Washtenaw County's oil production ramps up for the first time in decades
Editor's note: This story was updated at noon with links to previous coverage.
A flare burns off excess natural gas next to crude oil storage tanks near a pump jack on a farm in Saline Township in 2012. The oil well is one of nine producing wells in the township managed by Paxton Resources LLC.
Angela J. Cesere | AnnArbor.com file photo
About 109,919 barrels of crude oil — the equivalent of 4.6 million gallons — came from six oil wells in Saline Township in 2012. All of them belong to Paxton Resources LLC of Gaylord — and the company has applied for permits to drill eight new oil wells in the township within the past four months.
Paxton says it has nine wells producing oil in Saline Township now.
The oil wells have propelled Paxton Resources into the top 10 oil producers in the state, according to the industry publication Michigan Oil and Gas News. The company has not previously held such a ranking, said Greg Vadnais Jr., a land leasing agent for Paxton.
Crude oil sits in a reservoir basin near one of Paxton's oil wells in Saline Township.
Angela J. Cesere | AnnArbor.com file photo
During the 2000s, the average annual oil production for the state was between five and seven million barrels. In 2012, about 6.3 million barrels of oil were produced in the state, according to the most recent data available, Bellinger said.
“There have been some encouraging developments that have seen an enhancement of ability to produce (oil) from horizons in the southern part of the state,” Bellinger said.
Oil wells in Washtenaw County drilled by Paxton are about 3,000 feet down into the Trenton-Black River formation.
“Technological with seismic and drilling technologies have made it possible for companies to find new reserves of oil in that same formation,” Bellinger said.
Paxton's oil wells in Saline Township accounted for about 80 percent of the company's total oil production from all of its holdings in 2012 — up from about 36 percent in 2011 and 11 percent in 2010.
“It’s an exceptional project,” Vadnais said. “It’s exceptional in that it’s been drilled and that it’s made oil… We’ve done this in other areas where it’s not shot out seismically.”
Paxton is an eight-person company that operates out of Gaylord, Vadnais said. He and another Paxton representative manage Washtenaw County operations locally out of a house they rent in Saline Township.
“I think we’re moving at the pace we expected,” Vadnais said of Paxton.
During the drilling of a new oil well, Paxton uses 20 to 30 companies of varying specialties and employs 40 to 50 people directly, Vadnais said.
In the four years that Paxton has been working in Saline Township, Vadnais said community relations have improved.
“We’ve made a lot more friends,” Vadnais said. “Every time we drill a well, there’s an impact on a family. That’s been very positive for us… There will always be people who have opinions on the development.”
Crude oil is selling for about $100 per barrel. The price varies depending on the type of oil.
Residents with land lease agreements for mineral rights typically get about one-eighth of the sale of crude oil from a well on their property.
Paxton conducts breakfast meetings with its landowners every several months to give them updates and keep them informed on the company’s activities.
Paxton sells its oil to GulfMark Energy, a crude oil marketing and transportation company that operates in the Gulf Coast of Texas and Louisiana as well as in West Texas and Michigan.
GulfMark sells the oil to a refinery in Romulus, Vadnais said.
Paxton has been the only company actively pursuing land leases and acquiring permits for new oil wells in Washtenaw County during the past three years up until this spring.
Bishop Land Service Inc. of Mesick — a small town in northern Michigan — is pursuing land lease agreements for oil wells in the southeastern corner of Northfield Township.
There are two plugged oil wells there that last saw activity about 20 years ago, according to state permit records.
Bishop Land Services pursues land leases for mineral rights with residents and conducts seismic assessments of the area for their client. Clients typically are oil companies.
Bishop Land Service would not disclose their client, citing contractual obligations. Vadnais said Paxton has not hired Bishop Land Service, but has previously used the company for land lease agreements.
The recent increase in the pursuit of land leases in Washtenaw County for mineral rights raised concerns of residents last year who questioned whether Paxton would be using the environmentally controversial method of hydraulic fracturing to procure more oil from its wells.
Paxton publicly responded to those questions in a public meeting last year by explaining that they were not fracking their wells in Saline Township.
Paxton was drawn to Saline Township because of the availability of 24,000 acres of leased land that Phillips Resources of Pittsburgh put up for sale when it left the area in 2009, as well as seismic data about geologic structures in the township, Vadnais said.
