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Hunt heats up for natural gas

Drilling permits increase with soaring fuel prices
Sarah Ryley/From The Detroit News

TRAVERSE CITY — High oil and gas prices are driving up interest in drilling in some of the state’s most pristine lands, particularly four counties in northern Michigan that sit over a natural gas reserve.

Thousands of sites in that area are being looked at for drilling operations over the next few years, some of which have gotten the attention of environmentalists concerned about preserving the land in its natural state.

As energy costs have skyrocketed (the price of natural gas has doubled since 2000), the number of oil and gas drilling permits issued by the state has increased, too — 529 permits have been approved in the first half of this year, compared to 812 all of last year and 589 in 2004, according to the Michigan Department of Environmental Quality (MDEQ).

Michigan produces roughly 25 percent of the natural gas it consumes, so it’s a hot commodity in the state, said Hal Fitch, assistant supervisor of the MDEQ Office of Geological survey.

The bulk of the new drilling permits are for natural gas trapped in Antrim Shale formations stretching from Elk Rapids to Alpena. The gas is so profitable — because of cheap exploration costs and the 90 percent chance that it will get extracted — that energy companies such as Traverse City-based Aurora Oil & Gas Corp. are making its exploration among their top priorities in the state, said Jeffrey Deneau, head of investor relations for the company.

In a state where environmental issues rank among residents’ top concerns, especially in northern Michigan, oil and gas drilling-related proposals routinely attract protests and court fights.

Three proposed Antrim Shale drilling-related projects in northern Michigan are either in the courts or may wind up there.

Drilling devastates Big Wild

Those who are fighting the projects said they aren’t opposed to natural gas exploration if it’s done responsibly, but think that the energy companies are getting too greedy, and forgetting safety and stewardship concerns in the process.

“When managing state lands, we have to strike a proper balance — as a society we need energy, but we also need recreational property,” Fitch said. “The companies have drilled up some the most productive areas, now they’re going to have to move more toward the edge of those (areas).”

To a devastating effect, said Calvin “Rusty” Gates, Jr., president of Anglers of the AuSable. He described the Pigeon River and the surrounding area, scattered with oil and gas wells, as “The Big Wild which no longer is. It used to be one of the last truly wild places in the state, and now there’s not a single place in there that’s more than a half a mile from a road.

“You need to fly over it to see how devastating it really is.”

Brine and crude oil leaks

Kevin Sagasser, an environmental consultant who has a natural gas pipeline running through his Gaylord property, and other concerned citizens are prepared to take the MDEQ to court over the Michigan Oil and Gas Association’s plan to install twin well heads on 3,202 existing wells in Otsego and Montmorency counties.

The Michigan Oil and Gas Association, a membership organization for the state’s oil and gas companies, did not return phone calls for comment.

Fitch defended the DEQ’s review and approval of the project.

“We did what we feel was environmentally right,” he said. “We don’t take these things lightly.”

Sagasser is upset the MDEQ didn’t require that the association conduct more engineering studies to ensure drilling is done correctly or require a committee to take residents’ complaints.

Pipeline problems hit home with Sagasser, who noted that there have been at least five brine and crude oil leaks in his subdivision within the last year, including one on his property. He’s afraid there will be more unless the MDEQ provides more oversight.

“It’s kind of getting old up here,” says Sagasser, pointing to recent photographs of a pool of brine, a mixture of salt water and chloride, oozing from his backyard pipeline and the tractor-sized hole dug up to fix the problem.

Protecting the AuSable River

In Otsego County, the Anglers of AuSable are fighting a MDEQ permit that allows Merit Energy to dump 1.15 million gallons of treated water from an oil and gas production facility formerly owned by Shell Oil Co. The water would be released into Kolke Creek, which feeds into the AuSable River, one of the state’s premier fishing spots.

Between 1982-2003, 40 releases of crude oil, brine and toxins from the facility were reported, creating a massive plume in the groundwater sitting beneath Otsego County. Now, Merit Energy, which acquired Shell’s holdings in 2004, is responsible for the cleanup.

Susan Topp, the environmental lawyer handling the case, contends the water will still be contaminated with trace amounts of brine and would change the temperature of the AuSable River.

Fitch said the treated water will be so clean, “you could drink from it. The amount of brine in the water is below (what’s allowed by) drinking water standards.”

Wells near protected areas

Aurora Oil & Gas Corp. may drill 19 new wells in the Pigeon River Country State Forest, just outside an area that is protected by a landmark 1970s court order prohibiting any new drilling.

Aurora’s Deneau said the drilling will be done at or near existing wells to minimize the number of trees that will have to be bulldozed for the 20- to 30-foot pathways for trucks and pipelines.

Michael Brown, a Gaylord resident, opposes the project, along with other members of an advisory committee formed in the 1970s court order to oversee drilling in the protected area. But because the proposed project is outside of that area, they have little say.

Brown said if oil and gas prices continue to rise, he expects there will be a lot of pressure to open up drilling again. “They would love to get that thing opened up.”

You can reach Sarah Ryley at (313) 222-2536 or [email protected].

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