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Status report on Antrim drilling in Manistee, Benzie, and Leelanau counties

April 1, 1998 | By Keith Schneider
Great Lakes Bulletin News Service

In the year since the first Antrim natural gas well was drilled near Cedar, in Leelanau County west of Traverse City, industry agents have been leasing large blocks of mineral rights in Leelanau and in the Lake Ann area of Benzie County. Meanwhile, Lee's Petroleum, one of the state's most active Antrim producers, has proposed drilling three new wells in southern Leelanau County.

State geologists and industry representatives are unclear about what this activity means. Leelanau never has been a top producer of oil or gas, and virtually all Benzie production to date has been in Colfax Township, in the southeastern part of the county.

The new exploration reflects the increasing economic vigor of the industry. Financial returns from Antrim drilling have been very strong in recent years. According to the Michigan Oil and Gas Association, total gross revenues from Antrim gas have climbed to more than $600 million annually.

The expense of installing an Antrim well is relatively low. Leases generally are negotiated for less than $35 an acre. Drilling the well costs about $260,000, compared to an average of more than $1 million for a well into the much-deeper Niagaran geological formation. The result, say industry observers, is that aggressive companies like Lee's Petroleum are willing to drill a few exploratory wells along the known edges of the Antrim formation.

However there is more financial risk for producers in drilling for Antrim gas on the northwestern side of the Lower Peninsula, since the reserve is not as consistent there as it is in northeastern lower Michigan.

For example, in 1994 leasing agents raced through Manistee County after two unusually productive Antrim wells were tapped in Bear Lake Township. By 1995 more than 400 drilling permits had been issued by the state for Manistee County, most of them in five north-county townships. The reserve in Manistee turned out to be spotty -- 86 wells have come on line so far, according to the Michigan Public Service Commission.

Mason Co. Leases Fairgrounds, Airport
... Action Taken Despite Health and Safety Risks

The Mason County Board of Commissioners has accepted a bid of $30,354 from a Charlevoix-based energy company for the rights to explore for oil and gas beneath 537 acres of county-owned land, which includes the county fairgrounds and the local airport.

The decision came at a February Board of Commissioners meeting in Ludington, which attracted supporters and opponents of the leasing proposal. Despite calls from citizens to hold a public hearing on the matter, county officials accepted the oil company's offer and directed a subcommittee to negotiate the terms of the lease.

Local oil and gas workers spoke out in favor of the proposal, saying that if the county elected not to lease the minerals it would send the wrong message to an industry that provides local jobs and revenues to the community.

Staff of the Institute and local residents urged county officials to postpone the lease sale until a full analysis of the costs and benefits could be completed, including a comprehensive evaluation of the potential health and safety risks.

The drilling would tap the Niagaran reef, a deep oil and gas producing deposit that in Mason and other nearby counties contains dangerous hydrogen sulfide gas. A 1996 accident from a well in Parkdale caused eleven Manistee County residents to be hospitalized and left two people with permanent respiratory damage.

In addition to safety concerns, citizens asked the county commissioners to consider the potential effects of noise, odor, and truck traffic on the public's ability to enjoy the fairgrounds.
Instead of considering these issues, county officials deferred to the state Department of Environmental Quality to protect public health and safety and reduce nuisances. The DEQ currently is working on developing new safety standards for hydrogen sulfide, but there is no assurance that they will be in effect before the wells at issue are drilled. (See the article on page 16.)

The county lease brought an average of $56.37 per acre, a sum opponents say is too low. Citizens point to an auction last December of state-owned minerals in adjacent Oceana County, which averaged more than $100 an acre with some bids reaching as high as $1,000 an acre.

CONTACTS:Fabian Knizacky, Mason County Administrator, 616-843-8202; Sam and Sarah James, Advocates for Intelligent Responsible Environment, 517-757-3790.

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