Each month respectmyplanet (RMP) recaps the past 30 days of oil & gas activity in the Michigan Basin. We cover new applications & permits to drill oil, gas, disposal, and storage wells and anything else hydrocarbon related. We recap oil & gas activity that happens in Michigan and publish this Michigan Oil & Gas Monthly (MOGM) magazine right here at the end of each month. You can follow us on Twitter by clicking here, or like us on facebook by clicking here and you won’t miss a publication. Our publications are free and always will be. Have a tip for us about a leaking tank or a spill near your house? Or, are you curious about something oil & gas related you see that you want us to dig into? Let us know by leaving a comment at the bottom of this article.
Michigan oil & gas has awoken from its 2016 slumber with August being a very busy month. While we are still technically off to the slowest year in Michigan oil & gas history, things certainly picked up speed in August. The MDEQ’s Office of Oil Gas & Minerals received more applications for oil & gas wells in August than in the previous seven months combined. We are still likely on pace to have the slowest year ever in Michigan history, breaking last year’s record, but this month was a busy one nonetheless.
Early in the month Interstate Explorations out of Houston, TX filed an application for the Root 1-15 well to use high volume hydraulic fracturing (HVHF) in Roxand Twp in Eaton County targeting the Prarie Du Chien formation. That got me to thinking about HVHF again and I thought it would be a good idea to check in on Michigan’s HVHF wells producing from the Collingwood formation as we haven’t checked in on those wells in about a year. We will drop in on the Collingwood wells later in this MOGM and look back on Michigan’s HVHF history.
Also in August, Savoy Energy filed applications targeting of the Trenton-Black River formation in Lenawee & Monroe counties, which is something new. Most oil wells targeting the Trenton group of rocks in Michigan is along the Albion-Scipio trend, which is a remarkable series of synclinal oil & gas traps of Middle Ordovician age. Michigan’s Trenton group of rocks along the Albion-Scipio trend have produced 70x more oil than all other Middle Ordovician age rocks in Michigan combined. So, we will keep an eye on Savoy Energy’s Trenton-Black River exploration in Lenawee County & Monroe County to see what they find.
To keep things going with the flurry of activity in August, Core Energy has applied for a horizontal injection well in their Chester EOR unit in Otsego County. RMP is watching Core Energy activity closely as they have been working with the US Department of Energy on Carbon Dioxide sequestration technology, which is a topic that RMP advocates for and supports. RMP will be mapping out all of Michigan’s CO2 injection wells and its supporting infrastructure to understand our Michigan #CCS scenario better. CO2 sequestration (often called #CCS which stands for Carbon Capture & Sequestration) is a big topic across the country and around the world. RMP is Michigan’s fuel cell authority and we recently wrote about Molten Carbonate Fuel Cells and their role in #CCS in our Fuel Cells 101 – Learning the Basics post.
Fuel Cell Energy out of Danbury, CT recently direct issued $40 million worth of common stock to ExxonMobil who plans to implement $FCEL’s Molten Carbonate Fuel Cells around the world to capture Carbon Dioxide whence it can be stored underground just like what Core Energy is doing right here in Michigan. RMP will be watching & reporting on how Core Energy’s, ExxonMobil’s, and Fuel Cell Energy’s activities all fit together for Michigan and the rest of the world. ExxonMobil will soon be announcing the location of their upcoming pilot plant using $FCEL’s molten carbonate fuel cells and you’ll hear about it first on RMP’s Twitter & facebook; RMP is Michigan’s fuel cell authority.
A Look Back at Michigan’s HVHF Collingwood Wells Using LVWWs
RMP has been following HVHF since it started in Michigan in 2008. Friends of the Au Gres & Rifle River, along with RMP, wrote a white paper on HVHF in Michigan originally published in September 2012, which you can read about by clicking here. Our paper was again updated in November of 2014 to account for some additional activity that occurred subsequent to the original publication date, but we had already gathered, parsed, and analyzed enough information in 2013 to determine that there would never be another LVWW for hydraulic fracturing in Michigan after the Westerman 1-29 HD1 well. When Halliburton rolled off the Westerman 1-29 HD1 pad in June of 2013, all the circus-like activity of HVHF using LVWWs was over in Michigan. Period. And, it’s never going to be coming back unless someone is looking for a loss leader for a tax write-off.
