Michigan Oil & Gas Monthly – March 2016

Crickets.   New oil & gas activity in the Michigan Basin is so slow through the first quarter of 2016 that the only thing you can hear at the OOGM permitting department is crickets.  2015 was the slowest year in Michigan oil & gas history for new permitting activity breaking the old record set in 1931.   In the first three months of 2015, the slowest year in Michigan history, the Office of Oil, Gas, & Minerals (OOGM) had received 24 applications and had issued 28 permits.  As of today, through the first three months of 2016, Michigan’s OOGM has received only two applications and issued only six permits.   New oil & gas permitting activity in 2016 is on pace to set the bar substantially lower than last year’s record as the slowest year ever.

As always, however, there’s a lot going on in Michigan oil & gas even if the permitting department of the OOGM is hearing crickets with regard to new activity.  One particular well permitted this month continues to generate public attention in Southfield.  The Word of Faith 16-27 well was permitted on March 8, 2016 which drew street protests and a lawsuit filed by the City of Southfield.  March 8th was Presidential Primary Day in Michigan and the big news that day was Donald Trump and Bernie Sanders winning Michigan.  The Word of Faith 16-27 oil well story played on local TV stations that same day but was overshadowed by the Presidential Primary.  The City of Southfield filed a lawsuit against Jordan Development, Word of Faith Ministries, and the MDEQ to prevent the irreversible process of clearing a pad and drilling an oil well.  The case was heard on March 16th in Oakland County Circuit Court.

Michigan Antrim Vacuum
Linn Operating applied March 21, 2016 to operate 48 wells in their West Albert 11 Project on a vacuum system. Michigan’s MPSC has received 100’s of applications for 1000’s of wells since November 2015. Did you know that?  Click image to enlarge.

Judge Michael Warren who presides over the Oakland Circuit Court dismissed charges to the MDEQ because Oakland County does not have jurisdiction over State of Michigan matters like the issuance of permits for drilling oil wells.  Jordan Development is represented by Michigan’s former Attorney General Mike Cox who knows a thing or two about jurisdictional issues in Michigan.  The City of Southfield’s next move might be to file a lawsuit in Ingham County against the MDEQ because of State jurisdiction.  The City of Southfield currently, however, has bought themselves some time with Judge Warren resolving to keep a court injunction in place that prevents clearing trees and drilling until he can hear arguments regarding zoning issues in Oakland Circuit Court on September 1, 2016.  RMP will keep an eye on things and continue to report as new information becomes available.

How does an oil well in a heavily populated Michigan city help move the needle toward Michigan energy independence?  This oil well, even if it is the most prolific oil well in Michigan history, will have a negligible impact on Michigan’s overall energy production.  The citizens of Michigan and oil operators are spending much time, tax money, and public expense on these legal fights over a process that will not create much energy or many jobs for Michiganders.  An oil well also comes at the expense of many unhappy residents.  If Michigan invested in advanced cleaner energy systems as described in HB 4297 H-3, which is making its way through the Michigan Legislature and has passed committee with strong bi-partisan support, we could be creating jobs for Michiganders, lowering energy prices, and making Michigan an economic powerhouse.  We could also zone advanced cleaner energy systems in areas acceptable to Michigans’ citizenry.  Michigan’s economic growth and reduction in cash outflows for imported energy would be unprecedented.  Michigan could be a major player in moving America forward with sustainable energy production that protects fresh water and emits no NOx, SOx, or PM.  Michigan could lead the world  in manufacturing vehicles with advanced propulsion systems using garbage & sewage for fuel like the cars & trucks nearing production at the General Motors Advanced Propulsion Center in Pontiac Michigan.  Michigan could also  be leader in sustainable energy production systems that do not use crude oil as a fuel source.

methane burper
This one way valve device sits atop the landfill at Milford Road & I-96 in New Hudson Michigan. When methane pressure builds from the decaying landfill waste below, the valve opens and releases the methane to atmosphere. There are dozens of these “methane burpers” on this landfill and landfills everywhere that burp methane around the clock. There is also a network of natural gas pipelines in the landfill that routes millions of cubic feet of natural gas to a flare stack that has burned 24/7 for two full decades since Atchison Park opened in July of 1996.  It has probably burned for years before the park opened also. I drive by that flare stack every day on my way to work and it inspires me to promote waste 2 energy projects. Here is a video of the flarestack that never stops.  Click to enlarge.

