In the June 2015 Michigan Oil & Gas Monthly, we continue to see what we have been seeing every month for the past five years: not much. We are on pace to have the slowest permitting year in Michigan’s 88 year oil & gas history. We have been hearing from media outlets about how High Volume Hydraulic Fracturing (HVHF) is going to increase Michigan hydrocarbon production and create jobs for Michigan workers. The facts tells us the complete opposite. Read the June 2015 MOGM to learn more.
RMP is 501(c)3 non-profit organization registered in Michigan. We are committed to protecting fresh water resources by advocating for: sustainable energy production, hydrogen fuel cell vehicles, remediating environmental pollution & rethinking waste management.
Great stuff, as usual, Matt. Thanks for the informative read.
While reading, a a few questions arose. Don’t know if you have the answers, but whatever light you can shed on them would be appreciate:
1. I assume that the decline in Michigan oil production is the result of low global oil prices?
2. Why do companies abandon wells and at what stage of the process?
3. You mentioned leaking infrastructure in Michigan. How are we aware of this? I’m sure that our “environmentally conscious” friends at the MDEQ do not publish this information.
I agree with you that the MDEQ and oil companies need to be held accountable for any leaking infrastructure. With that in mind, I plan to write them to see what they are doing about this.
Thanks again, Matt!
Steve
Steve,
I’ll do my best to answer your questions:
1) Yes, oil prices are playing a big part in the slowdown of Michigan activity. If an operator believes that money out will be less than money in, the operator will not move forward with a project. Oil prices affect the probabilities used in that equation. It’s always about the money.
2) Operators could abandon a well for a number of reasons but primarily it is because the cost to operate the well is greater than the revenue from the well. The operator might think that oil prices will be higher in the future, so the operator will suspend production until the well is more profitable. It’s always about the money.
3) RMP supports and appreciates the hard working men and women of the MDEQ and MDNR. RMP gets the much of the information we publish from the MDEQ. And yes, the MDEQ is aware of abandoned and leaking infrastructure. RMP currently lists 206 oil & gas well/facility locations with confirmed ground water contamination and over 400 locations that are Temporarily Abandoned. There are 100s more locations where wells produce very little oil that are considered active and are allowed to hold leases of taxpayer owned land for very low prices. It is a good idea to write the MDEQ and ask questions about these locations. Does it make economic sense to allow locations that pollute our groundwater and provide very little income to our state to occupy land we own? These are fair questions to ask of our legislators and the MDEQ.
Thanks for reading.
Thanks, Matt!