There is really only one world-class hydrocarbon play in Michigan: the Antrim Shale Formation. The Antrim Shale Formation has provided a sustained 20% of Michigan’s natural gas needs for decades. No other Michigan natural resource can come close to matching that contribution to Michigan energy production. Operators have a 90% success rate drilling Antrim wells. On average, each Antrim well drilled will provide over half a billion cubic feet of natural gas. An Antrim well will only use a small amount of water and sand for completion (under ~10,000 gallons of h2o). Antrim wells show a solid record with regard to ground water contamination issues given the thousands that have been drilled. Antrim wells have also played a part in the berthing of a natural gas pipeline network across Michigan to bring a high demand product to a hungry market. Michigan’s natural gas pipeline networks also connect to our gas storage fields, which are the #1 capacity fields in the United States. Michigan’s network of natural gas pipelines is an invaluable asset to Michigan’s clean energy future. The Antrim Shale has played an important part of Michigan’s energy past and deserves its due respect. Michigan citizens have heated their homes across our state and cleaned & dried countless baskets of laundry in part because of the Antrim Shale. Many comforts that our lifestyles and citizens demand are thanks in part to the Antrim Shale.
Michigan, however, can do much better toward providing our own energy independence than 20% of one sector of our energy consumption. We can invest in our energy future by building new infrastructure to turn garbage and other dirty fuels into a different kind of hydrocarbon called synthetic natural gas (SNG). Michigan & America can achieve 100% energy independence for our residential, industrial, and transportation needs while protecting ground water resources without the use of subsurface hydrocarbons. We can achieve 100% energy independence while we work toward responsibly eliminating crude oil and hydraulic fracturing from our energy mix.
SNG is a hydrocarbon that works much the same way as regular natural gas. We can use SNG to heat our homes, dry our laundry, and even power fuel cell electric vehicles. Although the Antrim Shale has been a major contributor to Michigan’s energy mix, it can never give us 100% energy independence on its own. The Antrim Shale also produces a toxic and corrosive wastewater, which makes it economically obsolete given modern advances in energy production technology. The Antrim Shale is ultimately unable to a be a sustainable primary energy source for Michigan in the long run even though it merits the respect of our energy producing forbears and the workforce that made it possible.
Hydrocarbons are a natural part of our environment. They’re everywhere from your burrito filled tummy, to an animal farm dung pile, to our raw sewage treatment facilities. Hydrocarbons are especially prevalent where you bury your stinky garbage. Since we know hydrocarbons are completely natural and will always be part of our lives and part of our energy mix, here’s the big question: how do we manage the hydrocarbons in our environment, protect our ground water resources, and provide ourselves 100% of our energy needs? Do you think the Antrim Shale could provide 100% of our energy needs if we amped it up somehow? If we could hook up Antrim wells to some kind of turbo charger for production maybe?
This month we continue looking into the possibility of Michigan authorities allowing wells in the Antrim Shale Formation (ASF) to be operated on a vacuum. The public announcement of this possibility was made here. This link provides a listing of all the MPSC documents associated with the case to petition this action. There are 421 documents in total so far on the latest case and thousands of pages of reading available. The 421 number will be obsolete by the time you read this sentence as documents are being added every day. One of the latest documents, #420, petitions to give Hal Fitch and Erin McDonaugh until September of 2015 to form their public comments regarding the operation of Antrim wells on a vacuum. Document #421, grants their request.
The original operators filing for approval to operate a well under a vacuum are Highmount Midwest Energy LLC (case# U-16074), Belden & Blake Corporation d/b/a Ward Lake Energy (case# U-16705), Terra Energy Company LLC (case# U-16076), and Muskegon Development Company (case# U-16190). An appeal against the operation of ASF wells on a vacuum has been filed by OIL Energy, Chevron Michigan LLC, Jordan Development Company, HRF Exploration & Production, and Trendwell Energy Corporation.
The lawyers arguing for operation under a vacuum are basically saying that it is wasteful to not operate wells in the ASF on a vacuum. Their argument is a lawyer’s reach, but I don’t think the argument would sound as legitimate if they just said they were trying to make a little more money faster off of Michigan’s publicly owned natural resources. But, making more money is what it’s about. This is what for-profit companies do; they seek to make a profit. There’s nothing illegal about that, but no one ever just comes out and says it.
