Gas Pipeline Safety Article
Michigan Oil and Gas Facts



Number of Michigan Counties with Oil and/or Gas Production
· 63 of 83 in the Lower Peninsula

Michigan's Estimated Average Daily Production
· 22,677 Barrels of Oil
· 790 Million Cubic Feet of Gas (MMCFG)



Michigan's Annual Hydrocarbon Production (2000 Data)
· 8,277,840 Barrels of Oil (4% of Demand)
· 289 Billion Cubic Feet of Gas

Total Oil and Gas Production Since 1920
· 1.34 Billion Barrels of Oil
· 5.9 Trillion Cubic Feet of Gas

Total Number of Wells Currently Operating in Michigan
· 4,673 Oil Wells
· 6,865 Gas Wells

Top Crude Oil Producing Counties
· Hillsdale - 123 Million Barrels of Oil
· Manistee - 102 Million Barrels of Oil
· Otsego - 100 Million Barrels of Oil
· Midland - 84 Million Barrels of Oil

Top Natural Gas Producing Counties
· Otsego - 860 Billion Cubic Feet
· Manistee - 600 Billion Cubic Feet
· Grand Traverse - 548 Billion Cubic Feet
· Kalkaska - 507 Billion Cubic Feet


Michigan's Oil & Gas Industry and the Economy

Michigan's underground industry significantly contributes to the state's economy in a variety of ways:

· Providing more than 10,000 industry-related jobs.
· Paying 14,000 private mineral owners more than $80 million in royalties annually.
· Contributing nearly $1 billion in oil and gas income (royalties, rentals, lease bonuses) to the State of Michigan since 1927.
· Paying more than $40 million in severance taxes and oil and gas fees to the State of Michigan annually.
· Contributing millions of dollars in local property taxes on oil and gas wells, pipelines and surface facilities each year.
· Providing about $7 million in privilege fees to the state annually. These fees underwrite the activities of the Michigan Department of Environmental Quality's Geological Survey Division, which is responsible for monitoring and enforcing industry compliance with state and federal laws.
· Producing a total of $17.6 billion in Michigan crude oil and natural gas since 1925.
· Generating a total value of $865 million in Michigan crude oil and natural gas production annually in recent years. This, in turn, results in an additional $1.1 billion in business activity in Michigan, making oil and gas production a $2 billion industry in Michigan.
· Michigan, with the largest underground working storage capacity of any state, is a natural gas storehouse for the Northeastern United States with 600 billion cubic feet of storage capacity.
· Michigan produces about 25 percent of the natural gas in the state uses.


Michigan's Oil & Gas Industry at a Glance

Crude oil and natural gas have been found in 63 counties in Michigan's Lower Peninsula.

First Commercial Well Drilled: Saginaw Country, 1925.

Number of Wells: More than 47,300 wells drilled since 1925. 14,000 active oil and gas producing wells.

Well Depth: Ranges from a few hundred feet to approximately 12,000 feet

Biggest Production Year: Oil production reached 38.5 million barrels in
1979; gas production reached 305 Billion Cubic Feet (BCF) in 1997.

Barrels of Oil Produced: Currently producing 10 million annually; 1 billion since 1925

Cubic Feet of Natural Gas Produced: Currently producing more than 300 billion annually; more than 4 trillion since 1925.

Largest Mineral Rights Owner: State of Michigan, with 5.9 million mineral acres.


Michigan's Oil and Gas Industry and the Environment

Michigan's natural resources are a great source of pride to its residents. To preserve and protect these resources, the oil and gas industry works hard to minimize its impact on the environment. However, getting oil and gas out of the ground and delivered to customers sometimes means an inconvenience for a short period of time. State-of-the-art technology has made current operations quieter, cleaner and more efficient than a decade ago and improvements continue to be made each year. Michigan's oil and gas industry works to comply with industry regulations at all levels.

Federal

The Environmental Protection Agency stipulates specific rules and regulations for all industries, including the oil and gas industry. These areas of compliance include the Resource Conservation and Recovery Act (RCRA), the Clean Air Act, the Clean Water Act and the Comprehensive Environmental Response Compensations and Liability Act (CERCLA). The U.S. Environmental Protection Agency specifically regulates the disposal of production waste.

State

The Michigan oil and gas industry is directly regulated by the Michigan Department of Environmental Quality's Geological Survey Division, the department of Natural Resource and the Michigan Public Service Commission. Specific rules regulating the oil and gas industry are found in Act 451 of the public Acts of 1994 as amended (Part 615 Supervisor of Wells and the Administrative Rules of 1996), highlights of which include:

Permitting & Construction. Regulations cover every aspect of our industry - permitting a well, well construction and completion, facility construction, production operations, noise abatement, pipelines and, finally, plugging a well and site restoration.

Waste. Almost all of the waste associated with oil and gas production is salt water which is commonly produced with the petroleum. The water, or brine, may contain high levels of non-hazardous chloride. Once water is separated from the petroleum, brine is re-injected into the ground) frequently into the zone from which it came, or deeper to protect fresh water) in a state- and U.S. EPA-approved Class II disposal well. Also, many country road commissions use excess brine for dust and ice control on gravel roads.

