Written by Matt Knaack, Kyle Shutz and Scott Kaplan
This article first appeared online at mibiz.com on May 21, 2012.
On May 8, the mineral rights for 23,419 acres of land in Barry County were leased to two private oil and gas companies by the Michigan Department of Natural Resources. The deal was part of a larger, statewide auction that offered up drilling rights to more than 100,000 acres in 23 different counties throughout Michigan.
The auction netted the state more than $1.5 million for the 211 parcels in Barry County at an average of $67.20 per acre.
Many of these parcels are part of the Yankee Springs Recreation Area and the Barry County State Game Area near Gun Lake, although it is still unclear as to how the advent of oil and gas companies in the region may affect the local business and tourism industries.
Valerie Byrnes, president of the Barry County Chamber of Commerce who also oversees the Barry County Tourism Council, said that there has been no response from local businesses about last week’s auction.
“Businesses have not responded (to the chamber) one way or the other,” she said.
But this hasn’t stopped some business owners from speculating about what might happen if oil companies do start drilling.
Mike Powers, owner of Bay Pointe Inn, a resort located on Gun Lake, said he believes that drilling will not affect tourism like a wind farm might, particularly from a visual standpoint. He expects that the drilling will occur away from his resort.
“As long as (drilling is) safe for the environment and reduces energy costs and enhances job creation, I’m in support of it,” said Powers.
Oil and gas companies, after bidding on leases for the mineral rights, are preparing to begin exploration of the geological area. According to Hal Fitch, state geologist and director of the Michigan Department of Environmental Quality Office of Geological Survey, exploration near Yankee Springs may target the Trenton-Black River formation, a natural gas reservoir that stretches from the state of New York west through Michigan and as far south as West Virginia.
Protests led by residents of Barry County occurred in Lansing during the auction of these leasing rights. Many residents of the county are worried about the potential implications that hydraulic fracturing – commonly known as fracking – and horizontal drilling could have on the environment with some concerns pertaining specifically to the recreational area.
Hydraulic fracturing injects a mixture of water, chemicals and sand into man-made wells that extend below the water table to force apart shale rock, allowing for the easy extraction of oil and natural gas. Fracking has come under increasing scrutiny from Michigan environmental groups because of health risks and environmental concerns widely associated with the process.
Fitch reported that any drilling that occurs near Yankee Springs may not necessitate fracking and horizontal drilling. Instead, companies might select more traditional methods. However, this seems unlikely given that the leased parcels are all designated as non-development land. This means that while companies have the mineral rights to the land underneath the recreational area, they are not able to drill directly on site.
A report from the Hastings Banner indicated that there have been more than 134 oil and gas leases signed by private landowners in Barry County this year. In 2009, these types of leases were a part of only 14 deeds. If companies are leasing private land near parcels designated as non-development, there is a potential for horizontal drilling. According to that same report, acquisition specialists from companies such as Pteradon Energy LLC have been seeking out private landowners in Barry County to lease the rights of landowners since December.
If what some are speculating is true, the two oil companies that have pending leases in Barry County – Meridian Energy Corporation and the aforementioned Pteradon Energy – may perform fracking in conjunction with horizontal drilling. The leases have not yet been approved. They are pending until mid-June and any plans for extracting minerals must be approved by the state so it is ulikely that drilling will begin for some time.
Some areas in Wyoming and Pennsylvania have had issues balancing natural gas extraction and local tourism. The large amount of drill workers required to create and operate a new drilling pad have been known to dominate local lodging institutions and campgrounds during peak tourism months in the summer. There have also been reports of increased noise pollution in the forms of heavy truck activity and active drilling motors.
An official from the North Country Trail Association, a nonprofit group overseeing the trail, which passes through the Yankee Springs Recreation Area, expressed his concern for natural gas exploration next to sections of the trail. He stated that they are already having issues with natural gas leaks and fumes along with noise pollution on parts of the trail system in Pennsylvania where drilling has already been taking place. His concern is that there could be a similar situation on sections of the trail that pass through and around Yankee Springs.