The operators that are against operation under a vacuum are conversely concerned about the potential of money lost. This document in particular is a good summarization of the entire process of the appeal to deny authorization to operate Antrim wells on a vacuum. Arguments made for and against the operation of wells on a vacuum have a stated purpose other than financial reasons but that’s exactly what is at the heart of the matter. In essence, two groups of operators are represented by two different teams of lawyers that are fighting over how to make their money or protect their money made off of Michigan’s famed ASF. That’s what this story boils down to. Always follow the money if you want to get to the heart of the matter.
Michigan natural resources are in the middle of this battle between oil & gas lawyers from two different factions. Government employees engulfed in the issue are acting, in effect, as tax subsidized arbitrators deciding which private companies will win or lose profit off of our publicly owned natural resources. All we can know for certain about this issue is that the use of any public payroll dollars in administering this battle between oil & gas companies will not bring Michigan new jobs and will not bring Michigan closer to energy independence. One other certainty is that vacuum operations will bring more wastewater to the surface that will need to be disposed in class 2 injection wells.
Let’s look at the general concept of operating wells under a vacuum and some of the potential consequences to the ASF, as a natural gas producing formation, should vacuum operations be permitted:
Operating an Antrim well on a vacuum is exactly what it sounds like. A vacuum would be hooked up to an existing unit or field of ASF wells and it would “suck” up the gas and wastewater rather than just allowing the formation pressure to push up the gas and wastewater. The motivation is simple: get the gas faster and thus get revenue faster. The issues surrounding operating ASF wells on a vacuum boil down to two majors: 1) correlative rights and 2) the possible introduction of oxygen into the anoxic ASF.
The correlative rights issue pits the people that are for operating wells in the ASF on a vacuum against those that have mineral rights nearest to them. Imagine your mineral rights were next to a unit that went on a vacuum. The vacuum in the unit next to you might suck the gas from underneath you rather than that gas coming up your well bore like you’re used to. RMP has a supplemental data table in our DB that works in conjunction with MDEQ public data. When/if ASF wells are approved for vacuum operation, we will be able to mark those wells as vacuum wells in our database. We will also be able to mark the wells nearby vacuum wells. RMP’s software will be able to graph the production behavior of the wells before and after vacuum operations. If a nearby well suffers an abnormal production loss, the software RMP uses will spot it. If you are a concerned landowner in a production unit nearby a unit that will operate under a vacuum, let us know your well numbers and we’ll monitor your PRU and surrounding PRUs to look for abnormal behaviors in production. Our exclusive software will always be watching.
The other major vacuum issue is the potential of oxygen getting into the ASF because of infrastructure leaks or geologic communication through old nearby well bores. Oxygen being introduced to the anoxic ASF is a bit more serious with regard to Michigan natural resources for an array of reasons. Let’s talk about what can happen if oxygen is introduced into to the ASF. If you took high school chemistry, you might have already guessed the first issue. Remember Fe2O3? The most well-known chemical signature for rust? Yep, rust happens….when there’s oxygen and iron, there’s rust. Another thing that can happen if even a little bit of oxygen is introduced into the ASF is that it will end methanogenesis (the production of natural gas by microbes known as methanogens). In this document, we can reference the expert testimony in the Michigan court of appeals of Anna Martini who explains the risks related to the introduction of oxygen into the ASF.
Anna Martini, speaking under oath before the Michigan Public Service Commission, testified about the effects of the introduction of oxygen into the ASF. Anna is currently employed at Amherst College as an Associate Professor and Chair of the Geology Department. She teaches hydrogeology, biogeochemistry, and introductory courses in both geology and environmental studies. The Antrim Shale was the focus her doctoral thesis at the University of Michigan. She is a member of the Geological Society of America, Geochemical Society, and American Chemical Society.
In her sworn testimony on behalf of OIL Energy, Chevron Michigan LLC, Jordan Development Company, HRF, and Trendwell when asked about what the introduction of oxygen into the ASF would do to active methanogensis she had this to say:
Methanogens are obligate anaerobes – they cannot metabolize with oxygen present. Essentially, it is the methanogenesis process which results in the development of the gas in the Antrim Shale Formation. Exhibit I-124 (AMM-2) is a fluorescence micrograph of methanogens cultured from an Antrim well in Otsego County, MI. Under even low oxygen conditions, methanogens cease to function.
