Fracking in Michigan

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Fracking in Michigan
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Regulation
Regulatory agency Department of Environmental Quality[1]
Estate ownership Split[2]
Resources
Fossil fuels present Oil and natural gas[3]
Fracking
Year fracking began 1952[4]
Total wells fracked 12,000+[5]
Percentage of wells frackeed 78%[6]
Other state fracking pages
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Fracking in Michigan depends on available energy resources, the location of these resources, applicable laws and regulations, politics, and the power of environmental and industry groups. Decisions by policymakers and citizens, including state and local governments and ballot initiatives, affect if and how fracking occurs in a state.

Fracking has been occurring in Michigan since 1952. Despite this, the oil and gas extraction technique has been gaining attention recently. The Michigan Department of Environmental Quality (DEQ), which oversees oil and gas extraction in the state, has hosted over 200 meetings about fracking over the last three years. In 2013 the DEQ announced new reporting and monitoring requirements for high volume hydraulic fracturing operations.[7]

Fracking background

See also: Fracking

Hydraulic fracturing, or "fracking," is the process of injecting fluid -- mostly water and sand, but with additional chemicals -- into the ground at a high pressure to fracture shale rocks to release the oil and natural gas inside.

Recent technological advances in oil and gas drilling -- horizontal drilling and hydraulic fracturing -- have created a wealth of opportunities and challenges for states that have fossil fuel reserves that can be accessed through the combination of these two technologies and the industries that support them. The increased use of fracking has been an economic boon for states, not only those with fracking but also those with supporting industries, such as frac sand mining or associated machinery manufacturing.

Those opposed to fracking argue that the potential environmental and human health impacts could be large. Although wells have been fracked for over 65 years in the U.S., concerns have been raised over the ability for federal, state and local regulatory agencies to keep up with the recent and rapid growth and adequately protect the environment and human health. As with any type of energy extraction, either traditional or renewable, there are tradeoffs.

History

The state's first oil field was discovered in 1886 in St. Clair County and produced petroleum for local use. According to the Michigan Oil and Gas Producers Education Foundation, the "accepted entry of Michigan into the ranks of petroleum producing states" occurred with the August 1925 discovery of the Saginaw Field. In the 1930s, the state issued its first Standard Well Connection Permit to a gas well located in Mecosta County, marking the beginning of the state's natural gas production.[8][9]

According to the Michigan Department of Environmental Quality, oil and gas companies have practiced hydraulic fracturing in the state since 1952.[4]

Fracking at the ballot box

Voting on Fracking
Frackingsite2.jpg
Policy
Fracking policy
Ballot Measures
By state
By year
Not on ballot

2014

The Michigan Fracking Ban Initiative (2014), which would have prohibited the use of fracking in Michigan, failed to make the ballot in 2014. In order for the measure to have been added to the ballot, proponents would have had to collect and submit 258,088 signatures between February 15, 2013 and May 28, 2014. Between April and October 2013, the Committee to Ban Fracking in Michigan collected some 70,000 signatures. At that time, the group opted to postpone its efforts for a statewide initiative to 2016.[10]

Production

According to data received from the Michigan Department of Environmental Quality's Office of Oil, Gas and Minerals 5,872,000 barrels of oil were produced in Michigan in 2005. Production has generally risen since 2005. In 2013, production peaked at 7,780,000 barrels of oil.

Natural gas production data are collected by the Michigan Public Service Commission. In 2000, 243 BCF of natural gas were produced in Michigan. Production has declined since that time, as shown in the graph below. By 2012, the most recent date for which data are available, 127.2 BCF of natural gas were produced.

Michigan Annual Oil Production In Barrels Based On Sales (including condensate)
Natural gas production in Michigan, 2000-2012.png

Areas of activity

Map of high volume hydraulic fractured wells
Fracked wells in Michigan legend.png

The map to the right shows active permits and applications for high volume hydraulic fracturing in Michigan from 2008 to July 14, 2014. In total, the map represents 59 wells.[11]