“The science is really what brought us here,” Vadnais said. “We don’t know how long these wells are going to produce.”
Since then, Paxton's land lease holdings have grown to about 28,000 acres.
Compared with neighboring areas, oil production out of Saline Township is small in scale.
Immediately to the west of Washtenaw County, Jackson County had the highest oil production in Michigan in 2012, Bellinger said, with about 1.2 million barrels produced during the nine-month period between January and September in 2012.
In Lenawee County to the southwest of Washtenaw County, 370,000 barrels of oil were produced between January and September of 2012.
Beyond southern Michigan, there has not been a significant increase in new permits for oil wells in the state, Bellinger said.
“In the other parts of the state, oil production has declined over time mainly because there hasn’t been a significant new discovery made,” Bellinger said. “If there’s a new field discovered somewhere, that’s typically going to result in new activity and an increase in production.”
Bellinger said there very likely would be continued oil exploration in Washtenaw County throughout the next several years.
- Previous coverage: Are we next? Possibility of fracking in Washtenaw County drums up fear
- Previous coverage: Oil and gas company says it can't promise fracking won't happen in Washtenaw County
Amy Biolchini covers Washtenaw County, health and environmental issues for AnnArbor.com. Reach her at (734) 623-2552, amybiolchini@annarbor.com or on Twitter.
Comments
OLDTIMER3
Thu, Apr 4, 2013 : 3:11 p.m.
You call that water tank a reservoir? I would call it a small holding tank.
Tom Joad
Thu, Apr 4, 2013 : 3:07 p.m.
To use an old phrase, a drop in the bucket. The USA uses 20 million barrels a day. Now we are importing the dirtiest oil on the planet, tar sands oil from Alberta. A pipeline already broke in Marshall carrying tar sands oil. That clean-up cost is in the hundreds of millions. 70% of all oil is used for liquid transportation fuel and internal combustion engines are only 25% efficient. That efficiency drops to near 1% when you have a single driver commuting with an automobile. The paradigm of personal automotive transportation is something the earth and humanity can't afford in an era of diminishing resources and nearly irreversible climate change. Drilling 3000 ft to reach small pockets of oil and only negligible production is not without great costs and risks.
Superior Twp voter
Thu, Apr 4, 2013 : 7:10 p.m.
Give it a rest, already. Dirtiest oil on the planet! Global warming! Diminishing resources! Oh heavens, the sky is falling! There HAS to be a crisis for liberals. A must. I missed the part of your post that told of all that has been accomplished in the USA and how energy drives democracy, freedom, innovation, and prosperity. When are you joining the Amish again?
NorthsideGal
Thu, Apr 4, 2013 : 2:20 p.m.
So my neighbor claims that the land directly across from us was just leased to this company. We just bought our house about a year ago- we have a creek ( that is part of the Huron River Watershed) that runs behind our house, and we have two wells. From what I have read, I should test my water before I see them start drilling and after.... My fear is that my water will be contaminated to the point of no return, and my creek will be polluted, which effects my soil, my garden, my animals, etc. And it also seems like I have no where to turn when that does happen because it isnt done on my land. It seems like Washtenaw County and Northfield Township wants me to throw my hands up, say hell with it and I might as well sell my land to these people because it wont be worth anything once they are done.
Energy
Wed, Jul 17, 2013 : 2:55 a.m.
Dear Northside Gal, When a well is drilled the company will pound a conductor - a steel pipe with the diameter of 13 3/8. Then inside this pipe, they will drill down to the base of the drift - which in that area could be 500 ft. The install a 8 5/8 steel pipe and then cement down the hole all the way to surface between the two pipes. They will then drill down to the 3,000 ft listed in the article and then install a 5 1/5 steel pipe and cement all the way to surface between these two pipes. When you begin to see how much this industry is regulated and how much cement and steel is between the production fluids and your drinking water - I think you can safely sleep at night. Most oil companies do not want your land and are very accommodating to the land owners and mineral owners. By law they have to be so many feet from water wells, buildings, and running water (creeks and such).
OLDTIMER3
Thu, Apr 4, 2013 : 3:15 p.m.
And just how many inspectors does the state have to cover the whole state? And we all know how these state inspectors work, they call and tell you when they are coming so you can get everthing in order!
Amy Biolchini
Thu, Apr 4, 2013 : 3:07 p.m.