When Anna was asked about the redox process involving the precipitation of various scale products like rust that could form as a result of the introduction of oxygen into the ASF, she said this:
Exhibit I-125 (AMM-3) is a typical water analysis from the Antrim Shale Formation. The waters produced from the Antrim Shale Formation are anoxic and contain considerable amounts of metals (e.g., Fe) that, when in the presence of O2, will precipitate out as a form of iron oxide-hydroxide (“rust”). As an example, many Antrim wells produce water with as much as 2 mmol/L Fe (~100 ppm). For each 10,000 L of water produced (~ 63 barrels) the precipitation may reach up to 548 cc of iron oxide. This is evident from the following calculation:
2 Fe2+ 8 + H2O + 3/2 O2 ⇔ 2 FeO(OH)
2 mmol/L Fe x 10,000 L = 20 Moles Fe
20 Moles Fe → 20 Moles FeO(OH)
Fe = iron
O = oxygen
H = hydrogen
20 moles FeO(OH) x 106 g FeO(OH)/mole x 1 cc/3.87 g FeO(OH) = 548 cc FeO(OH)
In summary, for every ~63 barrels of formation water exposed to oxygen ~4.7 pounds of “rust” will form. Exhibit I-126 (AMM-4) is a photograph of the precipitate that forms when water collected is exposed to air. The reddish color is reflective of iron (rust).
Anna was further asked what would happen if any precipitate solids were introduced into the ASF. She said:
The consequence of the precipitation of these solids is that they can plug up the sand bed(s) in created hydraulic fractures and possibly plug off natural fractures. Also, if the solids are produced, they could foul surface production equipment and piping.
Anna also went on to explain that rust is not the only precipitate that would form if Oxygen was introduced into the ASF. Pyrite, also known as fool’s gold, would also react with O2 to form solids that could foul up natural fractures, induced fractures, and equipment. The ASF is what’s called a pyritic shale and if O2 gets into the ASF, gypsum (CaSO4 – 2H2O) will also form. Anna goes on to say that gypsum will also plug up fractures and equipment just like the rust would if it forms in the ASF.
The MDEQ has proposed a number of regulations to control the possibility of oxygen getting into the Antrim as a result of vacuum operations in this document. Our MDEQ staff might be burdened with extra police work, audits, and emails to handle an increased work volume of oxygen monitoring and regulating if vacuums are approved.
So what can we conclude? Well, we know that operating wells on a vacuum in the Antrim sucks. We can also conclude, if we look at the bigger picture, that operating wells on a vacuum in the Antrim sucks. See what I did there? It sucks for more reasons than the fact that it just sucks. It sucks because while lawyers bicker with lawyers about which private companies will make money from selling hydrocarbons from Michigan’s publicly owned Antrim Shale Formation, we could be working toward energy independence, improving Michigan’s economy, working toward the conservation of our fresh water resources, and creating good jobs. The ASF is the only world-class hydrocarbon producing formation we have in our state and I don’t mean to act as if I’m making light of the subject with the overuse of the suck word. Many lives and jobs and energy hang in the balance of the decisions that will be made and those decisions deserve to be well thought out and deliberate. I do, however, hope to spur people into thinking bigger than Michigan only producing 20% of our natural gas needs. We should be focused on the realistic goal of 100% energy independence while creating zero threats to our freshwater resources. Our society is thinking way too small in our energy ambitions. We are also wasting too much of our tax funded payroll dollars arbitrating and administering avarice between private energy monopolies seeking subsurface hydrocarbons when we can make all the energy we need up on the surface where the sun shines.
We are a hydrocarbon hungry society and we will, for the foreseeable future, need hydrocarbons to power our stuff like cars, smart phones, the regional webserver serving you this webpage, and the computer in front you allowing you to read these words. The hydrocarbon of the future, however, is synthetic natural gas (SNG) and we can use SNG to realistically move the needle toward 100% energy independence while eliminating threats to our ground water.
To think that hydrocarbons will no longer exist someday or not be part of our energy mix is to deny common sense. RMP tries to take a realistic world view on energy and has never suggested any position other than water conservation for public benefit and responsible migration away from crude oil as part of our energy mix. RMP advocates for the production of hydrogen (H2) from water electrolysis from wind and solar power but also via hydrocarbons like SNG from garbage & other dirty fuels like coal, methane from current landfills, farm waste, and raw sewage. RMP will be talking a lot about dirty energy sources like lignite, coal, and petroleum coke in future posts and how these energy sources are forecasted to increase in usage in the coming decades throughout the world; especially in poor countries. We can clean up the usage of these dirty fuels to get the energy we need while protecting our environment.
