December 26, 2012 - Springfield and Waterford townships have entered into negotiations for oil and gas drilling projects; will Independence Township follow suit?
Chris Bickley (click for larger version)
During the Board of Trustees meeting on Dec. 18, Chris Bickley from Jordan Development, an oil and gas exploration company from Traverse City, presented a plan to lease minerals under 70 acres of Independence Township. Of those 70 acres of potential oil, 40 of them are beneath Bay Court Park. The other 30 acres are located about two miles east of Bay Court, just east of Sashabaw Road.
Jordan Development's proposal included an agreement to do "no surface operation of any nature on any lands owned by the township," Bickley said. In addition, there would be no hydraulic fracturing (fracking).
"I'm glad that fracking is off the table," said Supervisor Pat Kittle.
If Jordan Development acquires leases to the mineral rights, they could place wellheads on properties owned by individuals and extract any oil or gas found under township lands through directional drilling. Jordan has already begun negotiating leases from private landowners in Independence.
The oil and gas company's intent is to bore more than 3,000 feet below the earth's surface. Using steel casings and concrete to drill the well, Bickley assured, "It's scientifically impossible for there to be any breach between [the well] and the water supplies or anything towards the surface."
"We've had a perfect record in the state of Michigan," added Bickley. "Safety is always paramount, and Michigan has by far the most stringent requirements, codes, and regulations related to how wells are put in."
Jordan Development operates over 450 wells and has acquired leases to over 100,000 acres in Michigan, according to Bickley. If the Board of Trustees accepted Jordan's proposal, the township would receive 1/6 of any royalties from the minerals found deep in the earth for as long as the well is producing.
Bickley suggested the township could cash in up to $50,000 each month for as long as the well is producing. Kittle believes $5,000 or $6,000 each month is a more likely figure the township could anticipate.
"We need a lot of research and community involvement before the board makes any decision," said Kittle. "Oil drilling is a risky business; half of these wells turn up dry."
Jordan Development's Vice President, Ben Brower, is more optimistic about the chances of finding oil and gas, however.
"The seismic has shown that there's a possibility of it," said Brower. "Certainly, we wouldn't be out meeting with people and taking the time to have multiple meetings with the township if we didn't believe there was a chance of oil and gas."
Without drilling, Jordan Development will not be able to determine for certain if the minerals they are seeking are under Independence Township. "The only way to find out is to drill," said Brower.
What would a drilling operation entail?
"To drill a well in Michigan takes approximately 7 to 10 days," Bickley explained. During the process of drilling the well, the surrounding area would be similar to a construction site. After the well location is established and the drill rig is removed, Bickley said the well "literally has no sounds, and they have no emissions."
Despite Jordan's insistence that there's no sound or smell from wells, Kittle is pleased they're "not putting [wells] on township land if it's approved, and that's a big if."
While the Board of Trustees may decide to refuse to lease their mineral rights, there's a chance they could be forced to give them up later through compulsory pooling.
If land owners in the area have leased their mineral rights and want a well drilled, but others choose not to sign a lease, a hearing could be held before the Department of Environmental Quality's (DEQ) Supervisor of Wells. During the hearing, the Supervisor of Wells could decide to pool the properties.
While property owners in the pool who refused to sign a lease would not see a well on their land, the oil and gas would still be extracted. Despite their refusal to lease their rights, the landowner would receive 1/8 of the royalties from a producing well but would lose the option of receiving an upfront bonus payment from the developer.
According to Jordan Development, compulsory pooling is an option they would not shy away from.
"If we had to, we'd go that route," said Brower. "If we have to protect the other neighbors' oil and gas rights, we would do that."
Kittle notes with the possibility of compulsory pooling, the township could be caught in a catch-22.
"Are we going to manage our future or have someone else manage it for us?" he asked.
Check next week's Clarkston News for testimony from a property owner in Springfield who has been approached by West Bay Exploration, a partner of Jordan Development, about leasing her mineral rights. The next Board of Trustees meeting will take place on January 8 at 7 p.m. at the Township Hall.
Clarkston News reporter