Tom Stover turned down an offer to have a well like this one in Missaukee County drilled on his Sears property because he worries about the water well behind his house and the quality of his land. (Heather Rousseau / Circle of Blue)
Michigan could be on the verge of a new and, possibly, risky era in underground exploration as companies jockey to cash in on the state's natural gas resources.
At the end of this month, oil and gas rights for 452,000 acres of state land across the northwestern Lower Peninsula will be auctioned off. A similar auction held in May generated $178.4 million for Michigan's Natural Resources Trust Fund, which state law designates as the recipient of all proceeds.
The surge of interest in Michigan's natural gas supplies is the result of a new twist on an old drilling technique -- one that has made natural gas production more cost-effective but has raised fears among environmental groups here and around the country.
Hydraulic fracturing has been used to harvest natural gas for decades in Michigan with few reported problems. By pumping a water/chemical mix vertically into shale formations beneath the surface at high pressure, the rock structures are fractured, allowing natural gas to flow and be pumped back to the surface.
Now, firms have found that by drilling much deeper vertically, and then drilling several thousand additional feet horizontally and using more water, they can unleash natural gas that previously wasn't harvestable.
Recent hydraulic fracturing in several states using this new approach has been linked to environmental problems, and concerns in Michigan include:
Industry officials and many government regulators say those problems can be tied to human error or failure to adhere to best practices -- not the hydraulic fracturing process itself.
Some conservationists ask: What's the difference? If state and federal regulations are unable to compel compliance that prevents harm to the environment, they say, then the process really is a problem.
"This drilling is not only deeper, it also uses substantially more fresh water ... and chemicals," the Michigan Environmental Council warns on its website. "There are many unknowns with respect to the environmental and long-term impacts."
Gas deposit a big draw
Roughly 10,000 feet below the surface across the top third of Michigan's Lower Peninsula lies the Collingwood shale formation -- named for the location of the mass's outcrop in Canada. It's a natural gas deposit that is drawing the attention of companies all over North America.
Calgary, Alberta-based Encana Corp. has gone the farthest in investigating Collingwood's potential. The company has leased mineral and gas rights to 250,000 acres of state and private land in Michigan.
Last winter, Encana drilled its first test well near Lake City. Over a 30-day period this year, that well produced 2.5 million cubic feet of natural gas a day after hydraulic fracturing. That level later dropped to 800,000 cubic feet of natural gas a day, but it is still considered productive by industry standards.
A second Encana hydraulic fracturing well is now producing test results in Cheboygan County. A company spokesman said the numbers from that well may determine how Encana approaches the gas rights auction at the end of the month.
"We're seeing a lot of people registering for this auction that have never participated before," said Mary Dettloff, spokeswoman for the Michigan Department of Natural Resources and Environment.
Weighing risk and reward
Many environmental groups have embraced natural gas as an alternative to coal and oil. And a flood of new investment and new jobs stemming from a rush on Michigan's natural gas would likely be welcomed in some circles.
"Sure, we'd welcome any new job creation," said Klaus Hergt, 83, of Cheboygan Township. "Just as long as it's done in a safe manner."
In addition, many families in rural Michigan have sold the mineral and oil rights to their properties -- taking in a one-time per-acre sum as well as a percentage of profits generated from wells on their property.
But with that comes the possibility of encountering problems residents in other states have experienced. It's placed many homeowners in the position of having to weigh an immediate payout with potential problems down the road.
"We've been approached by these companies through the mail, on the telephone and, in fact, they've just shown up at the door," said Susan Page, a 65-year-old Cheboygan Township resident who ultimately opted not to lease the mineral rights for her property near Twin Lake. "They're very enthusiastic about things, and it makes you sort of suspicious."
Critics cite water changes
Despite its potential, hydraulic fracturing has garnered negative headlines for impacts on the environment and on residents who live near the wells. One high-profile case involves residents in the northeastern Pennsylvania town of Dimock, who claimed their aquifer became contaminated after Cabot Oil & Gas began using hydraulic fracturing nearby.
Residents began noticing problems with their water's appearance, taste and smell. Many became sick and were forced to get new filtration systems and use bottled water.
State officials said the Houston-based company failed to properly seal the vertical well shaft in cement, which allowed methane close to the surface to migrate and contaminate nearby water supplies.
Pennsylvania's Department of Environmental Protection has fined the company more than $250,000 and is considering changes to its requirements.
"We have no problem with hydraulic fracturing," said Tom Rathbun, a spokesman for the state. "What we have a problem with is poor workmanship on these wells."
New York has imposed a moratorium on hydraulic fracturing to give officials time to examine the process.
And last month, the EPA sent requests to nine major natural gas companies seeking information about their practices as part of a study aimed at determining if fracturing poses a threat to drinking water and human health.
No easy answers
Encana has had its share of problems. One of the company's Colorado wells leaked chemicals including benzene into the West Divide Creek in 2004 resulting in a $371,000 fine -- the largest issued in the state at the time, according to a company official.
"Safety always matter and operating responsibility always matters," said Doug Hock, a spokesman for the company. "But it's important to understand what's involved in these issues. It's not about fracturing, it's about well-bore integrity. It's about operating properly."
For Page, such assurances weren't enough for her and her husband to sign over their mineral rights.
"I've read too many things about (hydraulic fracturing)," she said.
"We live right on a lake and we use a well system. Anyone who's concerned about their water needs to be careful."
Others have a different take, including some within the same families. The aunt of Page's husband agreed to lease mineral rights to her 500-plus acre property.
"She probably looked at it as a way for her to ensure her financial stability for the rest of her life and for her children's lives," Page said.