The People of America's Oil and Natural Gas Indusry

Michigan Basin Lease Sale

Jane Van Ryan

Jane Van Ryan
Posted November 2, 2010

The State of Michigan held a lease auction last week, in which leases for nearly 274,000 acres of state lands were awarded to the highest bidders for oil and natural gas development. The sale raised $9.65 million in bonus bids on top of the $178 million offered for leases during the very competitive May 2010 sale. 

Why are oil and natural companies investing in Michigan? The state is the center of the bull's eye-shaped Michigan Basin, a huge geologic bowl beneath the lower peninsula that stretches into Indiana, Illinois, Wisconsin and Ontario. About 500 million years ago, the basin held an ancient sea and created the proper conditions for deposits of salt, natural gas and oil.

Earlier this year, two wells drilled by Encana and its subsidiary Petoskey Exploration found promising amounts of energy in the Collingwood-Utica shale formations in Missaukee and Cheboygan Counties. Encana reported one well was producing natural gas and liquids that could add "meaningful future resources and production to our North American portfolio of prolific resource plays." The company also announced plans to drill more wells in the future.

At present Michigan is producing about 400 million cubic feet of natural gas per day from other formations within the Michigan Basin. While the basin is not as large as the Marcellus Shale, which is believed to hold one of the largest natural gas deposits in the world, it is helping to produce energy for American consumers. The key to unlocking the energy from the Collingwood-Utica shale plays is the combination of hydraulic fracturing and horizontal drilling, which is a tried-and-true methodology for producing natural gas and oil from hard rock formations.

To learn more about the Michigan Basin, view this map of the basin's geology. To learn about one of the two wells, scroll through this presentation. As you'll see, the hydraulic fracturing procedure occurs far below the aquifer eliminating the likelihood of groundwater contamination. Also in the presentation, check out the photographs showing the early stages of the drill site's remediation.