Oil discoveries in southern Michigan lead to drilling rebirth

The southern part of the state is having a resurgence of oil drilling that it hasn’t seen since the decades of the 1950s to the 1970s, said Scott Bellinger, editor of Michigan Oil and Gas News.

The Albion-Scipio rock formation in Calhoun and Hillsdale counties produced more than 125 million barrels of oil during those two decades.

In 2006, companies using new technology such as high-tech 3D seismic testing found more oil in some of the old spots in Calhoun County, leading to a mini-boom. Starting in 2009, the drilling moved into eastern Jackson and northern Lenawee counties. Oil was found there in places it had never been discovered before, Bellinger said.

In the first nine months of last year, Jackson County’s oil wells produced 791,500 barrels of oil, nearly double the second-place Manistee County, an area with a long history of gas and oil production. Lenawee came in third, Bellinger’s statistics show.

Pat Gibson, a vice president of West Bay Exploration, said earlier this month that the amount of oil from his company’s wells in the Irish Hills area provides about 2% of the oil consumers use in Michigan. It will have little impact on supply and won’t help gasoline prices, he said. But it does add jobs for drillers, welders and equipment operators.

The state collects about 7% in severance tax on every drop of oil produced, and the oil companies pay personal property taxes to local governments.

Some wells also have been drilled in recent years, or are being scouted, in western Wayne and southern Washtenaw counties.

In northern Michigan, a stampede for mineral leases began in 2010 after a company said it had hit a potentially lucrative new pocket of natural gas in deep layers of shale in Manistee County. But with sinking natural gas prices, that rush hasn’t so far panned out.

Michigan’s oil and gas industry is small overall. In 2009, the latest year figures were available, it ranked 17th in production of crude oil and 16th in gas among 38 states that produce gas and oil.

Article source: http://www.freep.com/article/20120318/NEWS06/203180475/Oil-discoveries-in-southern-Michigan-lead-to-drilling-rebirth

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Posted by on Mar 18 2012. Filed under Drilling & Production. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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