Many people consider the University of Michigan’s Graham Sustainability Integrated Assessment of high volume hydraulic fracturing an authority study on HVHF in Michigan, but RMP and our volunteer researchers do not. In fact, myself and the volunteer research analysts I have worked closely with to study HVHF in Michigan think the report is fundamentally flawed and misses the mark on many levels. The paragraph below is excerpted from the Graham Institute’s executive summary published in September of 2015 and very well encapsulates how fundamentally flawed the report is.
RMP has repeatedly stated our #1 most important geologic research philosophy is that it’s all about the rock. The excerpt above shows clearly that the Graham Institute did not do their homework or respect the rock.
RMP has been working diligently to report on HVHF since Beacon went into Sanilac County in 2008 and brought Michigan its very first HVHF well which was a failure. No wells in Michigan have ever responded sucessfully to HVHF since that very first well. Zero. Hundreds of millions of dollars have been spent since that white whale. Hundreds of millions of dollars have been lost. The Beacon well, just like every other well that used HVHF in Michigan, was targeting liquids not dry natural gas (CH4). The Beacon well like every other well using HVHF in Michigan was done with prices at all time highs. We have watched Devon drop tens of millions of dollars testing Michigan rocks with HVHF and walk away. We have watched Chesapeake lawyers turn to EnCana lawyers in a Cheboygan courtroom and curse the day that EnCana tricked them into testing Michigan while they were being charged with collusion for ripping off Michigan landowners. We watched latecomers like Blackstone funded Rosetta & GeoSouthern have dismal results testing Michigan rocks just like every single abject failure using HVHF in Michigan before them. Even Marathon’s last two recent attempts that we reported on in January using HVHF kept the perfect streak of failures alive.
RMP volunteers visited every single one of Michigan’s HVHF sites and took pictures and documented well timelines in real time. We did our best to share our information with the public at no charge and we received zero funding to conduct our research. RMP created a pictorial timeline of every single well from a staked wellhead location in the woods, to cleared pad, drilling, completion, and finally reclamation. Where was the Graham Institute getting their information to publish that paragraph which is completely out of touch with what was already so clear in 2013? Not only were things crystalizing into clear view in 2013, that paragraph was published in 2015 two years after every single operator had already stopped HVHF operations in Michigan.
More than two years before that paragraph was published, it was very clear that every single HVHF attempt was a failure with liquids prices at historical all time highs. Furthermore, natural gas prices (again which were irrelevant) had remained relatively constant over the past four years while activity in Pennsylvania, Ohio, Texas, North Dakota, and Wyoming was booming at never before seen levels. So again, where is the data to support that claim? That paragraph speaks volumes as to the waste of $600k used to fund the study. This key miss of not respecting the rock’s capability to produce is exacerbated by the fact that the report was published two years after it was abundantly obvious to people who actually studied the data available. RMP volunteers had been writing about this and sharing the information on this website since 2010 without ever having received a single penny in funding.
Unfortunately, the entire IA & its fundamentally flawed and incorrect reports were moot on arrival with regard to HVHF in Michigan. I tried to caution Mr. Callewaert about this fundamental premise via email and that some of his other data he already published on the Antrim was unsubstantiated. I even provided him our numbers through the contact links they provided. But, his response to me was that his numbers came from the MDEQ and he therefore was going to use those numbers. I told him that it took three people weeks of long hours reviewing Antrim well files and special custom software we created specifically for this project to compile the numbers to demonstrate the MDEQ average Antrim water consumption number of 50,000 gallons of water per well was incorrect and unsupported. I even gave him the spreadsheet that was the fruit of our long hours of tedious volunteer labor. His instinct was to trust the MDEQ’s unsupported number instead of RMP’s peer verifiable data and not ask any further questions. Mr. Callewaert again published the incorrect numbers provided by the MDEQ about Antrim water consumption with RMP’s data in hand. RMP’s data using a sampling size of 992 Antrim well completion reports shows an average water use of 6,805 gallons of water when including wells that also used nitrogen foam and 11,457 gallons of water when excluding wells that used nitrogen foam.
