Rivers At Risk

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Case Study
of the
Pigeon River
Hydrocarbon
Development
Plan

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The Pigeon River Country State Forest covers portions of Cheboygan, Otsego, and Montmorency counties. Under the
Pigeon River Hydrocarbon Development Plan, the forest to the east and north of the dark jagged line running through
the center of the map was off-limits to oil and gas drilling. Exploration and development occurred in the southern portion.
(continued from previous page)
Core Of The Energy Development Plan: Four Historic Documents
The action by the Natural Resources Commission proved to be the first important public policy decision in
the Pigeon River controversy. Nearly 20 more such pivotal votes and rulings would follow over the next
decade. They would be made by the commissioners, the senior staff of the DNR, state judges, and the
Legislature. And with each decision, the plan for how oil and gas development would proceed in the Pigeon
River would gain sharper focus.
- 1. Establishing a New State Forest -
The first policy document, based on Mr. Kellum's proposal, was an overall strategy to form and manage a
new state forest. Developed over a three-year period, AConcept of Management for the Pigeon River Country
was adopted by the Natural Resources Commission on December 7, 1973.
The plan called for establishing the Pigeon River Country State Forest by combining parts of the Pigeon
River State Forest, the Hardwood State Forest, the Black Lake State Forest, and the Thunder Bay River State
Forest.
The new forest contained 82,785 acres of public land and 9,763 acres of co-mingled private land. It served
as the center range of an elk herd that numbered about 250 to 300 animals. More than 70 miles of rivers and
streams swirl through the forest, the majority of which are prime trout habitat. There are 22 lakes of greater
than five acres, and just one-quarter of a mile of paved road.
Most importantly, the state set seven key objectives for managing the forest so that the "use of the timber
and mineral resources of the area for the good of man" were balanced with protecting the region "from
over-use and over-development which would destroy its wild character." One of the most useful steps the state
could take to achieve that objective, the plan noted, was to limit oil and gas development.
Among the novel rules proposed by the forest plan was to temporarily cease, from April 15 to June 30,
seismic exploration, laying of pipeline, and road construction during the critical nesting and young-bearing
period for wildlife. The plan also called for establishing an Advisory Council, made up of 12 citizens and three
ex-officio DNR representatives, to assist the DNR director in overseeing the forest.
"Oil and gas production may be denied or deferred in portions of the area," the plan's authors said,
"however, decision in this regard will be tempered by consideration of damage, need and effects of
exploration and development on other objectives in the area. It is quite probable that very careful development
can be conducted with minimal damaging effects."
- 2. AUnique Business Plan From the Energy Industry -
The second core document was a distinctive business arrangement for drilling in the Pigeon River Country
that was drafted by Shell, Amoco, and Nomeco. Publicly introduced on September 6, 1974, the agreement
called for mineral holders and leaseholders to "unitize" development by pooling their resources.
The intent was to make operations more efficient and more environmentally sensitive by eliminating
competitive drilling and thus the need for each company to install its own pipelines, roads, and production
facilities.
The industry agreement also proposed limiting drilling to 27,000 acres in the southern third of the Pigeon
River Country State Forest. Under the agreement, Shell Oil would manage all operations in the Pigeon River
field. Revenues and expenses were divided up according to an equitable formula.

(continued on next page)




				Case Study of the Pigeon River Hydrocarbon Development Plan

			The Pigeon River Country State Forest covers portions of Cheboygan, Otsego, and Montmorency counties. Under the Pigeon River Hydrocarbon Development Plan, the forest to the east and north of the dark jagged line running through the center of the map was off-limits to oil and gas drilling. Exploration and development occurred in the southern portion. (continued from previous page) Core Of The Energy Development Plan: Four Historic Documents The action by the Natural Resources Commission proved to be the first important public policy decision in the Pigeon River controversy. Nearly 20 more such pivotal votes and rulings would follow over the next decade. They would be made by the commissioners, the senior staff of the DNR, state judges, and the Legislature. And with each decision, the plan for how oil and gas development would proceed in the Pigeon River would gain sharper focus. - 1. Establishing a New State Forest - The first policy document, based on Mr. Kellum's proposal, was an overall strategy to form and manage a new state forest. Developed over a three-year period, AConcept of Management for the Pigeon River Country was adopted by the Natural Resources Commission on December 7, 1973. The plan called for establishing the Pigeon River Country State Forest by combining parts of the Pigeon River State Forest, the Hardwood State Forest, the Black Lake State Forest, and the Thunder Bay River State Forest. The new forest contained 82,785 acres of public land and 9,763 acres of co-mingled private land. It served as the center range of an elk herd that numbered about 250 to 300 animals. More than 70 miles of rivers and streams swirl through the forest, the majority of which are prime trout habitat. There are 22 lakes of greater than five acres, and just one-quarter of a mile of paved road. Most importantly, the state set seven key objectives for managing the forest so that the "use of the timber and mineral resources of the area for the good of man" were balanced with protecting the region "from over-use and over-development which would destroy its wild character." One of the most useful steps the state could take to achieve that objective, the plan noted, was to limit oil and gas development. Among the novel rules proposed by the forest plan was to temporarily cease, from April 15 to June 30, seismic exploration, laying of pipeline, and road construction during the critical nesting and young-bearing period for wildlife. The plan also called for establishing an Advisory Council, made up of 12 citizens and three ex-officio DNR representatives, to assist the DNR director in overseeing the forest. "Oil and gas production may be denied or deferred in portions of the area," the plan's authors said, "however, decision in this regard will be tempered by consideration of damage, need and effects of exploration and development on other objectives in the area. It is quite probable that very careful development can be conducted with minimal damaging effects." - 2. AUnique Business Plan From the Energy Industry - The second core document was a distinctive business arrangement for drilling in the Pigeon River Country that was drafted by Shell, Amoco, and Nomeco. Publicly introduced on September 6, 1974, the agreement called for mineral holders and leaseholders to "unitize" development by pooling their resources. The intent was to make operations more efficient and more environmentally sensitive by eliminating competitive drilling and thus the need for each company to install its own pipelines, roads, and production facilities. The industry agreement also proposed limiting drilling to 27,000 acres in the southern third of the Pigeon River Country State Forest. Under the agreement, Shell Oil would manage all operations in the Pigeon River field. Revenues and expenses were divided up according to an equitable formula. (continued on next page)