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<\/a>The first thing to understand about petroleum production is that it’s done for profit above all else. Saying that petroleum production is about profit above all else is not an affront to our energy needs or the working men and women of the petroleum industry. We respect all working men and women and understand very well their struggles because that\u2019s who we are too. We must understand all for-profit businesses have this goal in mind whether that business be a car wash, a restaurant, a grocery store, Et al. We also must, however, keep a close eye on petroleum production because it involves using public resources to create private profits; this can lead to bad legislation if there\u2019s corruption.<\/p>\n\n\n\n
Before we look at current data, let\u2019s understand a little bit about Michigan\u2019s oil & gas production history. If you read published papers from renowned geologists in Michigan\u2019s production history like this one<\/a> about the Dundee or this one<\/a> about the Niagaran, you\u2019ll see the Dundee has produced approx. 375 mmbo and the Niagaran has produced approx. 490 mmbo. Yet, if I download the production database today and totaled all barrels of oil from all formations, the total is less than 372 mmbo. What can we make of this unreconciled situation about more than twice as much oil produced than the total amount in the database? And, if you don\u2019t know what mmbo means, stay tuned, we\u2019ll get to that in a paragraph or two to demonstrate a point.<\/p>\n\n\n\n I had the same question as you about why production numbers in the database didn\u2019t match technical papers written by respected geologists. If you noticed, both of the papers linked above have a common co-author Bill Harrison<\/a>. Bill is the one of the most respected senior geologists in the State of Michigan and I emailed him to pose the question of where he came up with those numbers. It was enlightening to get some feedback from him and learn a couple key things about Michigan production history. It made perfect sense to learn from Bill that production from 1926 to 1982 cannot be reliably obtained from the production database. The State Oil & Gas Summaries, the United States EIA, and the MPSC Production Database are the generally accepted sources to aggregate data between 1926 through today’s current date. According to Bill, the data in the Michigan database becomes the most reliable source in the year 1997. If you review the production database you would notice that the first year of data available is 1969 but that somehow the data does not seem to make sense until the year 1982. From 1982 to today, I would have conjectured that the data was reliable based on basic data analysis skills. I did not realize it wasn\u2019t until 1997 the data became reliable and I\u2019m thankful for Bill\u2019s help there. It was something I would have missed if I didn\u2019t ask and we always want to get it right at The Org.<\/p>\n\n\n\n When we do detailed aggregate analysis in coming articles at RMP we will use the aforementioned fundamental concepts as our basis for reporting. Even so, it is important to note that all data in Michigan is approximated; even by the most respected geologists in our state. And, even then, data always comes with implicit disclaimers about keypunch errors, failure to report, and timeliness of when data is reported. One of the key parameters to keep in mind when reading RMP articles is that we accept data reported subsequent to 1997 as valid for drawing sound conclusions in aggregate for our state. Another key parameter about well specific reporting at RMP is that specific well data from 1969 to 1982 is accurate on a well-by-well basis but not in aggregate for the state of Michigan. And lastly, RMP reporting considers data from 1982 to 1997 is reliable in aggregate for certain formations and certain operators that were reporting diligently during those years of Michigan\u2019s O&G evolution. Should you decide to want to reference our data sets, we will soon provide instructions on how to cite our exclusive sources in your own bibliographies.<\/p>\n\n\n\n About that mmbo acronym used earlier\u2026 If you didn\u2019t know what that meant I know exactly how you feel. It can be very frustrating to read technical papers and get completely thrown off the tracks when you come to a unit of measure acronym that means nothing to you. We live in an age when it\u2019s easy to throw an acronym into Google and find out what it means. But, many acronyms aren\u2019t easy to find because of internet information noise or the simple fact that you don\u2019t feel motivated to look up the acronym so you just glaze right over it and you miss key points. For example, did you look up mmbo? Did you skip over it? Or did you already know what it meant? Mmbo stands for million barrels of oil and is a common term used in oil production reporting. M stands for 1000 and is derived from the latin word mille. So whenever you see mm or MM it will mean one million (1000 x 1000). We will use many acronyms in our articles and we reference the most basic and heavily used acronyms for the casual reader in the table below:<\/p>\n\n\n\n This article is being written in December of 2014. The last term in the table above HGL or Hydrocarbon Gas Liquids is brand new. If you follow the EIA on twitter, they just tweeted that term November 25, 2014 and referenced this new paper<\/a> of why the term was necessary to adopt. RMP will always be on top of new ways to report about the energy sector of our economy and how it relates to water. We are paying close attention to the acronym HGL as Michigan still reports using the term NGL. Michigan may adopt the term HGL in order to standardize their reporting to that of federal reporting but that will remain to be seen. If Michigan does start using the term HGL, we will let you know about it here as soon as we know.