Mr. Callewaert, who was working on U of M’s integrated assessment, also had an opportunity to see an actual HVHF well in Michigan (the one pictured throughout this post) that was about to use a LVWW for completion and he declined the invitation. The Garfield 1-25 HD1 well in Garfield Township was about to be completed by Halliburton when Mr. Callewaert contacted one of RMP’s key contributing volunteers. Mr. Callewaert was offered a chance to see the process but declined and said that he had already visited a hydraulically fractured well in Otsego County with Erik Bauss who was working as a shill for EID at the time. Erik Bauss was on the payroll of the API working for their hydraulic fracturing promotional arm. Erik knows very little about hydraulic fracturing and unfortunately showed Mr. Callewaert & Mr. Schwank an Antrim well with a two-inch diameter well bore made from parts that can be acquired at Home Depot. RMP has often made the analogy of an Antrim well to a Collingwood well as something akin to a mouse & a blue whale; both are technically mammals and have some similar characteristics, but they’re very different animals. The API’s EID still to this day spends $millions$ in prime time advertising, like a child with his fingers crossed behind his back, saying that an Antrim well is in essence the same as a Collingwood well for their marketing purposes because they both use hydraulic fracturing for completion. Mr. Callewaert had an opportunity to witness an HVHF well completion using an LVWW, which is something that will never again be done in Michigan, and he instead missed that opportunity in order to visit an Antrim well with a paid promoter of hydraulic fracturing from EID.
It’s disheartening to have our community-based data and research be ignored by those who say they’re focused on community-based research. To ignore data that stands on its own two feet that clearly shows something was erroneous and not ask for or provide substantiation was a biting mistake. For Mr. Callewaert to not even ask questions of where the MDEQ data came from or how it was supported exacerbated that mistake. Mr. Callewaert’s actions let me know exactly what to expect in the integrity of the Graham Institute’s IA; it was going to be fundamentally flawed and ill timed, which it was.
Regardless of the outcome of the Graham Institute’s study, let’s look at where Michigan’s Collingwood wells are today. RMP did the math long ago showing that Michigan’s Collingwood wells could never and will never break even financially which is what matters most to an operator. EnCana, the original operator, probably figured this out before RMP did, but we had to wait for our data from the MDEQ and we weren’t far behind EnCana in figuring out the Collingwood was a bust. EnCana certainly bluffed pretty well, however, because they still needed to sell their Collingwood assets and give the appearance their assets had real value. EnCana didn’t want to advertise that the wells were such a large financial loss to their shareholders as well as to any potential buyers like Marathon. And, we will never know what Marathon paid for EnCana’s wells, but RMP speculates that Marathon only wanted the property to look for oil. Marathon in fact attempted for oil in the Detroit River formation in October of 2015 and we reported in January 2016 how their attempts using HVHF in the Detroit River Group (Amherstburg) were failures too.
Since Marathon took possession of EnCana’s Collingwood wells, I will say they have done a good job of getting more production out of those wells than EnCana did. My colleague in amateur petroleum geology hobbying speculates that Marathon has most likely been able to get more production out of Michigan’s Collingwood wells by playing with the choke settings and “repressuring” the reservoir by simply toying with the choke. It would be interesting to talk to Marathon’s engineers to see what it is they did to improve EnCana’s wells, especially the resuscitation of the State Excelsior 1-25HD1. Regardless, we can see improved production out of all of Michigan’s Collingwood wells under Marathon’s tutelage and Marathon is at least still getting some revenue out of the wells.
It’s been about year since we last checked on aggregate production of Michigan’s Collingwood wells and we can see an increase of total revenue since inception from approximately $27.5 million a year ago to about $32.6 million today (through May reporting which is most current in August of 2016). We also see the State of Michigan’s total aggregate revenue cut rise from about $5.5 million a year ago to about $6.5 million today. We also see a little bit of a milestone in that aggregate revenue on the State Excelsior 3-25 HD1 well broke through the $10 million mark and is still the #1 NGL producing well in Michigan. While $32.6 million dollars might sound like a lot of money, remember that EnCana invested over $230 million into their Collingwood “experiment” according to their spokesperson Doug Hock. Even with Michigan’s free give-away of millions of gallons of our public freshwater from a cold transitional aquifer zone, the Collingwood is a bust. The financial failure that RMP continues to trumpet is why we have predicted with such confidence since 2013 that we will never again see a Collingwood attempt or an LVWW for HVHF. Investing $230 million to make $32 million is not smart business. You won’t, however, find that out by reading the Graham Institute’s executive summary 😉
August 2016 – List of New Oil & Gas Well Applications
Michigan received 19 applications in August more than doubling the total number of applications received for all previous 7 months of the year. This brings the total number of applications for 2016 up to 30. While we are still on pace to break 2015’s record for slowest year ever, August was still a busy month.
