Michigan Oil & Gas Monthly – October 2015

The featured image above (Photo Credit: Neo), is of the flare stack at the Milford Sand & Gravel 1-32 well.  West Bay Exploration filed a petition with the Assistant Supervisor of Wells for an exception to Michigan No Flare Order Provisions of Special Order No. 3-71 to flare up to 100,000 scf of natural gas a day from the flare stack shown in the featured image of our October MOGM.  Harold Fitch, the Assistant Supervisor of Wells, signed the Notice of Hearing for this petition on October 9, 2015.  The gas flared at the Sand & Gravel pit comes from two other wells also:  the Kensington Metroparks 1-31 and the Kensington Metroparks 2-32.  The flowlines from the Kensington Metropark wells flow across Kent Lake over to the processing facility at Milford Sand & Gravel just north of I-96 & west of Milford Road.  These wells are not only right by my house, they’re directly across the street from the dormant landfill on the south side of I-96.  This is the same landfill featured in the August MOGM that flares natural gas produced from decomposing garbage 24/7 that I drive by every day on my way to work.

Michigan Oil & Gas
The Kensington Metroparks 2-32 oil well is one of two wells in the metropark that produces oil & natural gas that flows across Kent Lake to the Milford Sand & Gravel pit processing facility. West Bay is requesting an exception to flare that natural gas from the Michigan Supervisor of Wells. The Assistant Supervisor of Wells will approve the exception to flare the gas at the hearing.  Click image to enlarge.

RMP has been writing about the economics of energy to initiate change in how we produce energy.  RMP also tries to demonstrate all the energy and opportunities to make energy we waste because of poor legislation that doesn’t incentivize job creation through building a smarter grid.  This is another good opportunity to talk about how we need to eliminate energy waste simply because it’s unprofitable for one private party.   It’s not West Bay’s fault or any other operator’s fault that it’s not cost effective to capture that wasted natural gas and get it to market, it’s our fault.  We need to demand our legislators incentivize job creation that builds the infrastructure to capture and get that energy to market.   That natural gas flared & wasted at both the landfill and from the Kensington wells could be turned into methanol which is a cost effective method to transport the wasted energy to market.

GasTechno is a company based in Walloon Lake Michigan that has a cost effective process to turn between 50k and 3000k cubic feet per day of natural gas into liquid methanol.  Turning natural gas into liquid methanol makes it cost effective to transport, creates Michigan jobs, and prevents natural gas as a waste stream because it turns it into a revenue stream.  GasTechno could make a big difference turning wasted energy from flared natural gas into a usable form of energy(i.e. methanol) for Michigan consumers.  GasTechno could make an even bigger difference in preventing wasted methane in other states like North Dakota, Texas, and California.

Michigan OIl & Gas
The Kensington Metroparks 1-32 oil well is the sister well to the 2-32 well above and produces oil & natural gas that flows across Kent Lake to the Milford Sand & Gravel pit. West Bay is requesting an exception to flare that natural gas from the Michigan Supervisor of Wells.

Another alternative to wasting flared natural gas could be to steam reform it into pure hydrogen.  A public hydrogen fueling station at I-96 & Milford road could take natural gas from the Kensington wells & the landfill and fill FCEVs, like the Toyota Mirai, every single day with energy that is otherwise flared/wasted.  100,000 scf of natural gas converts to 854 kilograms of H2.  The Toyota Mirai, which just debuted October 21 in California as a mass production vehicle, has a fuel tank that holds 5kg of H2 and can travel over 300 miles on that single tank.   Assuming that the landfill flares a similar amount of methane as the Milford & Kensington wells at the same location, that’s about 200,000 mcfd of natural gas wasted.  Let’s do some quick math: 200,000 mcf of CH4  = 1,708 kg of H2 divided by 5 kg per full tank = 341 fully fueled Toyota Mirais. That means that every single day we miss the opportunity to fuel between 300 & 400 Toyota Mirai type fuel cell vehicles with full tanks from this wasted energy source.  There are 100s of these flare stacks across Michigan and thousands more in the Bakken field in North Dakota and around our country.

