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Township weighs oil drilling options

From left, Pat Kittle, Jim Nash, and Steve Joppich identify where oil and gas exploration would occur in Independence Township. Photo by Mary Keck (click for larger version)
March 20, 2013 - An agreement to drill for oil in Independence Township will be on the table next month. To prepare for it, Independence Township Supervisor Pat Kittle, Clerk Barb Pallotta, and Township Attorney Steve Joppich met with Jim Nash Water Resources Commissioner for Oakland County on March 15 to discuss the lease agreement proposal Jordan Development offered in December.

"If you're going to do this, you have to keep an eye on them," Nash said about the oil and gas exploration company from Traverse City.

If the Board of Trustees votes to enter into an agreement with Jordan Development, the company will use horizontal drilling to reach minerals they believe are beneath 40 acres of Bay Court Park. Potential wells needed for the operation would not be located in the park, but on privately owned acreage nearby.

Nash offered suggestions for provisions the township might consider adding to a potential contract with Jordan such as language that would ensure horizontal hydraulic fracturing (fracking) would not occur if wells were sold to another oil and gas company once Jordan left. Testing the water quality before drilling was another point Nash stressed.

In addition, Nash advised making sure Jordan Development covers damages to local roads due to increased truck traffic to the drilling site. He also pointed out that noise and light ordinances could come into play when the drilling began, and he warned against watching for odors and leakage from tanks storing any minerals found.

"It's not a clean business," Nash warned.

The township's lease with Jordan Development would be "nondevelopmental" meaning no wells or storage tanks would be located on township-owned property. The agreement Jordan Representative Chris Bickley proposed in November offered the township 1/6 of any royalties from oil and gas produced, and Bickley suggested the township could gain $50,000 a month.

During their discussion with Nash, the township's officials talked over the possibility of compulsory pooling if the board voted against signing a contract with Jordan Development.

Kittle expressed concern compulsory pooling might cause the township to lose some of its control over Jordan's operations, and Nash acknowledged the potential for a catch-22 situation.

If Jordan Development is unable to secure all the mineral rights leases they need to explore for oil and gas in Independence Township, they could petition to the Michigan Department of Environmental Quality (DEQ). The DEQ would then hold a compulsory pooling hearing that could allow Jordan to conduct drilling operations despite objections from property owners.

According to Hal Fitch of the DEQ, of the four compulsory pooling hearings petitioned by Jordan Exploration and their partner West Bay Exploration over the past two years, three petitions were granted. One hearing was dismissed because Jordan Exploration came to an agreement with the landowner who didn't want to lease.

The Board of Trustees will consider the draft agreement for approval at their next meeting on April 2 at 7 p.m. at the Township Hall.

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