the terms ofthe lease.
Local oil and gas workers spoke out in favor of the proposal, saying that if the county elected not to leasethe minerals it would send the wrong message to an industry that provides local jobs and revenues to thecommunity.
Staff of the Institute and local residents urged county officials to postpone the lease sale until a fullanalysis of the costs and benefits could be completed, including a comprehensive evaluation of the potentialhealth and safety risks.
The drilling would tap the Niagaran reef, a deep oil and gas producing deposit that in Mason and othernearby counties contains dangerous hydrogen sulfide gas. A 1996 accident from a well in Parkdale causedeleven Manistee County residents to be hospitalized and left two people with permanent respiratory damage.
In addition to safety concerns, citizens asked the county commissioners to consider the potential effects ofnoise, odor, and truck traffic on the public's ability to enjoy the fairgrounds.
Instead of considering these issues, county officials deferred to the state Department of EnvironmentalQuality to protect public health and safety and reduce nuisances. The DEQ currently is working on developingnew safety standards for hydrogen sulfide, but there is no assurance that they will be in effect before the wellsat issue are drilled. (See the article on page 16.)
The county lease brought an average of $56.37 per acre, a sum opponents say is too low. Citizens point toan auction last December of state-owned minerals in adjacent Oceana County, which averaged more than $100an acre with some bids reaching as high as $1,000 an acre.

CONTACTS:Fabian Knizacky, Mason County Administrator, 616-843-8202; Sam and Sarah James,Advocates for Intelligent Responsible Environment, 517-757-3790.




	Close to Home Status Report on Antrim Drillingin Manistee, Benzie, andLeelanau Counties
		Since 1987 the energy industry has installed morethan 6,000 natural gas wells in the Antrim Shalegeological formation. The first intensive developmentwas in the "high potential" areas of northeastMichigan. In recent years the industry has focusedits exploration and development efforts on severalcounties in northwest Michigan, even in areas wherestate geologists had anticipated "zero potential."
In the year since the first Antrim natural gas well was drilled near Cedar, in Leelanau County west ofTraverse City, industry agents have been leasing large blocks of mineral rights in Leelanau and in the LakeAnn area of Benzie County. Meanwhile, Lee's Petroleum, one of the state's most active Antrim producers,has proposed drilling three new wells in southern Leelanau County. State geologists and industry representatives are unclear about what this activity means. Leelanau neverhas been a top producer of oil or gas, and virtually all Benzie production to date has been in Colfax Township,in the southeastern part of the county. The new exploration reflects the increasing economic vigor of the industry. Financial returns from Antrimdrilling have been very strong in recent years. According to the Michigan Oil and Gas Association, total grossrevenues from Antrim gas have climbed to more than $600 million annually. The expense of installing an Antrim well is relatively low. Leases generally are negotiated for less than$35 an acre. Drilling the well costs about $260,000, compared to an average of more than $1 million for awell into the much-deeper Niagaran geological formation. The result, say industry observers, is thataggressive companies like Lee's Petroleum are willing to drill a few exploratory wells along the known edgesof the Antrim formation. However there is more financial risk for producers in drilling for Antrim gas on the northwestern side ofthe Lower Peninsula, since the reserve is not as consistent there as it is in northeastern lower Michigan. For example, in 1994 leasing agents raced through Manistee County after two unusually productiveAntrim wells were tapped in Bear Lake Township. By 1995 more than 400 drilling permits had been issuedby the state for Manistee County, most of them in five north-county townships. The reserve in Manisteeturned out to be spotty -- 86 wells have come on line so far, according to the Michigan Public ServiceCommission. Mason Co. Leases Fairgrounds,Airport... Action Taken Despite Health and Safety Risks The Mason County Board of Commissioners has accepted a bid of $30,354 from a Charlevoix-basedenergy company for the rights to explore for oil and gas beneath 537 acres of county-owned land, whichincludes the county fairgrounds and the local airport. The decision came at a February Board of Commissioners meeting in Ludington, which attractedsupporters and opponents of the leasing proposal. Despite calls from citizens to hold a public hearing on thematter, county officials accepted the oil company's offer and directed a subcommittee to negotiate the terms ofthe lease. Local oil and gas workers spoke out in favor of the proposal, saying that if the county elected not to leasethe minerals it would send the wrong message to an industry that provides local jobs and revenues to thecommunity. Staff of the Institute and local residents urged county officials to postpone the lease sale until a fullanalysis of the costs and benefits could be completed, including a comprehensive evaluation of the potentialhealth and safety risks. The drilling would tap the Niagaran reef, a deep oil and gas producing deposit that in Mason and othernearby counties contains dangerous hydrogen sulfide gas. A 1996 accident from a well in Parkdale causedeleven Manistee County residents to be hospitalized and left two people with permanent respiratory damage. In addition to safety concerns, citizens asked the county commissioners to consider the potential effects ofnoise, odor, and truck traffic on the public's ability to enjoy the fairgrounds. Instead of considering these issues, county officials deferred to the state Department of EnvironmentalQuality to protect public health and safety and reduce nuisances. The DEQ currently is working on developingnew safety standards for hydrogen sulfide, but there is no assurance that they will be in effect before the wellsat issue are drilled. (See the article on page 16.) The county lease brought an average of $56.37 per acre, a sum opponents say is too low. Citizens point toan auction last December of state-owned minerals in adjacent Oceana County, which averaged more than $100an acre with some bids reaching as high as $1,000 an acre. CONTACTS:Fabian Knizacky, Mason County Administrator, 616-843-8202; Sam and Sarah James,Advocates for Intelligent Responsible Environment, 517-757-3790.