Oil and gas wells are regulated by the state. Local entities including the county and townships have no power to limit the exploration by the oil and gas industry within their boundaries. You can find a map of plugged, active and future oil and gas wells in Michigan here: http://ww2.deq.state.mi.us/GeoWebFace/ Michigan's Department of Environmental Quality has an Office of Environmental Assistance that could be of use to you: http://www.michigan.gov/deq/0,4561,7-135-3306_57163---,00.html
Epengar
Thu, Apr 4, 2013 : 2:15 p.m.
I sure hope the land owners are lawyering up before they sign these leases. Every company uses their own lease, and there are lots of clauses and considerations. Here's more information for land owners from MSU Extension: http://msue.anr.msu.edu/program/info/oil_and_gas Ms. Biolchini, I wish you would make a habit of linking to that Extension page in your stories about local mineral rights leasing. It would be a public service.
Amy Biolchini
Thu, Apr 4, 2013 : 3:08 p.m.
Epengar, thank you for providing the link to that resource.
Nancy Shiffler
Thu, Apr 4, 2013 : 1:48 p.m.
The picture with the flare says a lot. This is methane being burned off (there may be more that is simply being vented without flaring), which could have been captured and sold as natural gas. However, it's cheaper for the company to just send this green gas off into the surrounding air rather than take the time and money to capture it.
Energy
Wed, Jul 17, 2013 : 2:44 a.m.
Many companies will use the methane to fuel the engine for the pump jack(s) and will also use it in the heater treater (separator of oil and water). It really is an efficient use of the natural gas. Now if the engineers and scientist can find a way to lower the cost to Liquify the natural gas - we would be able to use all the natural gas from the well (that is if there is not an available pipeline to economically hook up to). Thanks to all the companies like Paxton that take great risks to provide fuel for our homes & vehicles and help us become less dependent on other countries.
Amy Biolchini
Thu, Apr 4, 2013 : 3 p.m.
Nancy, great point. Paxton told me that they're trying to figure out a way to use that methane instead of burning it off, as that's their only option right now.
Epengar
Thu, Apr 4, 2013 : 2:18 p.m.
Basic Bob, gas from the city of Ann Arbor landfills is trapped and burned to generate electricity. http://www.a2gov.org/government/publicservices/systems_planning/energy/Pages/LandfillGas.aspx
Basic Bob
Thu, Apr 4, 2013 : 2:12 p.m.
The same practice is applied at most landfills I pass.
Nicholas Urfe
Thu, Apr 4, 2013 : 1:18 p.m.
If only they could capture the oil from the slicked back hair of those lobbyists who are paid to push the "oil at any cost, and subsidized by taxpayers" agenda.
ruminator
Thu, Apr 4, 2013 : 1:17 p.m.
AA.com. Instead of being a conduit for the story the energy business wants told, how about a personal visit to our township to see how this business really impacts the quality of life? You don't want to miss the stench from the burn offs. Sit for awhile in one of our front yards and watch the 20-25 truck loads of gravel going to construct the next drilling site. You will especially like the choking dust cloud that envelopes you as you witness the transformation of land zoned for ag and residential use into industrial processing with no local oversight. Should you decide to actually live here, be prepared to be asked to vote for more local money to repair the damage to the roads. We already did just that to support a for profit company who pays nothing to the local taxing authority. You might even get to be part of the landowner breakfast club although most of us impacted by the the crude oil business have not been invited. There is much more to the story then this press release regurgitated by AA.com.
Amy Biolchini
Thu, Apr 4, 2013 : 3:18 p.m.
ruminator, no part of this story came from a press release. All of the data I compiled from numerous databases publicly available through the Michigan Department of Environmental Quality and from interviews. I initiated this story on my own volition because of several observations: That Paxton had applied for a large number of permits for new wells in Saline Township in a short period of time, and that another company was pursuing land leases for mineral rights in the county. Your assertion that this story does not address the immediate environmental impacts of construction of the oil wells is accurate. There is room for additional reporting on this issue, I would agree. The lack of local oversight you noted is a key issue here, as the industry is regulated by the state and not local authorities. I have been next to three of Paxton's oil wells in Saline Township when the flares have been burning. The smell was localized and minimal, in my opinion. One could also argue that agriculture has become "industrialized" and also causes "choking dust clouds" as well. For the sake of full disclosure, do you live in Saline Township? How close are you to the nearest oil well?
