Friday, February 16, 2018

Global Shale Law Compendium: Shale Governance in Michigan

Written by Chloe Marie – Research Fellow

The Global Shale Law Compendium series addresses legal developments and other issues related to the governance of shale oil and gas activities in various countries and regions of the world. In this article, we will focus to legal, policy, and governance issues related to shale gas development in the United States, and more specifically in the state of Michigan.

The state of Michigan holds significant oil and natural gas fields and development has been focused on Michigan’s northern Lower Peninsula. According to the U.S. EIA, the Antrim Gas Field, located in the northern Lower Peninsula, is one of the top 100 natural gas fields in the country and ranked 29th for proved reserves. The Antrim Gas Field also is home to approximately 1 Tcf of shale gas resources.

The technique of hydraulic fracturing is not new in Michigan as it was first used in 1952. Since that time, the Oil, Gas, and Minerals Division (OGMD) within the Michigan Department of Environmental (DEQ) has granted permits to hydraulically fracture approximately 12,000 wells. According to the DEQ’s map identifying high volume hydraulic fracturing activities, 39 wells have utilized the technique since 2008.  The largest cluster of wells is in Kalkaska County.

Numerous energy companies have shown interest in developing the Collingwood Shale, also located in Michigan’s northern Lower Peninsula. A subsidiary of Encana Corporation drilled its first exploratory well in 2010 in Missaukee County, which well later produced about 2.5 million cubic feet of shale gas per day for a period of 30 days. Based on the production levels and falling natural gas prices, Encana’s subsidiary decided to step aside from shale gas development in the area in 2014 to focus on projects more economically viable outside Michigan.

In Michigan, oil and gas activities, including the use of hydraulic fracturing, are governed primarily by Part 615 and Part 617 of the Natural Resources and Environmental Protection Act of 1994. Under this Act, the Michigan DEQ OGMD is responsible for overseeing the oil and gas permitting process.

A well operator is required to submit a permit application to OGMD and must comply with additional requirements when seeking to use hydraulic fracturing. These additional requirements include providing a list of all chemical compounds to be used in a high volume hydraulic fracturing operation. Applicants must make publicly available information on all chemical additives used during hydraulic fracturing through the FracFocus Chemical Disclosure Registry.

In addition, any permittee is required to file a special request with OGMD in order to withdraw a large volume of water for hydraulic fracturing using the Michigan Water Withdrawal Assessment Tool (WWAT). The regulations also require anyone involved in high volume hydraulic fracturing to develop a plan for the baseline sampling of water wells.

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