Newsletter of the Michigan Communities Land Use Coalition

Winter 1995

Volume 2, Number 1

Manistee Commissioners Seek

Moratorium on New Antrim Wells

In a clear statement of its concern that Antrim gas development could contaminate drinking water and harm the land, the Manistee County Board of Commissioners, by unanimous vote on December 13, has called for a temporary halt to new Antrim drilling permits in the region.

The formal appeal was made in a letter to R. Thomas Segall, Assistant Supervisor of Wells at the Department of Natural Resources.

In the letter, the Commissioners said dozens of permits have been issued by the state for Antrim gas wells in Manistee County and that hundreds more wells are proposed.

The Commissioners said they are concerned about the intensity of development because current law allows one well per 40 acres. Since the DNR is holding hearings in Lansing to increase the spacing between Antrim wells to as much as one well per 160 acres, the Commissioners asked Mr. Segall to stop issuing drilling permits until the state issues its new spacing order, which is expected by Spring.

In taking this action, the Commissioners said they wanted "to avoid Antrim development which is done in a rush, as had happened in Montmorency and Otsego counties." They added, "This is not a request to permanently deny drilling permits. It is expected and desired drilling permits [will] be issued after the new spacing order is in place."

The Commissioners said they are especially concerned about the use of deep injection wells for brine disposal near Manistee Lake.

Since 1870, the area around the lake has been a focus of drilling, for oil, gas and salt. An unknown number of the old wells are unplugged. The situation could lead to serious problems, the Commissioners said, because in producing Antrim gas modern drillers also must dispose of thousands of gallons of brine produced daily by each well.

Brine usually is disposed of by pumping it deep into the ground. But more injection wells around Manistee Lake could result in brine migrating up through old wells and contaminating groundwater currently used by hundreds of Manistee residents.

The Commissioners added that they are concerned about contaminating a salt formation beneath the lake that is a source of raw material for two major industries -- Morton International and Martin Marietta Magnesia Specialties. Halting new permits would give the county more time to study the issue, said the Commissioners.

We consider the Commissioners’ action to be serious and well-reasoned. It represents the sense of the community that much is at stake, and is a principled effort to claim some local control over oil and gas development. It would be extremely helpful for all MCLUC members and supporters to write Mr. Segall, encouraging him to approve the Manistee County Board of Commissioners’ request. Address your letters to: Mr. R. Thomas Segall, Assistant Supervisor of Wells, DNR Geological Survey Division, P.O. Box 30028, Lansing, Michigan 48909. Tel. 517-334-6923.

MCLUC Invited To Wisconsin

Oil and gas developers, led by Traverse City-based Terra Energy, are now exploring for natural gas near Lake Superior in Wisconsin. State regulators are drafting new rules to oversee the industry, and northern Wisconsin residents have turned to MCLUC for help.

Gerard Grabowski, a Pleasanton Township board member and MCLUC representative, will spend a week in Wisconsin in January to meet with community leaders, speak on public radio, and testify at a DNR-sponsored hearing. Property owners and environmental groups who had learned about MCLUC’s work are paying for Mr. Grabowski’s trip.

Mr. Grabowski, owner of the Pleasanton Brick Oven Bakery, led the effort last year to amend the township’s zoning ordinance to minimize damage to natural resources and private property from oil and gas development.

Less than two months after the DNR discovered that Oilfield Investments Ltd. installed a gas pipeline without permission in Antrim County’s Jordan Valley Management Area, the company and the state struck a deal that allowed O.I.L. to continue its unbroken pace in developing natural gas fields.

In September, DNR foresters discovered that O.I.L had crossed state land in the 20,000-acre protected wilderness with a new pipeline. The state proposed a $931.50 fine for damaging its property, and issued an order to remove the pipeline. The state also said it would stop issuing new drilling permits to O.I.L. until the legal issues were resolved.