Michigan could be creating jobs that move us toward energy independence using hydrocarbons like garbage and other dirty fuels. We must start to consider what was once called waste as a new form of natural resource. Instead of putting that garbage into landfills we could make use of it and create jobs. We are building mountains of trash that threaten our groundwater called landfills. Those landfills form tons of natural gas over time and release it to the atmosphere as they also threaten our groundwater with contamination. That garbage you take to the curb each week could be turned into a hydrocarbon called synthetic natural gas while introducing zero toxicity into the atmosphere or environment. The only byproduct would be vitrified glass, which is completely inert and can be used as fill material for many applications including road making material which Michigan could use with all of our potholes. There is a hitch: building a large plant to gasify metro-Detroit’s garbage would cost money. Understand that the initial investment to create clean energy from dirty fuels could cost millions of dollars for a 25MW plant or into the billions for a 500+ MW plant. The high bar of initial capital investment in waste to energy power plants, however, is a smart long term economic solution. Other cities in other countries are leading the way and this is Detroit’s chance to step up and be a world player rather than than doing nothing in the waste to gas arena. RMP will be showcasing these megawatt-producing gasification plants from around the world in future posts.
Now let’s take look at other Michigan oil & gas activity that occurred in August 2015:
In August we see Marathon Oil’s first move in the Michigan basin since acquiring Encana’s assets. Marathon Oil has applied for and was permitted to drilll the State Beaver Creek 1-14HD1 in Crawford county using HVHF this month. Marathon also applied for the Schlabach A1-18 P oil well in Clare County targeting the Amherstburg formation. Marathon Oil also stood by as more of their permits acquired from Encana expired. In August, the 60685 & 60686 permits into the Collingwood expired as we have been predicting. To reiterate, as promised, the Collingwood is a complete bust.
Speaking of bust, we see Whiting Petroleum Corporation’s stock continue a devastating slide. Whiting’s stock was trading near $85/share this time last year. It continues to drop well below 3 year low territory. We have seen Whiting swing and miss harrrrd in Sanilac county Michigan in pursuit of the A1 Carbonate and in August 2015, we see Whiting transfer ownership of 38 of their 139 Michigan wells to a company named Cobra Oil & Gas Corporation located in Wichita Falls, Texas. Saudi Arabia is the king of crude oil and US companies, like Whiting, and the men & women they employ are at the mercy Saudi actions; to think otherwise is folly. We are all at the mercy of the Saudis to a certain extent as long as we use crude oil as an energy source. If you support crude oil expansion, like KXL or Arctic Drilling, you hail King Salman as your energy CEO whether you would understand it or not. Forget about farcical TV commercials that say the USA is a kingpin of oil, the Saudis are the kings of oil. Period. The USA does not even produce half of the oil we consume & we have only 2.2% of proven crude reserves. The USA, Venezuela, Canada, and Russia are all paying dearly right now because of a casual twist of a spigot by a king half a world away.
In other Michigan news, Terra Energy is converting its Wrubel 4-14 well near Gaylord into a CO2 injection well. CO2 injection into the Niagaran is becoming more prevalent and this niche oil industry in Michigan is poised to grow with legislation talked about in RMP’s May 2015 edition of MOGM. RMP talked about CO2 sequestration in February and May editions of the MOGM and we continue to try to learn more about this technology that is the only weapon in our arsenal to eliminate atmospheric emissions of industry produced CO2.
Terra’s Wrubel 4-14 is a good example of a Niagaran Pinnacle Reef reservoir that was identified early as a good candidate for 2ndary recovery. Much talk about CO2 sequestration and secondary recovery has been taking place over the past decade. The US Department of Energy has funded projects in Michigan looking at the possibility of CO2 sequestration and carbon storage potential in Niagaran Pinnacle Reef trend oil fields. In simple terms, people are demanding action on climate change. One of the demands people are making is the reduction of CO2 released to atmosphere via industry and energy production.
As mentioned in the February and May editions of MOGM, RMP is following this topic closely. We have stated that with an increase in CO2 pipeline infrastructure, CO2 injection into old Niagaran oil reservoirs could meet the demands of what many people are asking for while also producing additional energy. The graph above, shows the complete 28 year and 3 month production history of the Wrubel 4-14 well which is a good candidate for CO2 injection. What we are working to understand is whether the CO2 remains in the reservoir or whether that CO2 comes right back up with the oil.
August 2015 – List of New Oil & Gas Well Applications
In August we see 6 new applications. 1 Gas storage & observation well and 5 oil wells. August numbers are reported through August 21st. Marathon’s application in Crawford county is already permitted and their application in Clare county is brand new at the time of this publication.