<\/p>\n\n\n\n Michigan production cannot be well understood without understanding production resource units. RMP\u2019s 3 basic general characteristics for a PRU are: general, legal, and surface geography definitions. In general<\/strong> terms a production resource unit relates to a subsurface reservoir. In legal<\/strong> terms, a PRU gets very complicated but basically means who personally benefits financially from Michigan\u2019s natural resources. We always look at natural resources from a public perspective in that fresh water is always a publicly owned asset. RMP believes that when fresh water use comes into play all taxpayers should have a reasonable democratic say as to whether they think that use is abusive, uneconomic, or not in the public\u2019s best interest. Lastly, a PRU from the surface<\/strong> generally means one or many surface locations like oil or gas wells, central processing facilities, sweetening facilities, pipelines, Et al. This subject has been somewhat complicated of late with the introduction of Collingwood testing that began for the first time in 2010. Each Collingwood well has been given its own PRU# even for wells on the same pad. By contrast, Summit Petroleum\u2019s St. Helen Unit spreads over acres of land and 117 wells make up one PRU. It is important to pay attention to whether a PRU# has a 1:1 relationship with a well or a 1:many relationship.<\/p>\n\n\n\n As of December 5, 2014, Michigan has approximately 7,100 different PRU#s in the latest Michigan database available by the MDEQ. The numbering of PRUs is sequential in nature. When wells retire their data remains on the list. The rate of new wells being permitted in Michigan is the lowest it\u2019s ever been in Michigan since 1931 which is the nadir point of Michigan permitting history. While permitting does not translate directly into drilled wells or production, it is a key indicator of oil & gas activity in Michigan. Each of the 7,100 PRUs in the Michigan database have data submitted for oil, condensate, NGLs, mcf of natural gas, and bbls of water. If operators are producing a well that does not produce one of those products, they are still required to enter a zero. Most people don\u2019t realize that every well produces a mixture of fluids and gases that must be separated into each of the aforementioned categories with surface infrastructure. Each operator must process the output of their well bore into saleable products and waste products. The water that comes uphole is toxic waste. Hydrogen sulfide gas is also toxic but can be saleable or waste. CO2 that comes uphole is generally considered waste and is generally vented to the atmosphere.<\/p>\n\n\n\n Not all PRUs report numbers for all categories in the database because different formations produce different things. If you have ever used RMP\u2019s map, you have seen how our map markers correspond to the general categories used by the MDEQ. We use black markers for oil wells, light blue for natural gas wells, green for class 2 injection wells, orange for observation holes, gray for dry holes, etc. to make the map easier on your eyes. PRUs are issued sequentially starting from #1 and currently are issued up through #21664. The difference between the 7,097 unique PRUs in the database and the latest sequential number of #21664 is most likely the number of PRUs for wells from 1926 to 1997 for which there is missing data in the data tables as mentioned earlier. When reading the reporting highlight bullet points below, keep in mind that many wells produce more than just one product. For instance, 4,699 is the total amount PRUs producing oil of the 7,097 PRUs reporting, but many of those 4,699 may also produce significant quantities condensate, NGL, CH4, and waste H2O as well. RMP\u2019s ranking system is based on all the parameters you\u2019ve read thus far plus the fact that our ranking system is simply the Microsoft Excel \u201c=rank(a1,a1:a7097)\u201d formula based on totals . Ok, of the 7,100 PRUs reporting in the Michigan database, here are the all time highlight numbers as of December 2014’s db with reporting through September 2014:<\/p>\n\n\n\n By far the largest amount of product by volume is waste water at 1.73 billion barrels. That number in gallons is 1.73B x 42 = 72.7 billion gallons of waste water. The waste water to oil ratio, the largest two products of Michigan\u2019s subsurface geologic formations, comes to 4.66:1. That means for every barrel of oil produced in Michigan\u2019s MPSC database with all the limitations discussed previously 4.66 barrels of waste water are produced. Most of this waste water is disposed in class 2 injection wells. Some waste water gets spread on Michigan roads as a de-icing agent in the winter or a dust control agent in the summer. The waste water must be permitted by the MDEQ before it can be spread on roads. Trucks that carry heavy waste water loads use public roads paid for by taxpayers. A full sized waste water semi tractor trailer type truck is generally 13,400 gallons (see picture above).