In a display of the industry’s political power, O.I.L. avoided the sanctions by changing its development plan for the region. It dropped a well it was planning to drill on a section of state

property in the management area where the mineral rights are privately owned. In exchange, the state allowed the company to keep the pipeline in place and to settle for payment of the fine.

Even so, the deal the state made with O.I.L. will not end the threat from natural gas development in the Jordan Valley. Terra Energy has notified the state that it intends to develop private mineral rights that it has leased in the area, and drill at least three wells in the presumably protected wilderness, according to Bill O’Neill, the DNR forester in the region.

In an editorial, the Detroit Free Press called the Jordan River Valley "one of those places that makes living in Michigan a thing to be thankful for." But the state’s natural gas industry, with the assistance of the DNR Geological Survey Division, appears intent on allowing what the newspaper called "the ugly fragmenting of this valley, too."

"It has taken a century or more for the Jordan Valley to regenerate itself this far, to restore the peace and the silence and the unbroken sweep of tall trees marching off to distant ridges," said the Free Press. "Do we really want to trash it again?"

O.I.L. Refuses To Meet With Residents

Oilfield Investments Ltd. has staked 32 wells and indicated to the state that it plans to install two compressing stations in Springdale Township. But when the residents of Old Grade Crossing, a neighborhood of 80 homes along the wooded west bank of the Betsie River, requested a meeting in early December, the company said there was nothing to discuss.

In a letter to Greg Fogle, vice president of O.I.L., Old Grade homeowners said they were worried about noise from a compressing station planned near the subdivision. They also wanted to know how the company will cross the Betsie River and nearby streams with roads and pipelines.

Mr. Fogle declined the invitation, telling the group that it was too early to meet because his company has not finalized its plans for development in Springdale Township.

This raises a question. When is the right time? When all the decisions have been made, and residents have no say?

Pleasanton Ordinance Challenged

Prompted by the state’s natural gas industry, the DNR has challenged Pleasanton Township’s authority to oversee oil and gas development.

Last July, Pleasanton Township amended its zoning ordinance to prevent damage to natural resources and the community’s quality of life from impending Antrim gas development. The zoning ordinance now calls for energy companies to file with the township their development plans for processing stations, pipelines, and other installations; establishes limits on noise and other nuisances from energy developments; and requires companies to post reclamation bonds to clean up the production sites when the gas and oil fields have been exhausted.

Other measures in the ordinance are designed to increase the distance between processing plants and homes, and prevent industrial facilities from being installed near streams, lakes and wetlands.

On November 4, Frank Mortl, president of the Michigan Oil and Gas Association, the industry’s Lansing-based trade group, sent a letter to the DNR’s R. Thomas Segall, Assistant Supervisor of Wells, arguing that Pleasanton’s ordinance was in violation of Public Act 61, the state’s oil and gas law. Mr. Mortl said the law gives Mr. Segall exclusive jurisdiction to regulate Antrim gas projects, and that "in our view, all such purported regulation by the township is precluded by reason of that fact."

Five days later, in a letter to Pleasanton Township Supervisor Fred Alkire, Mr. Segall reiterated that view. Mr. Segall said the Geological Survey Division has traditionally used its authority to regulate virtually every aspect of Antrim gas development.

Pleasanton Township board members say they are ready to defend their ordinance in court if necessary. Basing its argument on several recent legal cases involving local regulation of the energy industry, the township believes it has the authority to oversee all except the wells in an Antrim gas development.

Pleasanton spent nine months last year developing the ordinance. As part of their research, township board members talked with officials from Montmorency and other counties affected by Antrim gas development. During those interviews, the township was warned to do everything it could to manage the energy industry through its local zoning authority.

The Montmorency officials said state regulations not only are inadequate, they often are ignored because only a handful of state inspectors are assigned to the more than 4,000 wells that have been installed in northern Michigan since the late 1980’s.

Pleasanton Township To Meet With O.I.L.

The Pleasanton Township Board of Supervisors will discuss its new oil and gas zoning amendments with senior executives of Oilfield Investments Ltd. on February 6, 1995.

