It’s time to review the first six month’s production of subsurface hydrocarbons in the Michigan Basin as most operators have now reported results. The theme of this report is that things aren’t always as predictable as you think and that it’s important to always be diligent in measuring the data because the data can surprise you sometimes. Angus Deaton, a professor of economics at Princeton University, won the Nobel Prize in economics just two days ago. He was interviewed by Judy Woodruff on the PBS Newshour on Detroit Public Television after winning. Judy stated that Angus was being honored for his careful measurement of basic economic data and asked him why measuring things matters so much, he said:
We tend to take a lot of things for granted. You know the very word ‘data’ means ‘given’ and yet most of the numbers we have are not given. They’re produced by statistical offices, many of whom are under terrible budget pressure and threats from politicians who don’t understand how important the numbers are. And also, if we don’t know what sort of progress we’re making and how we’re doing, we don’t really know where we are.
RMP started out focusing on data related to High Volume Hydraulically Fractured (HVHF) wells which were new to us in Michigan in 2011. But, those wells are few and far between these days and the data has currently led us away from hydraulic fracturing in terms of energy production and the greatest threats to our Michigan fresh water systems. RMP measures the data related to Michigan resources consumed to produce energy in order to best understand how to use our resources. If we use our resources wisely to produce energy we can increase the wealth of Michiganders and create jobs without threatening our ground water or using fossil fuels. Michigan imports ~95% of the oil we use, ~80% of the natural gas we use, and 100% of the coal we use to produce the energy our consumers demand. We could, however, be 100% energy independent and create jobs in Michigan’s energy sector. To do this, we need to measure energy data that tells us where we are and try to figure out where we want to be. So every six months, we measure the subsurface hydrocarbons produced in the Michigan Basin.
When we look at the wells producing hydrocarbons in the first six months of 2015 we find a few unexpected things: wells that were drilled and completed decades ago outperforming newer wells in some cases.
Of particular note are Merit wells in Northern Michigan in Cheboygan, Montmorency, and Otsego counties. Wells that were drilled and completed originally by Shell Oil in the 70’s, 80’s, and 90’s that may have been forgotten about by some, have been reworked by Merit and are now some of the top producing oil wells and NGL wells in Michigan.
And, while the State Excelsior 3-25 HD1 & 2-25 HD1 still make the top 10 in natural gas liquids production, they’re not in the top 10 of dry natural gas producing units in the first half of 2015 and are not on pace to ever break even financially. The HVHF wells we have been tracking keep falling further and further out of the ranks of Michigan’s top energy producers. Let’s take a look at the top 10 Michigan production units in oil, NGLs, and natural gas from January 1, 2015 to June 30, 2015.
Michigan Oil Production 2015 (Jan – Jun)
In the Top 10 Oil category, Merit’s Horicon 7-15 well was somewhat surprising given the dominance of the Trenton Black River wells in Jackson county in 2014. The State Horicon 7-15 was originally drilled by Shell in 1983 and reworked by Merit in 2013. This well reminds us how old Niagaran pinnacle reefs may be a good place to eventually sequester carbon dioxide and still get energy production. These older wells can still produce numbers on par with some of the newer wells. Similar to 2014, however, West Bay & Savoy still have the best overall production showings with their Trenton Black River wells in Jackson county which was expected.
Merit’s Norwich unit & Breitburn’s State Beaver Creek unit, however, continue to be a sore spot in Michigan oil production in terms of footprint, water consumption, and contamination incidents even though they rank at #2 & #4 in top producing units. I hope you’ll click on the “See it on the map” link and take a look at the Norwich unit and State Beaver Creek unit. Note the geospatial footprint on the Google Map of the Norwich unit, for example, and that its 288 wells means that it is only producing 1.3 bbls/oil per well per day and has multiple spill and contamination incidents over its history. Each of the blue markers shown on the map in the link is a water injection well where millions of gallons of water are pumped to recover weak amounts of energy. Merit’s Norwich unit has nothing at all to do with fracing but it has a lot to do with poor use of Michigan’s fresh water resources for energy production and creating a threat to other fresh water. Breitburn’s State Beaver Creek unit is similar with 195 wells and only 1.3 bbls/oil per well per day produced.
