Saturday, May 12, 2012

Oil and gas auction in Oakland County and 20 other counties in Michigan

One of my students tipped me off to this story. She asked if I knew anything about it. I told her I had no idea, but since she was going to one of the meetings described below, could she please report back to me about it. Only after that did articles and videos about the subject begin to appear in my news feed. Speaking of which, here they are.

First, an overview from WXYZ on YouTube: Drilling in Oakland County?

Join me over the fold for some background from the Detroit Free Press, which I'm presenting in chronological order.

Orchard, Cass lakes neighbors fear drilling as state is set to auction mineral rights
By Dawson Bell
May 5, 2012
State-owned rights to potential oil and natural gas lodes beneath nearly 20,000 acres of Oakland County -- including parcels in high-priced neighborhoods around big, popular lakes such as Orchard and Cass -- will be among those available for lease at an auction Tuesday in Lansing, a prospect causing unrest among some residents of the area.

Whether the auction eventually will lead to drilling in well-developed suburbs is an open question, state and industry officials said Friday. Only a fraction of oil and gas leases awarded by the state are ultimately exploited.

But the mere threat of oil rigs, heavy trucks and pipelines in proximity to some of southeast Michigan's priciest real estate is making some homeowners nervous.
The homeowners weren't the only ones who became apprehensive about the prospect. The Detroit Free Press editorial writers did, too.

Editorial: Drill everywhere now? Not so fast, legislators
May 8, 2012
You think residents of high-end lakeside homes in Oakland County got a shock when they learned drilling rights in their neighborhood were going on the auction block? Well, stay tuned: It's a shock that could arise almost anywhere in Michigan if a group of state lawmakers has its way.

The state Department of Natural Resources auctions off subsurface rights owned by the state twice a year based largely on requests it has received from exploration companies. Currently, much of the action centers on oil extraction in southern Michigan.

Today's DNR auction features the hubbub-inducing Cass Lake and Orchard Lake subsurface rights. But it's small potatoes in light of a recent report by a Michigan House Subcommittee on Natural Gas, which recommends forcing the DNR to auction off all its currently unleased mineral rights -- about 5.3 million acres worth, or more than seven times the amount currently leased out -- by an unspecified but presumably imminent deadline. Mineral rights not leased by this deadline should then revert to the surface landowner in cases where the state does not hold title, according to the report.
The editorial continues with a description of the report, along with pointing out who economically non-sensical and environmentally dangerous the who thing is. Eric B. over at Michigan Liberal expanded on this editorial by quoting the relevant passage of a Financial Times article (I'm not linking and quoting myself, as the Financial Times has instituted a paywall) and pointing out how ideologically driven the whole thing is.

Back to the homeowners and environmental activists. They play a starring role in the last two articles from the Detroit Free Press I'm quoting today.

Fracking protesters make noise at state auction for drilling land
By Dawson Bell
May 8, 2012
An auction of state-owned oil and gas rights on 109,000 acres across lower Michigan, including Oakland County, was briefly disrupted this morning by demonstrators opposed to drilling.

One protester, who stood up as bids were being taken and began to talk over the auctioneer, was taken into custody for disturbing the peace after repeatedly ignoring orders from law enforcement officers, said Department of Environmental Quality spokesman Brad Wurfel.

A group of 50-100 protesters picketed outside the state building where the auction was being held, many of them from Barry County, where much of the acreage being offered today is located. The focus of much of their opposition is to a drilling technique called hydraulic fracturing or fracking, which they said could lead to contamination of water resources.
Click on through to the article, and you'll see that Anonymous was here, Guy Fawkes mask and all. The mask might distract from the message, which is that one cannot drink money. The problem is that, when everything is monetized, then people need money for all the things they really do need, like food, water, and shelter.

Despite the protests, the auction went through as planned.

Oil, gas drilling rights net $3.6 million at state auction
By Dawson Bell
May 9, 2012
An auction of state-owned oil and gas leases attracted a throng of protesters and bidders Tuesday, the latter shelling out more than $3.6 million for the drilling rights to more than 90,000 acres across Lower Michigan.

All of the 18,347 acres on the auction block in Oakland County -- some surrounding popular and exclusive lakes in West Bloomfield and Commerce Township -- were sold, bringing in more than $616,000.

A representative of the company that obtained much of the Oakland County acreage, Jordan Development of Traverse City, said discussion of development plans was premature.

Ben Brower said Jordan has operating oil and gas wells in Jackson and Calhoun counties but has no immediate plans for new wells in southeast Michigan. All of the Oakland County acreage is classified as nondevelopment, meaning that no drilling would be permitted on the surface; any extraction would have to be through directional drilling from nearby.
Oakland County was not the only location that had mineral rights auctioned off. In fact, Oakland County had only the second highest acreage up for bid. The most land auctioned off was in Barry County with 23,419 acres. Arenac, Livingston, and Gladwin each had more than 10,000 acres good for third through fifth place. Sixteen other counties in the state also had land up for auction. This is exactly what one should expect when oil is expensive and in short supply on the world markets and the party in power in the state is committed to continued reliance on fossil fuels.

Stay tuned. I expect to be writing a story like Oil boom in Irish Hills hits close to home about Oakland County some time in the next few years.


  1. This comment has been removed by a blog administrator.

    1. Dude, if you're going to spam my blog about real estate investments, at least spam an entry about real estate.