The public meeting will begin at 7 p.m at the Pleasanton Township Hall at the corner of U.S. 31 and Lumley Road north of Bear Lake.

O.I.L. plans to drill more than 40 wells in the township, and install several compressing stations.

Editorial

A Landscape For New Ideas

Nearly a year ago, MCLUC alerted the Manistee County Planning Commission about a circumstance of geological inheritance that could change our landscape. Northwest Michigan sits above an apparently rich reservoir of natural gas, and developers were arriving in force.

We asked our county leaders: Are we prepared to allow this fast-paced, anything-for-a-buck development to occur without restraint? Or could we establish some other logic in which county residents could tap into whatever economic opportunities the industry presented without forsaking our way of life or indelibly damaging the land?

On Friday, January 20, thanks in large part to the Planning Commission’s involvement, the 18-member Benzie-Manistee Oil and Gas Task Force will hold its first meeting, in Benzonia. Nothing like it has ever occurred in this region. A group of state, county, community, and industry representatives will negotiate a plan for developing oil and gas, with the goal of minimizing the damage.

It is a goal perfectly in touch with its time. Three years ago a committee of scientists, citizens and state officials appointed by Governor John Engler studied the state’s environment and determined that the deteriorating rural landscape was the most pressing problem. Governor Engler and his staff have since said they support solving the problem not with new regulations but with voluntary measures aimed at preventing damage in the first place.

The Benzie-Manistee Oil and Gas Task Force will attempt to do just that. It is the brainchild of Kurt Schindler and David Neiger, respectively the professional planners in Manistee and Benzie counties. It is being paid for with a $28,600 grant from the Department of Natural Resources.

Since MCLUC’s formation we have advocated the following changes in the way Antrim gas fields are installed:

1. Increase the spacing between wells to 160 acres.

2. Convince energy companies to provide detailed development plans to townships so that the public can review them before drilling occurs. As it is, plans are filed only with the state, and citizens must travel to Cadillac to see them.

3. Minimize damage to the land by avoiding drilling, road building and pipeline construction on steep, highly erodible slopes.

4. Set aside sensitive and biologically diverse landscapes for minimal drilling or no drilling at all. These landscapes would include the Bear Creek Watershed and the Betsie River Watershed.

5. Sharply reduce the noise from wellheads and compressing stations.

6. Establish a procedure for more completely informing surface owners about a company’s plan for development. And in cases where surface owners don’t own their mineral rights, companies should do everything possible to avoid drilling if there are alternatives.

The success of the Task Force also will hinge on embracing something less tangible, but just as important.

Northwest Michigan is clear water, open meadows, and thick forests. It is the rituals of production from orchards and corn fields. It is small towns and communities weighing how to preserve genuine values in the face of a social whirlwind heading our way. There is a passion to the spiritual and cultural geography that binds people to this place.

That is what has driven MCLUC’s work and what is most at risk from poorly managed energy development. We view the Task Force as a useful experiment in finding a new way to include, without unnecessary pain, an immense industry into a working and quite beautiful rural landscape. We urge the energy industry to accept this community’s resolve to untangle the ropes of division and negotiate a development agreement that is as respectful of economic opportunities as it is surpassingly careful of our home.

BENZIE-MANISTEE OIL AND GAS TASK FORCE

MEMBERS

Roger Hoeksema

District Planner

Forestry Division, DNR Region II

Cadillac

Chris Shafer

DNR Land and Water Management Division

Lansing

Hal Fitch, District Geologist

Geological Survey Division

DNR Region II

Cadillac

Ms. Gina Parks Klco, Supervisor

DNR Real Estate Division

Minerals Lease Management

Lansing

William Sperry, President

Savoy Oil and Gas

Traverse City

Frank Mortl, President

Michigan Oil and Gas Association

Lansing

Greg Fogle, VP for Operations

Oilfield Investments Ltd.