Think of it:  lower energy bills, significantly reduced landfill waste, good paying jobs for Michiganders, less money wasted on administering obsolete energy infrastructure, near elimination of environmental problems related to crude oil which costs us millions in taxes for remediation each year, and we could generate billions of dollars of surplus revenue to invest in advanced cleaner energy infrastructure, sewers, bridges, roads, and education.  Michigan doesn’t have to wallow in the mire and volatility of a crude oil based economy bound to the whims of Middle Eastern sultans.  Michigan’s citizenry could instead opt for job creation and a surplus revenue economy right here at home.  Michigan can be a world leader in advanced cleaner energy systems or stay focused on backwards and obsolete energy infrastructure like crude oil as we continue to fall behind the rest of the world.  If you agree, please help RMP bring this message to broadcast depth by sharing this post on your facebook feed by clicking the share button at the bottom of this post, thanks.  And, please read Michigan HB 4297 H-3 to learn more about advanced cleaner energy systems in the Michigan Basin.  Read the bill and call your legislator and tell them you support HB 4297 H-3 if you like what you read.  Remember, garbage gets buried where it threatens groundwater.  And, manure runoff into creeks and streams from farmland causes phosphorous loading on Lake Erie that creates toxic algal blooms.  Can you make an argument for why we shouldn’t use these wastes to generate surplus electricity and revenue while we stop polluting our drinking water and atmosphere?

Check out this video about sustainable hydrocarbons like renewable natural gas from sewage & manure.  The video was taken from the PBS Newshour broadcast on March 28, 2016.  RMP created a new hashtag called #poo_power to help promote waste-2-energy projects that promote the manufacturing of sustainable hydrocarbons like renewable natural gas.  Remember, natural gas is a very clean fuel that does not need to come from fossils.  We have enough organic matter on the earth’s surface to supply enough natural gas to power 100% of our energy needs.  And, if we don’t, that natural gas just vents to our atmosphere as organic material decays and becomes consumed by bacteria.  Help us educate the public that natural gas is not necessarily a fossil fuel.  If we bury our garbage and let our manure flow out to Lake Erie, we’ve failed in helping our economy & environment and we have succeeded in polluting our Great Lakes and the air we breathe.

Michigan Antrim Wells Getting Hooked Up to Vacuum Systems at Fever Pitch

In other Michigan oil & gas news, RMP continues to pursue the frenzy of activity that no one is talking about in any other publication: putting Michigan Antrim wells on a vacuum system.  The story of putting Michigan Antrim wells on vacuum systems has been the big story that is getting zero coverage by any Michigan news media outlets.  RMP first started covering this story in August of 2015 and it has not been talked about in any Michigan media rags for nine months now.  Not even the Michigan Oil & Gas Association is talking about the biggest frenzy of Michigan O&G activity since the 1980’s.   A couple of interesting things about Michigan Antrim wells getting put on a vacuum are 1) it’s the MPSC that administers the process, not the MDEQ.  And, 2) the amount of pent up demand to put a well on a vacuum system is very high as demonstrated by the numbers.  Let’s look at each of these two points closer.

RMP has been corresponding with Travis Warner of the MPSC over the last 9 months with regard to the permitting process for putting an Antrim well on a vacuum.  If you recall, RMP has been writing about how the MPSC considers an application granted sixty days after filing with no regulatory follow-up required.  Here is the language from Travis’ email:

Hi Matt, the U-16230 docket will contain all vacuum applications and MPSC Staff objections to allow for transparency between MPSC Staff, operators, and the public.  Regarding your question about wells that have been approved, the final requirements set by the MPSC (requirement II.E.) state:

  1. A filing by an operator showing that these requirements have been met shall constitute a request to operate a well or wells under vacuum. Absent an objection by Staff, the request is granted 60 days from its filing. The May 14, 2015 order states: Following 60 days from the filing of the appropriate request and meeting the initial six month waiting period, a natural gas well may be operated under vacuum unless the Staff files an objection to the request in this docket stating the specific reasons why operations under vacuum for that well and its associated systems should not proceed.

As you can see in the docket, the first applications were filed on November 19, 2015.  According to the requirements, these fields and wells will be allowed to operate on vacuum on January 19, 2016 unless Staff files an objection before then.

This leads to our second point about Michigan Antrim wells being put on a vacuum: the very high pent-up demand.  I followed up with Travis to get a listing of the wells that are now on a vacuum and later found out that no such list exists.   Travis got back to me on March 4th with a list that sheds light on how many wells might potentially be on a vacuum but I still have not quantified a definitive number.

Travis’ list identifies 367 Michigan gas fields that are on a vacuum.  The 367 fields are currently split up among 7 different operators as shown in the infographic below.  But, new applications are being filed each week at a fast pace.  Applications are now being filed for dozens of wells by operators, like Chevron, who ironically fought in court against allowing the MPSC to permit putting Antrim wells on a vacuum as discussed in our August 2015 MOGM.