OutfieldDan
Thu, Apr 4, 2013 : 3:02 p.m.
Ummmm... AA.com was there. They took the pictures, maybe you didn't see them? If there was a huge stench and huge impact, I believe that the reporter would have described that and the pictures would show the big mess you describe. The pictures were taken by Angela J. Cesere for aa.com.
kmgeb2000
Thu, Apr 4, 2013 : 1:14 p.m.
"About 109,919 barrels of crude oil — the equivalent of 4.6 million gallons — came from six oil wells in Saline Township in 2012." This also means about 460 tanker truck loads (9,900 gallons per tanker) of crude oil was transported through Saline Twp. and the surrounding area in 2012 on its way to Romulus. All serviced by residential wells and groundwater. An additional quantity of brine and oily water were also removed via tanker and transported to waste disposal wells. This was from six wells in 2012, of which, there are now nine and eight new permits in the line. So if production is consistent at ~18,000 bbls per well per year, the 17 wells could produce about 12,850,000 gallons of oil or 1,300 tanker loads for the trip to Romulus through Saline twp. Add to that the brine disposal component, which is also trucked offsite. Both the City of Milan and the City of Saline's municipal water systems are supplied by wells and groundwater. Other components of what the oil production represents to the community. Do the respective communities have the hazmat capabilities in place within Saline area to address an accident if it were to happen. We read about truck accidents frequently on Annarbor.com. A crude spill may be easier than the brine to address as it is much more viscous and can be removed by excavating a crash site. The brine, at concentrations hundreds of times higher than drinking water standards is another story, as this will infiltrate rapidly into the aquifers and groundwater. The brine is also no longer just brine at this point, picking up other organinc and metals from the crude oil.
Energy
Wed, Jul 17, 2013 : 2:38 a.m.
kmgeb2000 - I am sorry - I did not read that they were trucking the brine water. With this many wells, they may have a salt water disposal well which would send the brine down to the same formation 3,000 ft or lower and how will that impact drinking water?
kmgeb2000
Thu, Apr 4, 2013 : 3:20 p.m.
OutfieldDan: No, that is as presented at 12,850,00 gallons not barrels, as 1 bbls = 42 gallons. They have been producing about 18,000 bbls per year per well, as indicated in the story. Yes I have mixed units but unless you are in the oil business one does not usually think in bbls. You can visualize a gallon of milk. 17 wells at 18,000 bbls per well per year = 307,000 bbls per year = 12,850,000 gallons per year or 12,850,000 gallons/9,900 gallons per tanker = 1.298 loads.
OutfieldDan
Thu, Apr 4, 2013 : 2:27 p.m.
LOL 12,850,000 BO/year? That would take 714 wells not 17 wells. I guess you haven't checked your math. If each well produces 18,000 BO/year, that's two trucks per YEAR for each well which makes 36 total per year for 18 wells, not 460.
Chase Ingersoll
Thu, Apr 4, 2013 : 1:11 p.m.
That's 1.25 Million last year for Saline Township property owners ? Good for them.
OutfieldDan
Thu, Apr 4, 2013 : 2:44 p.m.
Ruminator no tax money? Don't you have a job? There happens to be a state income tax that is levied on the leaseholder - maybe you're not from Michigan. There also happens to be a 5% gas and 6.6% oil severance tax applied to oil and gas production. Property taxes also apply that are local. Tons of dust? LOL 2 trips per year to each well if there is no pipeline. Incidentally, before you spew more untruths, maybe check out Michigan Oil ang Gas Regulations. There happen to be a few: http://www.michigan.gov/documents/deq/ogs-oilandgas-regs_263032_7.pdf
ruminator
Thu, Apr 4, 2013 : 1:23 p.m.
Yup, good for them. Bad for the environment. No money to the local taxing authority to repair the roads. Burn off stench. Tons of dust to the air from dozens of extra trucks. No local oversight of industrial processing on land zoned for agriculture. Yup, good for them.
Mike
Thu, Apr 4, 2013 : 11:53 a.m.
Drill baby, drill...........and the President tries to spin this as to how he is allowing more drilling under his presidency while getting in the way of the Keystone pipeline. Can't stop people on their own land.......now if the government could only come up with a way to get that land................