Traverse City

Lance Lindwall, Forest Geologist

Huron-Manistee National Forests

Cadillac

Bill Bobier

State Representative

101st District

Lansing

James Olson, Attorney

Olson & Noonan

Traverse City

Keith Schneider, Chairman

Michigan Communities Land Use Coalition

Thompsonville

Karl Hosford

Michigan United Conservation Clubs

Lansing

Don Holman, Landowner

Onekama

Walt W. Poimboeuf, P.E.

Poimboeuf Petroleum Engineering

Manistee

James MacInnes, President

Crystal Mountain Resort

Thompsonville

Richard M. Wilson Jr., Attorney

Glockerman, Wilson, Saylor and Hesslin

Manistee

Millie Smith

Colfax Township Supervisor

Thompsonville

John B. Daugherty, Attorney

Beulah

STAFF

Mark Wyckoff, President

Planning and Zoning Center, Inc.

Lansing

Kurt H. Schindler

Manistee County Planning Director

David Neiger

Benzie County Planning Director

On Potter Road:

Melancholy, And A Plea To Respect Property Rights

By Kitty Myers

BEAR LAKE -- It’s now been a little over a year since our farm was invaded and the Antrim gas well was drilled in the middle of our hayfield. Things have turned out both better and worse than we anticipated.

On the positive side, thanks to Savoy’s top executive, Tom Pangborn, we have one, not two, wells on our 80 acres. And in the couple of weeks since snow and Christmas, activity in our immediate vicinity has lessened -- or is at least quieter due to the snow blanket and the fact that I’m inside most of the time with the new baby.

Trucks still come in daily to check the well but the big rigs haven’t been up for a couple of months. The new barn we built between the house and the well site helps limit what we see and hear. The compressing station down the road is still audible -- or maybe palpable is a better word. You feel it inside your head many mornings at 2 a.m., but it doesn’t seem as loud as it did before the snow for whatever reason.

On the negative side, the well is still in our hayfield. There is daily intrusion. And the one and a half acres torn up by drilling and the entry road was never reseeded, so that hay is lost for another year.

We’ve suffered through a year of noise and commotion where we could not have the stallions out in good weather because of the constant heavy construction traffic -- bulldozers, payloaders, backhoes, semi-trailers, and trucks. (At least most of the well traffic is during daylight hours, as opposed to PCA sludge trucks, dumping even at 4 a.m. on Christmas morning.)

The timing of the noisiest equipment generally seemed to coincide with our just having put the horses out. We now have major well site roads on both our east and west fence lines with continuous heavy traffic, where once there were only trees and a hayfield.

The compressing station is a frequent annoyance, though not as bad as we had feared it might be. But the new scare is the rumor that it is to be retrofitted from 400 horsepower to 1,000 horsepower.

We have had friends directly threatened with the placement of a compressing facility on their property without their permission or any compensation if they weren’t more cooperative.

We’ve seen nuisances like crews defecating in hayfields and yards and leaving their trash strewn about, and private hydrants left running.

And we’ve seen forests bulldozed without even proper notification of the property owner.

We’ve been told by the governor’s office that severed rights don’t affect enough citizens to be of concern. And we’ve been told by state representatives that we do have rights, but not what they might be. We’ve been told by lawyers that we have some rights but it would cost more to protect them than we could ever recover. And we’ve been told by the Department of Natural Resources that rights we once had are no longer there.

We’re pretty discouraged, but we’ll keep on fighting as long as we’re here. Our farm is for sale and we hope to leave the state of Michigan, which could be such a paradise, but where the laws and the elected officials and the state officials seem to be completely in the pockets of big business and the Michigan Oil and Gas Association. It’s to a point where private citizens have no rights and no chance to protect their own property.

$1.18M For State Rights In Manistee

Benzie, Grand Traverse and Wexford Land Also Leased

In many cases, leases in the county went for more than $400 an acre, and in one sale Savoy Oil and Gas paid $28,000 for the rights to a 40-acre parcel in Section 35 along 13 Mile Road in Pleasanton Township, or $700 an acre. The Savoy bid was the largest per acre bid in a state lease sale since 1989, and one of the highest in state history, according to the DNR.