Michigan Antrim Vacuum
Count of Michigan Antrim gas fields put on a vacuum by operator through March 6, 2016.  Seven applications for multiple wells have already been filed since March 6 and they’re all for multiple wells.

So if we do some quick math, we can see that Michigan has potentially connected or will be connecting soon thousands of Michigan Antrim gas wells up to vacuum systems.   We know many Antrim fields have multiple wells but we have to speculate as to the number of wells from these 367 fields by using some guesstimates.  And, we must also consider applications are coming in fast and furious each week which you can follow right here.

If we assume there are six wells per field, we would get 2,202 wells on a vacuum (367 x 6).  If we assume there are 40 wells per field, we would get 14, 480 wells (367 x 40).  The most recent application, which was filed by Chevron on March 23, 2016 was for a field containing 28 wells.   RMP estimates the average number of wells per field between 10 & 22 and makes the assumption that between 3,000 & 8,000 wells will be approved for vacuum!  This is a ton of activity that is literally off the grid with regard to Michigan newspapers, radio news, and tv news.   RMP is still working on getting a firm number but it would be a safe assumption, based on the conservative estimates shown here that we are talking about thousands of wells being permitted to operate on a vacuum with regulatory follow up being sine die.  This is one of the most major developments in Michigan oil & gas history and it is literally not being talked about anywhere.  Michigan’s Antrim Shale is Michigan’s most valuable proven hydrocarbon natural resource.

michigan antrim vacuum
The most recent application received by the MPSC was from Chevron for wells connected to their Iron Oxide CPF shown in this map. 28 wells are listed on this one application. The volume of wells/applications received by the MPSC has been high. RMP estimates thousands of wells between November and today.  Chevron fought against anyone in Michigan putting a well on a vacuum.  Now they’re getting into the game.  If you can’t beat them, join them. Click image to enlarge.

Because the vacuum data is kept by the MPSC and the well data & production data are kept by the MDEQ, a data bridge must be built to make more appropriate calculations of how many wells in Michigan are operating on a vacuum.  The only truly safe assumption is to say no one knows for sure and no one ever will unless RMP keeps digging on this story and keeps asking the MPSC questions.

Think about this:  Chevron paid attorneys to fight against putting Antrim wells on a vacuum because they said it could kill the Antrim Shale and they lost that fight.  Now, in a true demonstration of a race toward the bottom, Chevron does a complete one-eighty and takes the if you can’t beat ’em join ’em attitude.  Much of the expert testimony presented by Chevron to the State of Michigan and discussed in our August 2015 MOGM might very well come true over the course of the next decade.  That means Michigan’s most abundant, valuable, and prolific natural hydrocarbon resource, the Antrim Shale, could potentially be ruined in a race to the bottom over greed and because of docket U-16230.  These words describing a potential hazard for the squandering of Michigan’s most valuable natural energy resource, the Antrim Shale, are for posterity.  RMP will be monitoring the production of all wells put on a vacuum and if the Antrim Shale gets killed, we can look back to this March 2016 MOGM as the bellwether.   There are 100s of miles of flow lines connecting a vast network of Antrim gas wells in Michigan.  Mark my words:  oxygen finds a way & rust happens.

Those are the stories unfolding in the Michigan oil patch for the first quarter of 2016.  RMP has not published application and permit lists so far this year because there have been so few.  Therefore, the infographics below show the application and permitting activity for the entire first quarter of 2016 (Jan-Mar).  The plugging activity which has been higher paced is shown only for March activity similar to how RMP regularly reports each month.

January through March 2016 – List of New Oil & Gas Well Applications

Michigan has only received two applications thus far for the first quarter of 2016.  After the first three months of 2015, the slowest year in Michigan O&G history for permitting activity, the MDEQ’s OOGM had received 24 applications.  2016 is on pace to smash last year’s record as the slowest year ever.

michigan oil & gas applications first quarter 2016
Michigan has received two applications for wells in the first three months of 2016. This is the slowest start of any year in Michigan’s oil & gas history.  Click to enlarge.

January through March 2016 – List of Permits Issued for Oil & Gas Wells

Michigan has issued a total of six permits through the first quarter of 2016.  Michigan’s OOGM has issued 28 permits over the first three months of 2015.  Permitting, just like applications, is literally the slowest ever in Michigan’s oil & gas history; this standstill is unprecedented.  One of the permits shown below, the Word of Faith 16-27 oil well, however, has generated a lot of public attention.  The Word of Faith well was permitted 130 days after the application was filed, the MDEQ usually permits a well application within 30 to 40 days.

michigan oil & gas permits first quarter 2016
Listing of permits for oil & gas wells issued through the first quarter of 2016. The Word of Faith 16-27 oil well has garnered a lot of public attention. Click to enlarge.