2015 Top 10 Oil Producers in Michigan January 1 to June 30
|RANK||WELL / UNIT||OPERATOR||# OF WELLS PER UNIT||BBLS PRODUCED 2015||AVG BOPD||LINK TO MAP|
|#1||Beaver Creek Unit||Breitburn||43||68,490||381||See it on the map!|
|#2||Norwich Unit||Merit||288||67,258||374||See it on the map!|
|#3||Jennings 1-32 HD1||West Bay||1||49,730||276||See it on the map!|
|#4||State Beaver Creek Unit||Breitburn||195||45,700||254||See it on the map!|
|#5||State Horicon 7-15||Merit||1||40,856||227||See it on the map!|
|#6||Lantis Et al 1-30||West Bay||1||39,060||217||See it on the map!|
|#7||Moore 1-14||Savoy Energy||1||38,172||212||See it on the map!|
|#8||Kimball 2-14||Savoy Energy||1||38,114||212||See it on the map!|
|#9||Bauer 1-13||Savoy Energy||1||38,039||211||See it on the map!|
|#10||Lantis Et al 1-29||West Bay||1||36,338||202||See it on the map!|
Michigan Natural Gas Production 2015 (Jan – Jun)
Natural gas production again is dominated by the Antrim formation in the Northeastern part of Michigan. Antrim units are clusters of wells performing together so the per well output is not necessarily very high. The top producing unit in Michigan, the State Loud & Blue Lake Unit, is producing about 2.6 million cubic feet of gas per day on average. But, because there are 89 wells in the unit, that’s only about 29.4 mcfd per well. By contrast, we again see Jordan’s Torch Lake Unit, on the thin strip of land between Grand Traverse Bay and Torch Lake, also producing roughly 2.6 million cubic feet of gas per day but with only 28 wells in the unit. This means each well in the Torch Lake unit is producing about 93.6 mcfd and has by far more productive wells than the number #1 unit. As mentioned earlier, Michigan’s HVHF wells that consumed millions of gallons of water for completion are not found in the top 10 producers. The State Excelsior 3-25 HD1, for example, the well that consumed the most water in Michigan history at 21 million gallons, is ranked #42 for the first six months of 2015. There are 685 wells in the Top 10 natural gas producing units in Michigan. The State Excelsior 3-25 HD1 well consumed more water for completion than all of those 685 wells combined.
2015 Top 10 Natural Gas Producers in Michigan
|RANK||WELL / UNIT||OPERATOR||# OF WELLS PER UNIT||MMCF PRODUCED 2015||AVG MMCFD||LINK TO MAP|
|#1||State Loud & Blue Lake||Linn Operating||89||472||2.622||See it on the map!|
|#2||Torch Lake Unit||Jordan Development LLC||28||472||2.621||See it on the map!|
|#3||Doctor’s Club & Hunt Unit||Linn Operating||91||453||2.519||See it on the map!|
|#4||State Briley Unit||Linn Operating||82||404||2.244||See it on the map!|
|#5||State Charlton Unit||Terra Energy||45||389||2.160||See it on the map!|
|#6||State Loud & Albert Unit||Merit Energy||94||379||2.106||See it on the map!|
|#7||Dry Hole Club Unit||Linn Operating||57||369||2.051||See it on the map!|
|#8||State Chester Unit||Enervest||83||356||1.976||See it on the map!|
|#9||State Kearney Unit||Chevron||49||335||1.861||See it on the map!|
|#10||State Maple Forest Unit||Linn Operating||67||319||1.770||See it on the map!|
Michigan NGL Production 2015 (Jan – Jun)
NGL production in Michigan is led by the State Excelsior 3-25HD1 well which is the HVHF well mentioned previously. But, because the 3-25HD1 well cost so much to drill and complete and used so much water, it’s not economical for producers or Michigan citizens. We are forecasting this well will never break even financially or even come close and is a wasteful use of Michigan resources for energy production. Thankfully, the financial fundamentals of wells of this type are so clear to operators that no more Collingwood activity will take place in Michigan regardless of Collingwood wells continuing to be permitted after their poor showing.