August 2016 – List of Permits Issued for Oil & Gas Wells
In August 2016, Michigan issued three new permits. Since there are only 19 permits so far this year, all permits for 2016 are shown below. The bottom three permits on the list were issued in August.
August 2016 – Oil & Gas Wells Published as Plugged
Only six wells were reported plugged in August bringing the total wells reported plugged for 2016 up to 83.
The August 2016 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.
2016 Apps to Plugs Ratio KPI:
30 Applications : 83 Wells Plugged
The August 2016 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.
2016 Permits to Plugs Ratio KPI:
19 Permits Issued : 83 Wells Plugged
August 2016 – Petroleum As % Of U.S. Trade Deficit KPI:
RMP is tracking this stat since President Obama signed a bill in December of 2015 that lifted an export ban on crude oil that had been in place since 1970. RMP will be monitoring the effect of that federal legislation by monitoring an important economic statistic published by the United States Census Bureau. The data and graph (shown below) come from this website: https://www.census.gov/foreign-trade/statistics/graphs/PetroleumImports.html
This stacked-area line graph shows how much of the monthly US trade deficit can be attributed to the deficit in petroleum products. The vertical axis shows percent of the U.S. Goods and Services Trade Deficit. The horizontal axis shows a monthly time series from January 2006 to present. The bottom area of the graph shows what percent of the deficit comes from petroleum goods. The top area shows the percent of the deficit coming from non-petroleum goods and services. RMP made a prediction the day the bill was signed that this graph would trend toward zero which is a good thing for the US economy.
Recently, however ,we see two consecutive month’s of upticks causing oil companies continued pain caused mostly by Saudi Arabian actions.
Closing Remarks – August 2016
Finally in the August 2016 MOGM we touch back on the main reason why RMP publishes this monthly magazine: to advocate for the responsible migration away from crude oil as an energy source because it causes contamination to our groundwater. It’s important for RMP to demonstrate we understand oil & gas so we don’t get bullied as know-nothings by a very tough and well-funded industry. But, it’s also important for RMP to consistently demonstrate how oil is contaminating our groundwater and is bad news for our economy and national security in the long run.
We again find this month another example in a long list of examples whereby hydrocarbon storage tanks have contaminated Michigan’s freshwater resources. A Muskegon Development tank battery in Roscommon County was discovered to have polluted Michigan ground water and was reported by Muskegon Development on July 5, 2016. RMP has demonstrated in numerous posts that hydrocarbon storage tanks above and below ground are the biggest threat and burden to Michigan’s environment & economy posed by hydrocarbons.
We as Americans have used oil to our benefit for a long time and the quality of life improvements we have gained as a society from using hydrocarbons like crude oil for energy are undeniable. But, we now have the technology in hydrogen fuel cells to migrate away from crude oil as an energy source and create new jobs for our oil field workers as well as dramatically cut our military costs while improving our national security. We should, and we must responsibly migrate away from oil to improve our economy, environment, energy security, and national security for the benefit of future generations. This whole website and every post written here is a repository for information that supports this simple point. RMP takes this stance not to attack the oil industry or threaten its workers as we recognize our own dependence on oil; but rather, we call out these common sense points to take a sober look at what is best for America’s future generations. RMP understands that the migration away from oil will take decades and must be done in a responsible way to protect workers in the oil industry and the economy at large.