March 2016 – Oil & Gas Wells Published as Plugged

The wells plugged list is for the month of March only.  Plugging activity has been normal over the first quarter.   14 wells were reported plugged in March bringing the YTD total wells published as plugged up to 60.

michigan oil & gas wells reported plugged march 2016
Plugging activity through 2016 is keeping about normal pace to what it was last year.  Click to enlarge.

The March 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:

2 Applications : 60 Wells Plugged

The March 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:

10 Permits Issued : 60 Wells Plugged

March 2016 – Petroleum As % Of U.S. Trade Deficit KPI:

New in 2016!  RMP will be tracking petroleum as a percentage of the US trade deficit.   RMP mentioned in our December 2015 MOGM that President Obama signed a bill 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 horizonal 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.

petroleum trade deficit

Petroleum as a % of US Trade Deficit for January 2016 comes in @ 10.2%.  Data for this KPI lags three months behind the current date.  The previous month’s deficit (December 2015) was @ 13.7% which represents a 2.5% month over month downtick.

Great contrast can be drawn between what oil wells people care about based upon where that oil is and because of who that well affects.  For example, Keith Butler can go on and on about the justification for drilling a well at 9 Mile & Evergreen but how would Keith feel if the tables were turned?  Would his rhetoric remain the same, and as indicated in the Holy Bible, if someone filed an app to drill for oil in his backyard?  What if an operator wanted a clear a well pad in Troy Michigan behind Keith’s $1.1 million dollar home within view of his backyard patio?   Would he and his neighbors stand defiant and do the same thing as the residents in Southfield?  Or would Keith welcome the well and use the same rhetoric he uses when justifying the Word of Faith 16-27 well if he was not going to receive a single dime from it but had to look at it every day for 25 years?  RMP calls this psychological phenomenon the who’s in the ambulance concept and it has to do with hypocrisy.  It basically means that people don’t really care if someone else is getting hurt regardless of their rhetoric; rather they care only if it’s personal to them.   Justifications ring hollow when they’re not objective and consistent.  These types of justifications that ring hollow when they’re not objective or consistent also go directly against the teachings of Jesus Christ in the Holy Bible which is especially ironic and poignant in the case of the Word of Faith 16-27.

A great example of the apathy people feel towards oil wells out of their line of sight are the thousands of wells in Northern Michigan that don’t generate public concern because they’re out in the woods and nowhere near population centers.  Thousands of Niagaran wells and Antrim wells in northern Michigan mean so little to folks living here down state near my home in Metro Detroit.  RMP focuses on these forgotten Michigan wells out in the woods up north because we know that if we don’t care no one else will.  It’s RMP’s mission to be objective and care about every single well in Michigan with an egalitarian & non-partisan viewpoint.  RMP tries with near zero in funding to raise awareness about how advanced cleaner energy systems could eliminate the need for all oil wells, oil refineries, oil storage tanks and the associated environmental costs and nuisance of such wells all while improving our economy and creating jobs for Michigan’s oil workers and anyone else in Michigan that seeks employment.

Maybe one day in the future, a more macro view of the energy economy will become apparent to the Michigan public and advanced cleaner energy systems will put Michigan on the path to energy prosperity.  If we don’t migrate away from crude oil as an energy source, we will remain in an energy deficit position and depend on energy from other parts of the world like the volatile and adversarial  Middle East.  We will continue to hear crickets at the OOGM permit office and we will continue to be beholden to Middle Eastern sultans as long as our cars & trucks are powered by gasoline and internal combustion engines.  But, there is hope!  Continue to support RMP and we can help educate people about fuel cells and using landfill waste and raw sewage to make Michigan 100% energy independent and flush with surplus revenues.  Help support RMP and you can help us make Michigan great again.

That’s it for this edition of the Michigan Oil & Gas Monthly.  RMP estimates that by the end of April, we will have full year production data for oil, gas, condensate, NGLs, and waste water for 2015.  Our 2014 full year production reporting issue published in April of 2015 was RMP’s most popular MOGM edition last year.   Everyone wants to know which wells produce what and where.  Stay tuned for our April 2016 MOGM to learn where top hydrocarbon production units were in the Michigan Basin through the 2015 reporting year.  No organization in Michigan can put the top producers on the map like RMP.  Our exclusive software blows away any other reporting you can find in Michigan or any other state regardless of price, and our reporting is and will always be free of charge to the general public.

Thanks for reading and see you next month.  Please help our small 501(c)3 non-profit organization by sharing this post on facebook.  Simply click the facebook share icon below and help us reach more people without spending a dime.  But, if you can afford to make a small tax deductible donation by clicking here, that would be great too.  Thanks.

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