Michigan oil and gas development: A 2014 mid-year update
Oil and gas drilling and production was lower during the first part of 2014, and very significantly less than in the early 2000s before the recession.
Oil and gas development in Michigan is certainly in the news, primarily because of the continuing debate concerning potential impact from hydraulic fracturing (fracking), the controversial technique that is credited with the rapid oil and gas production rise in the United States. Actual drilling activity in the state during the first half of 2014, though, is down from last year, and very significantly lower than peaks in the early-mid 2000s.
According to data compiled by the Michigan Oil and Gas Association publication “Michigan Oil & Gas News,” just 42 wells were completed between January and June, a decline of more than 35 percent from levels a year ago. This activity, said the article’s author, represents a “modern record low level.” The publication attributed this decline to several factors, including the lack of commercial success in the Utica-Collingwood and A-1 Carbonate formations. Those are the deep layers where high volume hydraulic fracturing has been most frequently used to release natural gas and oil. The most recent Utica-Collingwood well to be drilled in the state was in early 2013. An exploratory Utica-Collingwood well drilled in Montmorency County during 2010 set off a leasing rush and generated considerable activity, but results since that time have been less encouraging.
Much of the drilling activity during the first half of the year was in Southern Lower Michigan, with Lenawee and Washtenaw Counties leading the way. Nearly all of those wells were targeted to the Trenton, Black River, Dundee and Niagaran formations. A new discovery well in eastern Kalamazoo County reportedly spurred increased leasing activity in the surrounding area.
Nearly twice as many permits were issued by the Michigan Department of Environmental Quality Office of Oil, Gas and Minerals (OGM) during the first half of the year than actual number of wells drilled. That difference, which is greater than is typical, indicates the potential for increased activity yet this year.
Actual oil, natural gas and related products extracted from existing wells during the period was also down, although the data was somewhat incomplete. Notably, gains in crude oil production were recorded in Lenawee and Washtenaw Counties compared to a year ago.
Also during the first half of the year, OGM released proposed draft changes to high volume hydraulic fracturing rules. Those regulations, if adopted, require water withdrawal assessment and monitoring, baseline sampling, and disclosure of hydraulic fracturing fluid chemical additives. Public hearings regarding those rules were held in July 2014.
Michigan State University Extension and partner organizations will continue to sponsor educational workshops to help Michigan residents understand oil and gas leasing and other issues. Additional information is available on the MSU Extension oil and gas information web page.