Help us educate the public about all the domestic opportunities we have to move America closer to 100% energy independence by sharing this post on facebook.  Let’s encourage our legislators to write legislation that helps Michigan stop wasting energy and helps move Michigan toward energy independence and job creation.  RMP recently released our Nationwide Legislator Lookup Tool (NLLT) software that makes it easy to find your state & federal legislators all across America.  Check out a demonstration of how easy it is to use our NLLT by clicking here.

We can make Michigan a better place with more jobs without flaring excess natural gas or burying our garbage in the dirt like cave people.  Why not ask our legislators to write legislation that can actually change the fact that approximately 100% of the vehicles on Michigan roads are powered by gasoline/diesel?   Oil pipelines will never go away while ~100% of our vehicles are powered by oil no matter how many protests are held.  Oil pipelines will go away, however, if we responsibly migrate away from oil powered vehicles toward FCEVs.  Please share this post and help raise awareness about common sense solutions that can actually lead to real change.

Now let’s take look at other Michigan oil & gas activity that occurred in October 2015:

It was another slow month in Michigan for applications and permits of oil & gas wells.   While we are only reporting through 10/23/2015 in this edition of the MOGM, we are on pace to have 122 permits for the full year.   111 permits is the lowest amount of permits in Michigan history in 1931 and we are 9 permits away from tying that number.  We see increase in our plugs to apps ratio this month too with 48 wells reported plugged in October.    This means so far through 2015 we are seeing 2.75 wells reported plugged for every 1 well applied for.

State Norwich 1-6 HD1
The State Norwich 1-6 HD1 well head sits dormant on a well pad  cut out of  dense Red Pine in the Pere Marquette forest near Norwich Township in Missaukee county.   Chevron purchased Atlas soon after Atlas had drilled this dry hole.  Chevron plugged this well on September 11, 2015.  (Photo Credit: Neo)

The end of the Collingwood era in Michigan sees a couple more nails in its coffin in October.   The State Norwich 1-6 HD1 well in Missaukee county which was drilled by Atlas, was reported plugged this month by Chevron with a plug date of 9/11/2015.  Rumor is that Chevron tried to sell this well, but who would want to buy it?   The State Norwich 1-6 HD1 well was dry hole just like the Pioneer 1-3 HD1 just west of it.   Think about how emotion and ignorance played such a part in Michigan’s short lived Collingwood era:   The Pioneer 1-3 HD1 well, which spurred the largest State lease auction in Michigan history, was nothing but a dry hole.  Another nail in the Collingwood’s coffin was published this month as the MDEQ reported that the State Koehler & Kendall 1-27 HD1 well in Cheboygan was plugged on 9/23/2015 by its new owner Marathon Oil.  The MDEQ was very accommodating to extend the TA status on the State K&K well year after year for Encana & Marathon, but that chapter has been closed now too.

michigan oil & gas.
The State Koehler & Kendall 1-27 HD1 well was drilled and completed in Cheboygan county where the Utica/Collingwood is 4,410 feet below the surface. This well was drilled in September of 2010 and reported plugged this month. (Photo Credit: Neo)

It’s funny that in 2010 the Collingwood’s future was based on ignorance and avarice alone.  Even today, esteemed educational institutions are publishing papers regarding options of how to best legislate the future of the Collingwood without having taken the time to try to understand that it will never produce a profit and therefore will never be drilled again.   Even though energy is everywhere around us and by law is neither created nor destroyed, it won’t be pursued if it can’t create profits.  Profit, not energy, is what it’s really all about and profit is slightly harder to generate even when subsidies and legislators are on your side.  Where there is no profit there is no activity; and therefore the Collingwood is dead.