If you’re interested in reading about this latest spill discovery that was reported by Muskegon Development you can request a copy of the Site Status Report prepared by Pescador LLC out of Traverse City, MI for the tank battery spill in Roscommon County. I would upload the document for you to DL from this site but it is too large (60MB) for RMP to attach on our tiny server space which is rented on a shoe-string budget. You can read about the tank battery that required the removal of over 2,354 tons of contaminated Michigan soil. You can read about the ground water monitoring well that was installed that showed readings of ethlybezene & total xylenes above GSI criteria and also 1,2,3 TMB and 1,2,4 TMB levels above both RDW & GSI criteria. You can wonder to yourself: why wasn’t this found sooner? You can wonder to yourself: how could over 4,700,000 pounds of Michigan soil get contaminated with hydrocarbons before it was discovered again by happenstance rather than protocol? How many years did this leak go on undetected? It’s inexcusable neglect and unacceptable. And still, does the MDEQ publish a monthly listing of EQP-7233 forms for Michigan taxpayers to read? No.
Why doesn’t the MDEQ publish a listing of every EQP-7233 filed each month which is easily compiled information to host on their website? RMP has to sleuth for it and FOIA for it. It’s a terrible practice that keeps Michigan taxpayers in the dark about the underbelly of using crude oil for energy. One of RMP’s long time volunteer contributors who watches over the Au Sable watershed has to send multiple boilerplate FOIAs every single month on the 15th of the month individually by county just to find out if a spill has occurred in past 30 days. Let’s fix this. Let’s demand that the MDEQ publish a listing of every EQP-7233 form on their website every single month. It is so easy to do and would shed light on all the contamination caused to our freshwater by oil & gas. These actions could hasten the adoption of hydrogen fuel cells and create excellent high-paying jobs for Michiganders and true energy independence.
There are literally thousands of liquid hydrocarbon tanks leaking in Michigan contaminating our groundwater. The biggest problem in Michigan and every other state in America is actually refined hydrocarbon product storage tanks (i.e. gas stations & distribution stations) In fact, the count of the Michigan LUST list as of the date of this publishing is 9,543 tanks under active remediation at 2,809 unique locations. In fact, Michigan has an entire section of law dedicated to acceptance of the fact that there are so many thousands of these contamination sores across Michigan that we (along with every other state in America) have become complacent in accepting dealing with these messes as a standard routine. Gasoline & diesel fuels are a shitty and obsolete way to power our cars & trucks. But, RMP is here to tell you there is a better way. RMP thinks outside the box and has a solution to phase out this problem along with the phase out of crude oil pipelines. This is why RMP has self-declared itself as Michigan’s fuel cell authority non-profit 501(c)3 environmental group. By switching to fuel cell electric vehicles like the Toyota Mirai, we can responsibly migrate away from gasoline and diesel as a fuel source; and more importantly as a contamination source to our freshwater.
Michigan spends on average over $30 million dollars a year on remediation of these tanks that contaminate our water. There is in fact an entire cottage industry of high paid mucky mucks that profit from this contamination and dozens of Michigan forms administered with our tax dollars that can be responsibly faded to antiquity if we no longer used refined petroleum products to power our cars and trucks.
On Dec. 30, 2014 Michigan Governor Rick Snyder signed Senate Bill 791, creating Public Act 416 of 2014. This amends Part 215 of the Natural Resources and Environmental Protection Act (NREPA), PA 451 of 1994, and authorizes the creation of the Underground Storage Tank (UST) Cleanup Fund (The Fund). The Fund will be used going forward to reimburse owners of tanks for cleanup costs. RMP will be writing much more about The Fund in future posts. We can make an eye opening calculation of the money spent to clean up hydrocarbon spills in Michigan related to underground storage tanks in the past as follows : with 10,430 unique locations on the closed LUST list and the estimated cost of each clean up site of roughly $250,000 per location we have everything needed to do some simple math. The number of locations closed multiplied by the average cost per site equates to $2,607,500,000 to clean up messes using gas & diesel for our cars & trucks. That’s not a misprint, that’s $2.6 billion dollars for cleaning up our polluted water because of refined oil products. Think of what we could do with that money if it didn’t have to be wasted on cleaning up such messes.
RMP has no money to further our mission advancing sustainable energy solutions that create good paying jobs, but we know exactly what to do with money if we could get some. RMP knows what to do to affect legislative action that can put us on the path toward ending this senseless contamination of our freshwater resources for future generations (my kids – your kids – and their kids). Think about it. If you’ve got $600k to spare, go ahead and click on that donate button in the upper right hand corner of your screen; it’s a tax deductible donation because we are a 501(c)3 with a license to solicit from Michigan’s Attorney General. Thanks for reading. See you next month.