Economic impact

The use of fracking, often in combination with horizontal drilling, has made it possible to extract supplies of oil and natural gas that were once economically unfeasible to extract. This has led to significant growth in the domestic oil and gas industry, and in the supply of domestically produced oil and natural gas. The growth in activity has impacted the economy in direct ways, such as increased capital investments (from both the U.S. and other countries), royalty and lease payments, and government revenues in the form of fees and taxes. The increased supply of natural gas and oil has also affected electricity prices, manufacturing, service industries and employment. In many places, fracking has increased employment in the mining (oil and gas) sector and supporting industries, such as the restaurant and housing sectors. Consumers and manufacturers have also benefitted thus far from lower oil and natural gas prices, and increased demand for pipeline, drilling and other ancillary equipment. As demand for natural gas and oil grows, however, prices are expected to rise.[12]

Taxes, fees and revenue

Fracking booms can increase local government revenue through increases in property and sales taxes, which can help compensate for the costs detailed below. The primary revenue streams from fracking--mineral leasing revenues and severance taxes--go to state and federal governments. As of June 2013, Michigan employed the following oil and gas severance tax:

  • 5 percent of the gross market value of natural gas,
  • 6.6 percent of the gross market value of oil and
  • 4 percent of the gross market value of stripper well crude oil

Of this, 2 percent, or at least one million dollars goes into a state orphan well fund. The remaining tax is deposited in the state general fund.[13]

Economic impact study

Economic modeling
IMPLAN and REMI are two econometric modeling systems used in both the private and public sectors to predict economic outcomes of policy changes. While these systems are widely used and highly respected, their results are theoretical and may not be universally accepted.

Because the oil and gas industry has grown so rapidly, there is not a wealth of data regarding its economic impacts. Instead economists use forecasting models, such as IMPLAN and REMI, to predict the impact increased fossil fuel extraction is having on the economy. These studies usually measure both direct impacts, i.e., the jobs and income being added within the oil and gas industry, and indirect impacts, i.e., jobs created throughout the supply chain. These studies also include induced impact, i.e., jobs created through increased spending due to growth in the industry.[17]

The following data are taken from a study done by PricewaterhouseCoopers LLP (PwC), a research consulting firm, for the American Petroleum Institute about the economic impact of the oil and natural gas industry in 2011 in Michigan. According to the PwC study, the oil and gas industry added $15.76 billion in total value in 2011, including direct, indirect and induced value. Of this, $4.92 billion, or 1.3 percent of the state's total value added, was direct, $5.2 billion was indirect and $5.6 billion was induced. In total this accounted for 4.1 percent of the state's total value in 2011.[17]

Employment

The PwC study attributes 182,040 jobs, or 3.6 percent of state employment in Michigan in 2011, to jobs created directly, indirectly, or induced, from the oil and natural gas industry. The industry directly employed 53,044 people, or 1 percent of state total employment. Indirectly the industry employed 51,785 people and induced 77,211 jobs.

Direct, indirect and induced labor income, according to this study, was $8.81 billion, totaling 3.5 percent of Michigan's labor income in 2011. Direct labor income from the mining sector was $2.39 billion, or 1 percent of the state's total. Indirect labor income totaled $3.09 billion and induced labor income was $3.33 billion.[17]

Royalties and land sales

The United States is one of the few countries where property owners can own the right to use and build on their land, known as surface rights, but they may not own the rights to the minerals located under their property. Depending on the state the mineral rights may have been sold in the past and may now belong to someone other than the surface owner. In fact, those mineral rights may belong to more than one individual, a company, or many individuals, who now have the right to extract those minerals, and in some states this can happen without the permission of the property owner. This can cause tension between the mineral owner, or whoever is leasing the mineral rights, and property owner.[18]

Environmental impact

Because of the sudden and unprecedented growth in fracking across the United States, getting high-quality, unbiased, state-specific information on the environmental impacts of fracking can be difficult. Most studies that would fit those first two qualifications are government studies that focus on the nation as a whole. As such, much of the information that follows in this section may only apply generally to the state. State-specific information has been added where possible.