October 2015 – List of New Oil & Gas Well Applications

Michigan only received 5 applications for wells in October 2015 and all were for oil wells.  Two of the apps were for a single Wyotex pilot/horizontal combination targeting the A1 in Grand Traverse county.   Well financed operators from all over the country have come to Michigan over the past 5 years targeting the A1.  The result has been a 100% failure rate on every single A1 attempt.   The last operator to fail targeting the A1 was Whiting Oil in Sanilac county who this month gave more definitive signs they’re abandoning further exploration in the Michigan Basin indefinitely.   Will Wyotex give drilling into the A1 a go and break the streak?  Will they think better of it and roll?  Or, will they give drilling a go and add their name to the long list of A1 failures and keep the failure streak in tact?  We will have to wait and see.

Michigan Oil & Gas Applications October 2015
Michigan received 5 Oil & Gas Applications in October 2015. Click image to enlarge.

October 2015 – List of Permits Issued for Oil & Gas Wells

In October 2015, Michigan issued 15 permits for wells.   13 of those wells were oil wells and 2 were for gas storage wells.  The 2 gas storage wells are in Detroit at the Sunoco Pipeline storage facility at the intersection of Inkster Road & Ecorse Road and were issued to Sunoco Partners.  Marathon was issued a permit for the Schlabach 1-7 HD1 well in Clare county.   This marks Marathon Oil’s second attempt at the Detroit River group of rocks in the Michigan Basin.   The Ensign 161 rig just finished drilling the Beaver Creek 1-14 HD1 well last week and will probably be moved to Clare county and assembled on the Schlabach well pad by the time this month’s MOGM is published.  We will be keeping an eye on Marathon’s completions to see if they can break the dry hole curse that has plagued every single operator who has attempted HVHF in Michigan.

Michigan Oil & Gas Permits October 2015
Michigan issued 15 Oil & Gas permits in October of 2015. Click to enlarge.

October 2015 – Oil & Gas Wells Published as Plugged

48 oil & gas wells wells were reported plugged in October including the Norwich 1-6 & State Koehler & Kendall wells pictured above.   48 wells is higher than the monthly average and moves the needle on the ratios of applications to plugs KPI and the permits to plugs KPI.

Michigan Oil & Gas wells plugged October 2015
Michigan Oil & Gas wells plugged October 2015. Click to enlarge.

The October 2015 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:

89 Applications : 245 Wells Plugged

The October 2015 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:

102 Permits Issued : 245 Wells Plugged

No new wells were issued PRU#s in October and no new companies were added to the roster of operators in October.   Oil & gas exploration activity continues to be at a record low in the Michigan Basin.

Thank you for reading this edition of MOGM and we’ll see you next month.

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3 Replies to “Michigan Oil & Gas Monthly – October 2015”

  1. Matt,

    Thanks for another informative edition of RMP’s Michigan Oil & Gas Monthly.

    As for flared gas, I still don’t understand why owners of these wells cannot or, perhaps “will not” capture this excess gas. Is it cost prohibitive, or? It seems as if it would be pretty simple to stick a tube over that flared well and pump it into some type of container and sell it. What am I missing? As you pointed out, it is such a waste to see all that gas literally going up in smoke.

    Thanks again for the interested read, and keep up the great work, Matt!

    Steve Krause

    1. Energy production is for profit first and energy second. If it costs money, it hurts profit which trumps all else. GasTechno has a solution to turn that stranded methane into methanol which can get the energy to market in a cost effective manner which can be a win-win over the current situation for many operators. To pipe the gas to market would be a money loser for the operator because the infrastructure cost outweighs the revenue – simple as that. RMP tries to spotlight this waste to challenge the status quo as not good enough. There is room for improvement and we can put pressure on our elected officials and regulators so that they might craft legislation or rules that create incentive for Michigan jobs and less waste without unfairly taxing the operator such that the operator would no longer want to do business in Michigan.

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