TRAVERSE CITY - Michigan may have large natural gas reserves deep underground, but it will likely be years before they would be developed on a large scale, giving policymakers time to deal with the environmental and public health concerns associated with the extraction method known as fracking, according to a study released Thursday.
The University of Michigan analysis found that the industry has had a good safety record over the past six decades in extracting gas from shallow rock. More recently, companies have begun exploring shale formations more than 2 miles down, which raises questions about potential damage to water and air quality, and degradation of wildlife habitat, the researchers said.
But it said for now, low prices for gas and high costs of retrieving it from deep rock offer little incentive for substantial development.
This May 2011 photo shows crews preparing to pump water and chemicals into a natural gas well in downstate Charlton Township, to release additional gas from shale formations 1,200 feet beneath the earth’s surface. A new study says Michigan may have large natural gas deposits deep underground, but that low prices and high extraction costs make a development boom unlikely anytime soon, if ever. (AP photo)
"While exploration for oil and gas is, almost by definition, an expensive hit-or-miss process ... Michigan now seems to be unlikely territory for a major success," the study said.
The university's assessment has been awaited by government officials, the industry and advocacy groups. Michigan has been on the fringes of a debate on the merits of fracking, but may become more embroiled if companies push ahead with plans to extract gas from the Collingwood and Utica formations, which extend across much of the northern Lower Peninsula at depths of 10,000 to 12,000 feet below the surface.
The discovery of gas in those formations inspired a record number of drilling leases on state-owned land in 2010. Encana, a Canadian company, says it might eventually drill up to 500 wells in Michigan, although spokeswoman Bridget Ford said Thursday that was a best-case scenario. Presently, the company has nine producing wells and permits to drill 12 more. Nineteen "high-volume" wells, which require more than 100,000 gallons of water and chemicals, have been completed statewide.
Low market prices for gas haven't stopped companies from fracking in other states such as Pennsylvania and Texas. Brian Ellis, one of the study authors, said the Collingwood and Utica formations in Michigan are deeper than those elsewhere and more expensive to tap.
Fracking, or hydraulic fracturing, is a process in which water, chemicals and sand are injected deep underground to break apart rock and free trapped gases. Proponents say it's been done safely in Michigan for decades, but opponents argue that it's dangerous to humans and the environment. Democrats in the state House have introduced bills to strengthen fracking regulation, and some environmentalists are collecting petition signatures for a ballot initiative to ban it.
The industry and the Michigan Department of Environmental Quality, which oversees oil and gas production, say the state already has tough rules and fracking can be done safely, even at great depths.
The study takes no position on whether fracking should be expanded. Its purpose is to provide information to guide legislators and other policymakers, said John Callewaert, the director of the university's Graham Sustainability Institute. A second phase next year will offer policy options.
"There's a lot of interest in high-volume hydraulic fracturing, but there really isn't much activity at the moment in Michigan," Callewaert said. "That's why now is a good time to do this assessment."
Michigan's abundance of lakes, streams and groundwater is "a double-edged sword," said ecology professor Knute Nadelhoffer, who wrote the report on potential environmental consequences. It means fracking shouldn't cause water shortages if done properly, he said. The state's wetland protection law and a computer tool designed to measure the effects of major groundwater withdrawals, although flawed, should help prevent abuses.
But the vast networks of waterways that interconnect Michigan's landscapes would make it difficult to contain major spills, erosion or nutrient releases caused by fracking itself or construction of support infrastructure such as roads, he said.
Fears that fracking chemicals injected deep underground will flow upward and contaminate aquifers that supply drinking water wells are "grossly overblown," said John Wilson, a university consultant who wrote the technology report.
A more legitimate concern is the handling of polluted water that returns to the surface - nearly 40 percent of the amount injected, he said, although Michigan requires its disposal in underground wells and efforts are underway to re-use more of it. Nadelhoffer said it still isn't clear what reactions the toxic chemicals used in fracking undergo before they spew back to the surface. "That poses another risk," he said.
Others reports said state regulations don't require companies to provide enough information about fracking chemicals and called for more study of possible health risks from fracking.
Follow John Flesher on Twitter at twitter.com/JohnFlesher