Air

As with any type of energy extraction, there are several areas of risk when it comes to air quality. In the case of fracking, these risks include air pollutants such as VOCs and methane. When natural gas obtained due to fracking is used to generate electricity in power plants, it produces fewer carbon emissions than coal-fired power plants. According to a 2014 study by the National Oceanic and Atmospheric Administration, "as a result of the increased use of natural gas, CO2 emissions from U.S. fossil-fuel power plants were 23% lower in 2012 than they would have been” without the increase in natural gas use.[19] During the extraction process, however, more methane is emitted, and methane actually traps 20 times more carbon dioxide than other greenhouse gases. Nevertheless, according to the International Energy Agency (IEA), CO2 emissions in the United States dropped by 3.8 percent in 2012, due in large part to the "increased availability of natural gas, linked to the shale gas revolution."[20][19]

Some environmental groups have also raised concerns that methane could be leaked during the extraction process, resulting in unnecessary pollution.[21][22] Most of this pollution occurs during the well completion phase. Fracking operations can also emit known carcinogens, which have been linked with increased rates of cancer.[23]

A 2014 report from the U.S. Environmental Protection Agency found a decrease of 3.3 percent in overall greenhouse gas emissions and a 12 percent decrease in methane emissions from 2011 to 2012. Natural gas extraction is the second largest producer of methane, after cattle.[22][24]

Earthquakes

Sign depicting Michigan's petroleum industry

The central and eastern United States have been experiencing an increase in earthquakes over the last few years, according to the U.S. Geological Survey (USGS), the government agency responsible for such data. Studies from the USGS have not found fracking directly responsible for this increase in felt earthquakes; however, the USGS is looking into regulations that would use seismic data to determine thresholds dictating when and where fracking can occur.[25] There is a growing body of evidence suggesting that this growth in the number earthquakes has been caused by the increased use of injection wells to dispose of fracking wastewater. While fracking has been rarely known to cause earthquakes, there is an established scientific link between earthquakes and the disposal of fluids in deep, underground injection wells. Once a well has been fracked, the water that returns to the surface is called wastewater, which contains large amounts of salt and other contaminants.[26] Some of this water can be recycled, but that water which can't be recycled is often stored in injection wells. These injection wells are generally considered the safest and most cost-effective place for wastewater remaining from fracking operations to be stored. Injection wells are located thousands of feet underground and are encased in cement. Multiple drilling wells often rely on one disposal well for storing their wastewater. The U.S. Environmental Protection Agency estimates there are 144,000 of these wells across the United States receiving 2 billion gallons of frack fluid per day.[25][27]

Induced seismology, or man-made earthquakes, have been around for decades and can be caused by mining, damming rivers and injecting fluids into underground wells. Earthquakes are caused by injection wells as water is pumped into underground wells, causing the faults under the earth to slip. Even though scientists at the USGS have even been able to cause earthquakes on purpose by carefully injecting liquid into the earth, the link between injection wells and earthquakes is not fully understood. One of the largest concerns for scientists and regulators is that they do not have the tools to predict whether wastewater will cause seismic activity. These concerns are compounded by the lack of knowledge about where faults are located across the central and eastern United States. The USGS is just beginning to map these areas in more detail in order to understand the seismic risks. As of June 2014, these earthquakes have typically been small, two or three in magnitude on the Richter scale, but at least one scientist has raised concerns that earthquakes could grow in intensity if old injection wells continue to be used for storage.[25][26]

Policypedia
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State energy policy

State fracking policy

Energy policy terms

Fracking in the U.S.

Energy use in the U.S.

Energy policy in the U.S.


See also
Local fracking on the ballot

Statewide fracking on the ballot

Water

When it comes to water protection and fracking there are four main areas of risk: the depletion of fresh water sources, spills and leaks of fracking fluid into water, mismanaged produced water and flowback, and stormwater pollution. Up to 10 million gallons of fresh water may be required to frack one well. Stormwater, flowback, produced water and wastewater can be harmful because they contain total dissolved solids and naturally occurring radioactive materials. Because of the recent and rapid growth in fracking there are still many uncertainties about the effects of fracking on water. There are studies that link fracking to groundwater contamination, but they remain controversial. The U.S. Environmental Protection Agency is releasing a report in 2014 on the potential impacts of fracking on drinking water, and is working on effective programs for managing these potential risks.[23][28]

Health

Because of the recent and rapid growth of fracking, little is known about the potential impacts to human health. Government agencies dealing with human health issues have raised concerns about some chemicals that can released during the fracking process, including VOCs. The Centers for Disease Control is working with the EPA and federal, state and local agencies to better understand potential impacts.[29][30]