On the other hand, we again see Merit wells that were re-worked in 2004, 2006, & 2007 into Niagaran formations really dominating the NGL category when it comes to making money and using less fresh water resources. The #2, #3, #4, #8, & #10 NGL producing wells are all Merit wells; some dating back to the 1970’s, that Merit “tuned up” and is now making money by taking one man’s junk and turning it into another man’s treasure. The old adage of successful oil producers is to go back to where oil has already been found in order to secure a profit.
2015 Top 10 NGL Producers in Michigan Jan – Jun 2015
|RANK||WELL / UNIT||OPERATOR||# OF WELLS PER UNIT||BBLS PRODUCED 2015||AVG BPD||LINK TO MAP|
|#1||State Excelsior 3-25HD1||Marathon||1||11,621||65||See it on the map!|
|#2||State Vienna 2-31HD1||Merit Energy||1||6,949||39||See it on the map!|
|#3||State Forest 1-14||Merit Energy||1||6,764||38||See it on the map!|
|#4||State Hayes 1-36||Merit||1||6,755||38||See it on the map!|
|#5||Kalkaska Unit||Breitburn||18||6,226||1.92||See it on the map!|
|#6||State Excelsior 2-25HD1||Marathon||1||6,019||33||See it on the map!|
|#7||State Beaver Creek 1-23HD1||Marathon||1||5,863||1||See it on the map!|
|#8||STATE CHARLTON & SALLING HANSON ET AL 6-4||Merit||1||5,714||32||See it on the map!|
|#9||Warren 1-20||Cobra||1||5,679||32||See it on the map!|
|#10||STATE CHARLTON 1-9 HD-1||Merit Energy||1||5,207||29||See it on the map!|
5 Year Rolling Michigan Oil Production in Aggregate
Aggregate oil production continues to decline in Michigan. RMP continues to advocate for the responsible migration away from oil as an energy source for Michigan and America; for the good of our economy, national security, and environment. Michigan imports over 95% of the oil we consume but we could be 100% energy independent and eliminate threats to our fresh water resources by adopting fuel cell electric vehicles. This responsible migration away from oil can be done in a manner that protects and reemploys Michigan oil workers as energy dynamics change over the coming years. We can make renewable energy from water, garbage, and other municipal wastes for FCEVs while creating hundreds of good paying jobs and infrastructure for the next millennium.
5 Year Rolling Michigan NatGas Production in Aggregate
The Antrim formation is not like other natural gas formations in America. Antrim wells, which power Michigan NatGas production, produce steadily for years and years. The wave of hydraulic fracturing across America has ironically brought fracing in Michigan to a stand still. While the decline is slow in Michigan NatGas production, it will continue to fall off as formations like the Marcellus and the Barnett make it not worth operators’ while to pursue Michigan production. Below is a look at aggregate natural gas production in the Michigan Basin.
5 Year Rolling Michigan NGL Production in Aggregate
The aggregate NGL graph below really depicts the attempt that Encana made at producing hydrocarbons from Michigan’s Collingwood formation. Encana received millions of gallons of Michigan’s most valuable resource, our fresh water, for free and still could not come close to turning a profit. When they pulled the plug to stop the financial losses, production plummeted after the spike you see below. A good analogy for the graph below is a quarter horse vs a mustang in reference to the Collingwood vs the Niagaran. The quarter horse sprinted off ahead of the mustang but eventually petered out. The mustang eventually reeled that quarter horse back in and continues to run right past it.