In all, 59,321 acres of public land in 19 counties across Michigan were leased at the auction, earning the state $5.66 million, or an average of $95.47 an acre. The state also receives a one-sixth royalty on the value of the gas produced.

It comes as no surprise that energy developers showed the most interest in Montmorency County, where they paid $2.83 million for state-owned mineral rights on nearly 17,000 acres, for an average of $167 an acre. Since 1990, natural gas developers have installed over 1,000 Antrim wells and more than 60 compressing stations in Montmorency County.

But in a clear signal of the industry’s growing interest in Northwest Michigan, Manistee County attracted the second highest average bids for state mineral rights. By far the largest investor was Savoy Oil and Gas, the company that is developing the county’s first Antrim Shale gas project in Bear Lake.

Tom Pangborn, Savoy’s chief executive officer, spent nearly $981,000 for 3,500 acres of state-owned mineral rights in Manistee County, most of it in Pleasanton and Springdale townships. He leased nearly 1,700 acres of land in Springdale for $348,780, or an average of $209 per acre. In section 32 of the township near the intersection of Big Four Road and 13 Mile Road, he paid $72,000 for a 160-acre tract, or $450 an acre.

Mr. Pangborn invested even more in Pleasanton Township, paying $607,000 to lease 1,209 acres, or more than $500 per acre.

Also interested in Manistee County was Terra Energy, the state’s largest Antrim gas producer. Terra spent $23,190 to lease 773 acres in Arcadia Township. And Fruehauf Production Company paid $22,010 to lease 2,201 acres in Manistee and Stronach townships.

Developers also indicated significant interest in neighboring counties. A number of companies paid an average of $50 an acre to lease 786 acres of state land in Benzie County, and nearly $136 an acre to lease 971 acres in Wexford County. Developers also leased 2,001 acres in Grand Traverse County, for an average of $48 an acre.

MPSC Proposes 160-Acre Spacing For Antrim Wellfields

Midway through the pivotal hearings in Lansing to determine a new spacing pattern for Antrim gas wells, there is reason for property owners to be hopeful.

The Michigan Public Service Commission, which oversees safety and monitors production in the oil and gas industry, is recommending that the minimum spacing between Antrim wells should increase from 40 acres to 160 acres.

The MPSC made the recommendation in testimony that its staff geologist, Mark Nida, prepared for the second phase of the hearings during the week of January 17. He said that 160-acre spacing for Antrim gas wells makes economic and environmental sense.

Mr. Nida said that spacing wells at 160 acres will yield more gas per well while reducing damage to land and streams. He added that in unusual cases, where wells are not adequately draining gas from the Antrim Shale layer, the MPSC would support allowing developers to seek permits to add wells. But in no case, he said, should wells be spaced more densely than one every 80 acres.

Perhaps no single issue in the debate over Antrim gas development is more important than spacing. Wider spacing means fewer wells, roads, pipelines, and compressing stations; and less, in fact, of all the industrial installations that have caused citizens across the state to complain about developments.

The spacing hearings, which began in September as a result of a lawsuit, are conducted before an administrative law judge. A new spacing order is expected by March, when the hearings are completed.

MCLUC has registered as an "interested party" in the procedure, and after receiving copies of the written testimony we will submit a statement supporting the MPSC, Shell Western, and Amoco proposals for 160-acre spacing.

The Michigan Oil and Gas Association is backing a different view. The industry association is lobbying for a minimum spacing of one well every 80 acres.

The Department of Natural Resources is supporting this position. The reason: both MOGA and the DNR were defendants in the lawsuit that brought about the hearings. During settlement talks last year, they agreed to make a joint recommendation on spacing.

207 Antrim Gas Wells Slated

In Manistee County

One year after Savoy Oil and Gas announced that its Bear Lake Township project included several of the highest producing Antrim Shale gas wells ever discovered in Michigan, the natural gas rush has accelerated in Manistee County. Since the county’s Antrim gas field was first tapped early in 1994, 207 wells have either been drilled, permitted, or proposed. The county has become one of the most intensive energy development regions in the state.