Hydrogen Sulfide (H2S). Also known as sour gas, hydrogen sulfide has a high content of sulfur and is a natural byproduct of many industries, including agriculture, salt, paper-making, sewage disposal, and oil and gas. The State of Michigan has stringent rules and regulations that specifically address the handing of hydrogen sulfide by the oil and gas industry.

Noise. Many new technologies and methodologies in noise abatement have been developed, and regulations have been updated, to make sure oil and gas operations are as quite as possible.

Uniform Regulatory Control

Because geological formations that produce oil and gas do not conform to surface boundary lines, and due to the highly specialized technical nature of the business, state rules and regulations cover all oil and gas activities. However, as a matter of policy, drilling permit applications are sent to township and country governments by the state for their input. The oil and gas industry also complies with a variety of local ordinances regarding pipeline rights of way, local surface facility zoning in established municipalities, and soil erosion and sedimentation control. In addition, the Michigan Department of Transportation, along with Michigan's country road commissions, regulate the movement of heavy equipment.
The Michigan Natural Resources Trust Fund:
Putting Michigan's Oil and Gas Revenues to Good Use

Michigan was the first state in the nation to establish a land trust fund specifically funded by revenues generated from the oil and gas industry. The 1976 landmark legislation created what is now the Michigan Natural Resources Trust Fund. It was hailed by oil and gas industry leaders, environmentalists, conservationists and recreation groups as a significant investment in Michigan's natural resource heritage.

This historic commitment to Michigan's natural resources was spearheaded by the Michigan Oil And Gas Association (MOGA), the Michigan United Conservation Clubs (MUCC) and the Michigan Department of Natural Resources in the 1970s, and has drawn high praise form environmental industry leaders across the nation.

Although the original purpose of the Fund was solely to preserve and protect Michigan's natural resources through buying and/or improving public parks and recreation lands, its financial success made it a target to help balance the state budget. During its first seven years, more than $100 million was diverted to the Michigan Economic Development Authority and other programs outside its original stated purpose.

In 1984 a statewide referendum called for an end to raids on the Fund. The referendum resulted in the Michigan Natural Resources Trust Fund amendment to the Michigan Constitution, specifying that funds be used to support land acquisition and facility development and improvement.

Since its inception, the Michigan Natural Resources Trust Fund has received more than $550 million from oil, gas and mineral easing and production on state lands. By law, a portion of these annual revenues, plus earned interest, must be used to acquire and improve Michigan's public recreation facilities.

The Michigan Natural Resources Trust Fund has purchased more than 135,000 acres of ecologically significant or recreational land, including more than:

· 3,000 acres for the Pigeon River County State Forest;

· 14,000 acres for the state park system;

· 1,000 acres for boating access sites;

· 2,600 acres of water frontage for fishing access sites; and,

· 37,000 acres for state wildlife areas.


Michigan Geology

Gas and oil - chemical compounds of hydrogen and carbon - were formed deep beneath the ground millions of years ago as part of the earth's evolution. Usually buried thousands of feet deep and locked in sandstone, limestone, or shale, oil and gas migrate up through the earth until they are trapped by no-permeable rock formations. Science and technology are required to identify and locate these rock formations and extract the oil and gas.

Some of the most significant oil and gas formations in Michigan, as shown in the accompanying maps, include:

1. Traverse, Dundee and Richfield Formations

Production from the Traverse, Dundee and Richfield Formations has been found mostly in the central part of Michigan's Lower Peninsula. Exploration and production in these areas dominated the Michigan oil and gas industry in the 1930s and '40s.

2. Trenton/ Black River Formation

The Albion-Scipio Filed of the Trenton/Black River Formation produces oil from a common source along a one-mile wide path in Calhoun, Jackson and Hillsdale Counties. The single largest field in the state, Albion-Scipio has produced 125 million barrels of oil since its discovery in 1957.

3. Niagaran Reef Trend

Discovered in 1968, the Niagaran Reef Trend (actually as series of fields) tripled Michigan's oil production and quintupled our natural gas production in the 1970s. The Reef Trend is located along a 12- to 15-mile wide pate from Oceana Country, through Kalkaska and Otsego Counties, to Presque Isle County. It also runs through southern lower Michigan, with production fields in Eaton, Ingham, Livingston, Oakland, Calhoun, Macomb and St. Clair Counties.

4. Glenwood and Prairie du Chein Formations

The Glenwood and Prairie du Chein Formations are the deepest producing gas formations discovered to date in Michigan. The wells are drilled to depths reaching 11,500 feet. Exploration and development of these fields, which are located in the central part of Michigan's Lower Peninsula, was heavy in the 1980s. Counties with significant Glenwood or Prairie du Chein discoveries include Newaygo, Bay, Osceola, Ogemaw and Arenac.

5. Antrim Shale Formation

Drilling and development of this formation, which began significantly in the late 1980s, has again doubled Michigan's annual natural gas production. The Antrim formation, located throughout Michigan, is presently only commercially productive in the northern part of the State. To date, Antrim exploration and production has centered on Otsego, Montmorency, Alpena, Alcona, Oscoda, Antrim and Manistee Counties.

Information provided by the Michigan Oil and Gas Association