Socioeconomic impact

Fracking can also present challenges to communities. Increased oil and natural gas production happens in boom or bust cycles, and often these cycles disproportionately occur in rural communities. Increased oil and gas activity near homes has been traced to depressed home values. Large scale fracking booms can also lead to increases in crime, such as substance abuse, sex trade and domestic abuse. An influx of oil and gas workers also strains housing and traffic resources. This lack of housing can push oil and gas workers into 'man camps', or "clusters of mobile homes, RVs, and trucks" or into hotels. A fracking boom also puts heavy traffic on roads, which can strain infrastructure, increase traffic accidents, and increase the likelihood of oil spills. These changes can force local governments to respond by hiring more police, social workers, health care workers and emergency response personnel, thereby spending more funds on repairing roads and social programs. Currently, much of the tax revenue generated by the oil and gas industry goes to the federal and state government, making it difficult for local governments to respond to strains on their infrastructures.[23]


Departments, agencies and organizations

  • The Michigan Department of Environmental Quality (DEQ) was formed by executive order in 1995. At the time, the newly-formed DEQ assumed the responsibilities of the Department of Natural Resources. Through a series of subsequent executive orders, the department assumed additional responsibilities. The mission statement of DEQ reads as follows:[31][32]
The Michigan Department of Environmental Quality promotes wise management of Michigan's air, land, and water resources to support a sustainable environment, healthy communities, and vibrant economy.[31][33]
The department is comprised of the following offices:[34]
  • Administration Division
  • Air Quality Division
  • Office of Environmental Assistance
  • Office of the Great Lakes
  • Remediation Division
  • Office of Oil, Gas and Minerals
  • Water Resources Division
  • Within DEQ, the Office of Oil, Gas and Minerals administers the exploration and production of oil, gas and other mineral resources in the state. Specific responsibilities include: permit application reviews, field reviews, compliance inspections, enforcement, and spill response. The office is also responsible for regulation of hydraulic fracturing operations in the state.[34][35]
  • Within DEQ, the Air Quality Division "works with business and industry air pollution sources and with the general public to help maintain compliance with statutes that minimize the adverse impacts on human health and environment." The division implements emission control and air monitoring programs, issues necessary permits and inspects air emission sources.[34]
  • Within DEQ, the Water Resources Division "establishes water quality standards; assesses water quality, issues permits to regulate the discharge of industrial and municipal wastewaters, and is responsible for wastewater collection and treatment facilities," among other water quality responsibilities. In addition, the division is charged with protecting and promoting the best use of the state's water resources (including its lakes, streams, wetlands, etc.).[34]

Major organizations

  • The Michigan Oil and Gas Association (MOGA) is an industry group founded in 1934 that "represents the exploration, drilling, production, transportation, processing and storage of crude oil and natural gas" in the state. The group has nearly 1,000 members, including both independent and major oil companies.[36] MOGA is listed as a "cooperating association" by the Independent Petroleum Association of America, which is a national trade group that "advocates its members' views before the U.S. Congress, the Administration and federal agencies."[37][38]
  • Ban Michigan Fracking is an advocacy group that opposes fracking. Founded in 2011, the group's stated mission is "to educate, advocate and organize to ban fracking and raise awareness of the dangers of gas drilling to the state's economy, to the environment and to the health and safety of its people."[39]

Natural gas use in Michigan

For more information on energy consumption in Michigan, see "Energy policy in Michigan"

In 2011, about one quarter of Michigan’s energy use went to the residential, transportation and industrial sectors. Just over one-fifth went to the commercial sector. Despite mild winters in the northern part of the peninsula, most of Michigan's population lives in the southern end, which has a more severe climate. The cold winters in Michigan's southern half drive the residential demand for home heating. Most of the energy used in the state is in the form of natural gas, followed by coal and petroleum.[3]

In Michigan, homes are primarily heated by natural gas. Electricity is the next most common home heating source, at 7.9 percent. Following that, homes are heated by LPG, other sources (such as wood) and fuel oil.