August 2015 – List of Permits Issued for Oil & Gas Wells
In August (through the 21st) we have 12 new wells permitted. 11 oil wells and the 1 GSO well applied for and permitted this month. Marathon’s permit #61130, if completed, would use a completion technique called High Volume Hydraulic Fracturing (HVHF) using an estimated 1,815,000 gallons of water according to the application submitted to the MDEQ. The term HVHF in Michigan can vary in water consumption between a well that consumes 100,000 gallons of fresh water for completion to a pair of wells that can use 33,674,290 gallons of fresh water like we saw when Encana’s State Excelsior 2-25 HD1 & 3-25 HD1 were simultaneously completed in March of 2013 in Kalkaska, Michigan.
August 2015 – Oil & Gas Wells Published as Plugged
The Apps to Plugs Ratio KPI:
The apps to plugs ratio is self explanatory. By looking at the number of applications to wells plugged KPI we can see wells coming vs wells going. This KPI along with the previous one supports our original 2014 & 2015 outlook post with more numbers and data.
2015 Apps to Plugs Ratio KPI:
69 Applications : 171 Wells Plugged
The Permits to Plugs Ratio KPI:
The permits to plugs ratio is nearly the same as the apps:plugs ratio but with permits instead of applications.
2015 Permits to Plugs Ratio KPI:
75 Permits Issued : 171 Wells Plugged
Hydrocarbons are natural and will always be inside you and all around you. Our bodies are made of hydrocarbons. Hydrocarbons are currently and will always be part of our lives and our energy future. We have to manage our hydrocarbons in a smart way that protects freshwater. Certain hydrocarbons, like crude oil, should be responsibly phased out of our energy mix in order for our economy to get stronger and improve the wealth of our nation. We have the technology to responsibly phase out crude oil as energy source while protecting working men & women in the oil industry in America. Roughly 50% of national crude oil consumption is imported. Over 95% of Michigan crude oil consumption is imported. Crude oil accounts for over 11% of our national trade deficit even with major gains in American oil production over the past decade. All of this while our federal legislators are laser focused on KXL, exporting crude, and drilling for crude in the Arctic because of campaign financing donations. Crude oil is obsolete even though it will be a major source of transportation energy for years and years to come. The faster we eliminate hydrocarbons that don’t make sense for our economy, like crude oil, the faster we improve our economy and national security. We can phase crude oil out of our energy mix by adopting FCEVs for transportation and building an H2 fueling infrastructure so we can use garbage or water as a fuel source in place of gasoline or diesel fuels.
This month’s featured image is of a fluorescence micrograph of methanogens cultured from the Antrim Shale formation in Otsego County Michigan. Countless numbers of these tiny microbes produce the billions of cubic feet of natural gas we take from the Antrim Shale in Michigan each month to heat our homes and water. The image was obtained from the public testimony of Anna Martini as mentioned above and is served by MPSC public webservers.
In this August 2015 MOGM special thanks goes to Sharron Allen, who was very helpful in the publication of this post. Sharron’s name & phone number tops the alphabetical listing of all MPSC employee’s at this link. Sharron helped teach me how to navigate the MPSC case information webpages which provided the many source documents for this edition’s main story. Sharron joked about how it’s no fun to have her name at the top of the alphabetical list because she’s always the first person’s phone to ring and then she has to deal with questions from people like me. She joked that if she could start her career over, she would change her last name to Zimbabwe. But, Sharron’s career is near its end as she told me she’d be retiring soon. Good luck in your retirement Sharron. Thanks for all your help and all of your years of service to Michigan.
By the way, while you were reading this post, the flare in the youtube below was burning @ Interstate 96 & Milford Road in New Hudson, Michigan. Garbage thrown away many years ago is buried there. That garbage is decomposing into leachate & natural gas. The leachate threatens groundwater and the methane being produced naturally by this decomposition process is being flared and vented to atmosphere. This garbage could be powering FCEVs like the Toyota Mirai or the Hyundai Tuscon. Or, the natural gas could be heating someone’s home or providing electricity to someone’s home. Natural gas is a part of life. While we can get all the natural and synthetic natural gas we need without hydraulic fracturing, living things cannot exist beyond natural gas. Managing our hydrocarbons is the only prudent solution for our energy future. Pretending that natural gas is a problem for the environment is a red herring – natural gas is a fundamental part of our environment.
Join us next month when we will look at the first six month’s of production of 2015 in the Michigan Basin. Remember, production reporting lags well behind real time. We are estimating that by the end of September, we should have a solid basis to review the production from January 1, 2015 to June 30, 2015.
See you next month and thanks for reading.