A recent report by the International Energy Agency predicts the supply and consumption of natural gas is on the cusp of a “golden age” as use of the fuel expands rapidly over the next 25 years. This assessment should be enthusiastically received by Michigan policymakers, who have available to them a virtual “gold mine” of the clean fossil fuel.
The unknown is whether state leaders will opt for a future of abundant and affordable energy or continue down a less reliable, more costly road to energy independence.
With clean, inexpensive energy as its goal, M&M Energy LLC, is one of a number of companies ready to meet the challenge. In the process of redeveloping the former Total Refinery site in Alma, the firm discovered there had been a significant gas find in the 1970s by Shell Oil inside a 150,000-acre tract called Pigeon River.
A series of technical failures caused one of the first wells drilled by Shell Oil to explode. Although the fire was extinguished after a couple of days, the environmental community took legal action that lasted three years to halt the drilling. The state rescinded the Shell Oil leases and entered into a consent decree called the Pigeon River Settlement Agreement that allowed for future development of hydrocarbons. However, no drilling has occurred in the interim because of the politically charged nature of the accident.
M&M Energy recently acquired private leases that were not subject to the Shell Oil restrictions. These acquisitions are located within the Antrim Basin reservoir that spans most of Michigan’s Lower Peninsula, one of a dozen basins across North America that are rife with what is known as “unconventional gas.” Included are the Barnett Shale located in the Dallas/Fort Worth area, the Williston Basin in North Dakota, the Woodford Shale on Oklahoma and the Marcellus Shale in New York. All are currently under development.
Although identical in content to conventional natural gas, “unconventional gas” requires sophisticated stimulation techniques to extract it from reservoir rock. Past practices involved the controversial “fracking” or hydraulic fracturing that injected high-pressure jets of water, sand and chemicals into rock formations to release gas. Its use prompted justifiable concerns about water table contamination, which limited its expansion in some parts of the U.S.
The new technology uses “horizontal drilling” that limits the surface impact by 95 percent and makes it “environmentally sustainable” in unlocking gas heretofore deemed beyond reach, according to Michael Sawruk, an M&M Energy partner.
A proposal has been submitted for the review and disposition of Gov. Rick Snyder that essentially asked the state for permission to do a pilot program. The company is prepared to make the investment to see “whether the flows are there.”
Upon approval, Michigan can become a new land of opportunity. The company is willing to split all profits with the state from what is estimated to be 100 trillion cubic feet of untapped gas. “To put that in perspective, at $3.50 per million BTUs, that’s about $40 billion of economic value,” says Sawruk.
An additional economic incentive would be to make the state a “true partner” or a “working interest owner” by taking the revenue, or buying the gas at discounted rates to be used in Michigan facilities. It requires some modification to the state’s energy policy.
Former Gov. Jennifer Granholm took the position that the future of Michigan was renewable green energy — wind and solar — and refused to consider conventional hydrocarbons. The environmental community has taken the approach that the state needs to “keep pristine lands pristine.” Neither Granholm nor the environmentalists have acted in a manner sufficient to meet current and future needs in the most economically viable manner.
Michigan can have a competitive edge over surrounding states if policymakers set aside outdated environmental concerns, trust 21st Century technology and ultimately decide tapping the potential of “unconventional gas” outweighs the risks.
Indeed, it would border on negligence to idly sit on a precious resource that can creatively and intelligently power Michigan’s entry into a prosperous high-tech future.