Consumption of energy for heating homes in Michigan
Source Michigan 2011 U.S. average 2011
Natural gas 77.4% 49.5%
Fuel oil 1.5% 6.5%
Electricity 7.9% 35.4%
Liquid Petroleum Gases (LPG) 8.8% 5%
Other/none 4.4% 3.6%

The Anterim Field in northern Michigan is one of the top 100 natural gas fields in the United States. Despite having the most natural gas storage capacity in the nation, production is declining. The natural gas produced in Michigan meets less than 20 percent of the state's demand. Michigan imports natural gas from Indiana, Ohio, Wisconsin and Canada. Exploration of the Collingwood Shale, which lies under the Utica Shale of Northern Michigan, may yield more natural gas in the future. The major pipelines in Michigan are the Vector and Great Lakes Gas lines.[3][40]

Where electricity comes from in Michigan[41]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 9,000 0.11% 0.03%
Natural gas-fired 1,001,000 12.08% 0.1%
Coal-fired 4,570,000 55.14% 0.26%
Nuclear 2,178,000 26.28% 0.28%
Hydroelectric 70,000 0.84% 0.02%
Other renewables 417,000 5.03% 0.21%
Total net electricity generation 8,288,000 100% 0.2%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

In Michigan there are 11 private natural gas utilities.[42]

News items

This section displays the most recent stories in a Google news search for the term "Michigan + Fracking"

All stories may not be relevant to this page due to the nature of the search engine.

Michigan Fracking News Feed

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See also

External links

References

  1. Michigan Department of Environmental Quality, "Hydraulic Fracturing in Michigan," accessed July 16, 2014
  2. Michigan Department of Environmental Quality, "Mineral Rights," accessed July 16, 2014
  3. 3.0 3.1 3.2 U.S. Energy Information Administration, "Michigan Profile Analysis," updated December 18, 2013
  4. 4.0 4.1 Michigan Department of Environmental Quality, "Five facts about Hydraulic Fracturing," accessed July 16, 2014
  5. Michigan Department of Environmental Quality Office of Oil, Gas, and Minerals, "Five facts about Hydraulic Fracturing," accessed July 31, 2014
  6. Michigan Department of Environmental Quality Office of Oil, Gas, and Minerals, "Questions and answers about hydraulic fracturing in Michigan," accessed July 31, 2014
  7. M Live, "Michigan DEQ proposes new fracking regulations in light of environmental, health concerns," October 22, 2013
  8. Michigan Oil and Gas Producers Education Foundation, "Timeline of Michigan Oil and Gas Production," accessed July 16, 2014
  9. Michigan Public Service Commission, "About Michigan's Natural Gas Industry: Exploration and Production," accessed July 16, 2014
  10. Great Lakes Echo, "Michigan group postpones petition to ban fracking," February 13, 2014
  11. Michigan Department of Environmental Quality, "High Volume Hydraulic Fracturing Active Applications and Active Permits - Since 2008. July 14, 2014
  12. IHS, "US unconventional oil and gas revolution to increase disposable income by more than $2,700 per household and boost US trade position by more than $164 billion in 2020," accessed September 17, 2014
  13. National Conference of State Legislatures, "State Revenues and the Natural gas Boom: an Assessment of State oil and gas Production Taxes," June 2013
  14. IMPLAN, "IMPLAN€'s History of Expert Economic Data," accessed September 17, 2014
  15. REMI, "About Us," accessed September 17, 2014
  16. REMI, "Clients," accessed September 17, 2014
  17. 17.0 17.1 17.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  18. Geology.com, “Mineral Rights,” accessed January 29, 2014
  19. 19.0 19.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  20. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
  21. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  22. 22.0 22.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  23. 23.0 23.1 23.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  24. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  25. 25.0 25.1 25.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  26. 26.0 26.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  27. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  28. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  29. U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
  30. Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
  31. 31.0 31.1 Michigan Department of Environmental Quality, "DEQ Mission," accessed July 16, 2014
  32. Michigan Department of Environmental Quality, "History of DEQ," accessed July 16, 2014
  33. Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  34. 34.0 34.1 34.2 34.3 Michigan Department of Environmental Quality, "Guide to DEQ Divisions and Offices," accessed July 16, 2014
  35. Michigan Department of Environmental Quality, "Oil, Gas and Minerals," accessed July 16, 2014
  36. Michigan Oil and Gas Association, "Welcome," accessed July 16, 2014
  37. Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
  38. Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
  39. Ban Michigan Fracking, "About Us," accessed July 16, 2014
  40. Michigan PSC, "Michigan Energy Profile," accessed March 5, 2014
  41. U.S. Energy Information Administration, "Michigan Profile Overview," accessed February 5, 2014
  42. Michigan PSC, "Gas Utilities in Michigan," accessed March 5, 2014