5 Year Rolling Michigan Waste Water Production in Aggregate
The aggregate waste water graph below trends with the production declines in hydrocarbons. A calculation we provided a year ago when reviewing aggregate production data holds true through the first half of 2015: for every barrel of oil produced in Michigan, about 12 barrels of waste water are produced. Now keep in mind, not all waste water comes from oil wells, many Antrim wells produce waste water too, it’s just a calculation for frame of reference. But, it’s a calculation that demonstrates the inefficiency of hydrocarbon production in Michigan vs other forms of energy production like wind which produces zero waste water and consumes zero fresh water. Every barrel of waste water is a logistics cost and a potential threat to fresh water.
Graph Data for Hydrocarbon Production in Michigan
The data used to produce the graphs above is shown in the image below. Mind the fact that the data can be revised as operators report late and/or revise previous reporting. All hydrocarbon data is approximate but RMP’s measurements are based on years of data analysis experience, continue to be fully disclaimed, and are open to peer review. All data compiling and reporting done by RMP is free to anyone to view on this website and is done with volunteer labor. RMP is a Michigan registered federal 501(c)3 non-profit organization. Our revenues for this fiscal year are so far $0. If you find this information helpful and would like to support RMP’s service to the public community, please consider making a donation by clicking here.
Michigan hydrocarbon production continues to supply Michigan with only a tiny fraction of the hydrocarbons we consume for energy. We import roughly 95% of the oil we consume, 80% of the natural gas we consume, and 100% of the coal we consume. We measure this data to appeal to people who have the economic common sense to recognize we could do better with our resources and become 100% energy independent without putting fresh water at risk. We could divert garbage, for instance, from landfills and use it to create hydrogen to power our cars and homes. We could use sewage, farm wastes, and other municipal wastes that pollute our lakes to make energy to power our cars and homes from hydrogen. We could use wind and solar energy to convert water into hydrogen & oxygen and use the hydrogen to power our cars and homes.
RMP supports and advocates a responsible migration away from subsurface hydrocarbons for energy. RMP also supports workers in all aspects of Michigan’s energy production, storage, and transmission sector of our economy even as we advocate for responsible change in how we produce energy. We also understand that we all use subsurface hydrocarbons to make our lives better, lift ourselves from poverty, and provide the energy we rely on to enrich our lives. The energy mix we all rely on to power our smart phones, cars, refrigerators, furnaces, and steel will include subsurface hydrocarbons for years to come even if we make progress toward retiring them.
RMP asks all environmentalists to look around the next time they’re on the road and notice that practically all vehicles on the road in Michigan are powered by oil/gasoline. If you round to the nearest integer, 100% of Michigan vehicles are powered by oil/gasoline. How can we have 100% of our vehicles powered by oil and not expect to have oil pipelines? It’s like the old clichés “everyone likes sausage but no one wants to see how it’s made” or “everyone wants to go to heaven but no one wants to die”. If you drive in your gasoline powered car to go attend an oil protest it’s a conundrum for moving the environmental cause forward. While protesting oil might raise awareness, we are all still beholden to oil until we have a solution that displaces our demand for it.
There is, however, something tangible you can do. Something that provides a real solution toward retiring oil to antiquity. You can check out this post or this video that shows you how easy it is to identify and contact your state and federal legislators. You can call your legislators or write them and ask them to get on board with what other states like California, Hawaii, Connecticut, and New York are doing: supporting Fuel Cell Electric Vehicles and American energy independence. Other states and countries are making a difference toward the eventual end of oil pipelines and oil storage tanks by supporting FCEVs. Making protests signs won’t move us forward as long as 100% of the vehicles on our roads are powered by oil/gasoline. Albert Einstein once said “insanity is doing the same thing again and again and expecting different results”. Instead of driving your oil powered car to an oil protest, you could support a tangible migration toward something that creates jobs and leads to clean renewable energy: support FCEV development and infrastructure. It’s time to be for something positive rather than being against something negative. If you do help Michigan adopt FCEVs and hydrogen fueling infrastructure, oil pipelines won’t have any purpose and will eventually cease to exist. That’s real change; that’s the respectmyplanet.org way.
Update: In April of 2016, RMP published the MICHIGAN OIL & GAS PRODUCTION REPORT JANUARY – DECEMBER 2015 complete with first ever financial approximations of hydrocarbons produced.