Bear Lake Township now has 104 wells drilled or in various stages of the permitting process. Pleasanton Township is second with 46 wells, followed by Springdale Township with 32, and Onekama Township with 12. Manistee Township and Maple Grove Township each have five wells, Stronach Township has two, and Norman Township has one.

Since the Autumn 1994 issue of this newsletter, 32 more wells have been proposed for the county, according to the Michigan Oil and Gas News and our review of state records.

Township Location	Name of Mineral Owner	Gas Company	Status
Bear Lake Section 1	Willey	Savoy Oil and Gas	Application Pending
Bear Lake Section 2	Myers	Dynamic Development	Application Pending
Bear Lake Section 3	Thompson	Dynamic Development	Application Pending
Bear Lake Section 3	Fauble	Savoy Oil and Gas	Application Pending
Bear Lake Section 9	Howes	Oilfield Investments	Application Pending
Bear Lake Section 14	Skiera	Dynamic Development	Application Pending
Bear Lake Section 14	Skiera	Dynamic Development	Application Pending
Bear Lake Section 19	Acker	Dynamic Development	Application Pending
Bear Lake Section 19	Acker	Dynamic Development	Application Pending
Bear Lake Section 25	Axtell	Oilfield Investments	Application Pending
Bear Lake Section 26	Sedlar	Oilfield Investments	Application Pending
Bear Lake Section 35	Asiala	Oilfield Investments	Application Pending
Bear Lake Section 35	Johnson	Oilfield Investments	Application Pending
Bear Lake Section 35	Reckow	Oilfield Investments	Application Pending
Bear Lake Section 36	Reckow	Oilfield Investments	Application Pending
Maple Grove Section 29	Litwin	Oilfield Investments	Application Pending
Maple Grove Section 29	Sitkowski	Oilfield Investments	Application Pending
Maple Grove Section 30	Grybok	Oilfield Investments	Application Pending
Maple Grove Section 31	Kaap	Oilfield Investments	Application Pending
Onekama Section 1	Szuch	Oilfield Investments	Application Pending
Onekama Section 2	Meister	Oilfield Investments	Application Pending
Onekama Section 11	Kataja	Oilfield Investments	Application Pending
Onekama Section 12	Perclin Orchards	Oilfield Investments	Application Pending
Onekama Section 12	Perclin Orchards	Oilfield Investments	Application Pending
Onekama Section 13	Short	Oilfield Investments	Application Pending
Onekama Section 13	West Michigan National Bank	Oilfield Investments	Application Pending
Onekama Section 14	Hilliard	Oilfield Investments	Application Pending
Onekama Section 23	Miller	Oilfield Investments	Application Pending
Onekama Section 24	Short	Dynamic Development	Application Pending
Onekama Section 24	Short	Dynamic Development	Application Pending
Pleasanton Section 35	Bowling	Dynamic Development	Application Pending
Pleasanton Section 35	Poulin	Dynamic Development	Application Pending

MCLUC Financial Report

MCLUC’s membership now numbers 71 families and businesses. This year we will apply for Section 501 (c)(3) status under the Internal Revenue Service code so that contributions made to MCLUC will be tax exempt.

We thank everyone who has given their time, talent, and money to the work of safeguarding this wondrous corner of the country.

Operating Statement as of December 30, 1994

Income:

Meeting collections 104.50

Memberships 3483.96

Donations 1700.00

Total Income 5288.46

Expenses:

Donation to Michigan Environmental Trust Ltd. 150.00

Legal costs to develop leasing package 4003.31

Meeting costs 53.00

Miscellaneous 9.50

Office supplies 53.75

Postage 258.73

Publishing newsletter 488.56

Research, subscriptions & photocopying 604.82

Travel 435.62

Total Expenses 6057.29

Deficit 768.83

Cash on hand 492.09