Usual Suspect
Thu, Apr 4, 2013 : 2:02 p.m.
"now if the government could only come up with a way to get that land" Kelo vs City of New London
kmgeb2000
Thu, Apr 4, 2013 : 1:22 p.m.
@Clownfish. Here is a link to show the extent of the Ogallala Aquifer, which covers an area of approximately 174,000 mi² (450,000 km²) in portions of the eight states. Other fun facts: About 27 percent of the irrigated land in the United States overlies this aquifer system, which yields about 30 percent of all ground water used for irrigation in the United States. Pesky humans wanting food. http://en.wikipedia.org/wiki/Ogallala_Aquifer
clownfish
Thu, Apr 4, 2013 : 1:08 p.m.
I like it when people vote down facts! It shows what we are dealing with. Who cares if oil and gas production are reaching levels not seen in 20 years, we KNOW Obama is slowing production because we hear it on the airwaves so it must be true. (pssst, Obama is a secret Muslim, his killing of hundreds of Islam o-Fascists is just a cover, Mr Beck told me so)
clownfish
Thu, Apr 4, 2013 : 12:34 p.m.
http://www.governor.nebraska.gov/news/2011/08/31_pipeline.html Dear President Obama and Secretary Clinton: I am writing to you today regarding a very important issue to the State of Nebraska and to our citizens- the Keystone XL Pipeline. I am opposed to the proposed route of this pipeline. The Final Environmental Impact Statement compares a potential spill in the Sand Hills region to a 1979 Bemidji, Minnesota spill and concludes that "the impacts to shallow groundwater from a spill of a similar volume in the Sand Hills region would affect a limited area of the aquifer around the spill site." I disagree with this analysis, and I believe that the pipeline should not cross a substantial portion of the Ogallala Aquifer. --- Gov. Heineman, (R), Nebraska.
clownfish
Thu, Apr 4, 2013 : 12:31 p.m.
US oil production 2011, millions of barrels: 2011 5,672.56 3.62 % increase over 2010. Sept 2012- overall crude output in the U.S. rose 3.7 percent to 6.5 million barrels per day by the week of September 21, a trend that has continued since the country met 83 percent of its annual energy needs from the beginning of the year through June. Should domestic oil production continue at its current rate, the United States will enjoy 2012 as its most self-sufficient year since 1991. Here is some news, the oil/tar that will be pumped through the Keystone is NOT American oil, it is foreign oil. Odds are that the derivatives refined from that oil will NOT even be sold in America. Here is how "the government" takes private land: August 23, 2012-"A judge in Lamar County, Texas, ruled Wednesday night that TransCanada's Keystone XL pipeline has the right of eminent domain, rejecting a plea by farm manager Julia Trigg Crawford and dealing a blow to landowners and environmentalists who have been trying to block construction of the pipeline. The ruling by Judge Bill Harris removes yet another potential obstacle for TransCanada, which already has permits from the Army Corps of Engineers for the southern leg of the pipeline, which starts in Cushing, Okla., and runs to Port Arthur, Texas." Turns out it is the CANADIANS that are taking the land from US citizens!
motorcycleminer
Thu, Apr 4, 2013 : 11:31 a.m.
American oil ...keep it coming.....
you can't handle the truth
Thu, Apr 4, 2013 : 3:42 p.m.
Don't forget about Michigan jobs. Keep that coming too!
OutfieldDan
Thu, Apr 4, 2013 : 2:21 p.m.
Ruminator, you have no idea what you're talking about. You should visit the facility and see how small it is, and how infrequent there is truck traffic. Maybe look at the pictures that are included with the article? Do they look like what your are saying?
Ivor Ivorsen
Thu, Apr 4, 2013 : 1:17 p.m.
Sorry, but oil is fungible...it flows into a global market where it is sold to the highest bidder. Domestically produced oil will not bring oil, or gasoline prices, down.
ruminator
Thu, Apr 4, 2013 : 12:47 p.m.
You might want to see for yourself how the production of crude oil impacts the quality of life in and around the well location. The stench from the burn offs, torn up roads, choking dust from increased truck traffic on gravel roads and the unknown of how your well water might be impacted to name a few. Please come. Sit in my front yard. If you are ok with all of this, let the next well be in your yard, school, city park, church or your favorite vacation spot.