<\/p>\n\n\n\n Finally, we come to the last piece of the puzzle and the most complex: money. Adam Smith wrote in his magnum opus<\/a> about economics \u201cwar is the most complex and noble of the all the arts\u201d. The Japanese have a saying that \u201cbusiness is war\u201d. With the introduction of money and for-profit business into the mix, motivations can change because of avarice. RMP takes a raw look at anyone who fronts a position inconsistent with data or the economic truth as it can be proved with reliable sources. We do not hesitate to dig for the data that supports or debunks a person\u2019s or entity\u2019s stated position. All of our work is non-partisan and non-profit to maintain an objective stance with regard to the issues we discuss as they relate to money, profits, the net destruction or creation of wealth, the net destruction or creation of jobs, GDP, net importing\/exporting, and all things related to the economy.<\/p>\n\n\n\n With that additional disclaimer out of the way, we will use average pricing from a given year for the base of our money calculations. We will then used the measuringwealth.com<\/a> site using the \u201cincome measurement\u201d conversion type to make a calculation of what the average oil price of was in a given year relative to the current year. Like all things oil & gas, the numbers will always be approximations based on a standard table of figures. All of our pricing figures and current dollar conversions will be upfront, published on our site, and available for public scrutiny. We welcome all feedback if you have ideas on how the information could be more reflective of the highest economic standards. We will rely on state sources, federal sources, and we will always provide applicable references.<\/p>\n\n\n\n Ok. That was a little boring to get through. But, like the analogy in the beginning, it was necessary in order to get to the more interesting information we plan to start publishing.<\/p>\n\n\n\n We have big energy challenges facing our state and country. Michigan has all the resources we need to domestically achieve energy independence in our state without oil, natural gas, or any other hydrocarbon with zero greenhouse gas emissions and net 0% consumption of freshwater. And, although that accomplishment might not be achieved for years to come, the turning point has already begun. While the hydrogen in the hydrocarbons we talk about will be key to understanding how we graduate to the post hydrocarbon economy, we must understand where we are and where we come from. Hydrocarbons will be in our lives for the foreseeable future. We can now, however, begin phasing hydrocarbons out of our energy mix and fertilizer production in favor of using water. Some hydrocarbons, like crude oil for instance, are currently obsolete for the first time ever and a more aggressive timeline can be pursued to phase gasoline out of our energy mix.<\/p>\n\n\n\n While we will continue to need and rely on the hydrogen in hydrocarbons for years to come, many institutions like the US Dept of Energy<\/a> and the US Military<\/a> have started laying the ground work to retire hydrocarbon infrastructure which is good for the environment and economy. Countries like Germany, South Korea, and Japan are also starting to make significant headway in gearing up to retire hydrocarbon infrastructure too. While it’s encouraging that companies like Toyota<\/a>, Honda<\/a>, Hyundai<\/a>, GM<\/a>, Ford<\/a>, Mercedes<\/a>, BMW<\/a>, Volkswagen<\/a> and Boeing<\/a> are finally starting to migrate our transportation sector toward renewable hydrogen production from water, it remains a challenge to ramp up new infrastructure.<\/p>\n\n\n\n With all the basics laid down, we can now start to talk about Michigan\u2019s petroleum production, gross values sold, and current production volumes. We will start to demonstrate petroluem production information using our Google Maps API v3 application.<\/p>\n\n\n\n We\u2019ve got an App for that\u2026 And it\u2019s going to be fun to demonstrate and we look forward to sharing with you the next evolution of the respectmyplanet.org mapplication: Org 2.0. Stay tuned.<\/p>\n","protected":false},"excerpt":{"rendered":" Understanding Michigan Petroleum Production can be tricky at first. This article is a primer about the basics of petroleum production and discusses history, units of measure, and pricing. We are about to start publishing Michigan production info on a regular basis and this article will help you get the most out of how and why we report the way we do.<\/p>\n","protected":false},"author":1,"featured_media":199,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3],"tags":[17,6,16],"class_list":["post-191","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oil-gas-exploration","tag-economy","tag-hydrocarbons","tag-petroleum-production"],"yoast_head":"\n<\/a><\/a><\/a>\n