Interests Clash as Oil Booms in Saline

For some, the oil drilling going on west of town represents a nuisance, a threat to property values, or worse, a risk to the health of their family.

For others, Michigan’s mini-oil boom might help provide extra income to help keep up with the escalating costs of farming.

Wednesday night at Liberty School, both sides were represented as 400 people attended a forum sponsored by State Rep. Mark Ouimet, R-Scio Twp., and moderated by radio personality Lucy Ann Lance.

The panel included Greg Vadnais, Ray Barnhart and Mark Bailey, of Paxton Resources, the company drilling for oil, Hal Fitch, of the Michigan Department of Environmental Quality, James Clift, of the Michigan Environmental Council, and Mitch Rohde, of No Paxton, a citizens’ group opposed to the drilling.

Early in the forum, Lance surveyed the audience for support for the drilling. About a third of the audience, including many farmers, was for the oil drilling. About a third were against.

Paxton officials used the forum to put a human face on the small, independent energy company based in Gaylord.

Answering a question about who would pay for health costs if people were to get sick because of water contamination or if property values plummeted, Paxton representative Chris Vadnais was annoyed by the suggestion that the company would shirk its responsibilities.

“We’re taking about catastrophic scenarios here. But I don’t want people walking away from here feeling like there is a grey area about how Paxton would respond to such a thing. If we’re drilling for oil wells and there is an oil contamination, whose fault do you think that might be,” said Paxton, responding to comments by Rodhe and Clift that suggested a company might walk away from its own mess. “We are human beings running this company. We have common sense. We have families. We’re not looking for ways to sneak poison into the aquifer.”

Rohde said he wasn’t so sure.

“What does an eight-man company like Paxton do when they are sued for millions and millions of dollars in a health case? Consider what happened when they got sued for something as simple as messing with the Horse Whisperer’s topsoil. The fought it for eight years before finally being forced to pay,” Rohde said. “As much as Greg (Vadnais) claims they’ll take care of it, I think you have to consider their past behavior as well as the past behavior of the industry.”

Vadnais pointed out that the company had a difference of opinion, fought it in court, lost it and then paid.

“We lost and we paid. We’re accountable,” he said.

Paxton officials didn’t spend a lot of time talking about worst-case scenarios. Instead, officials spent a great deal of time detailing the drilling process and all of the safety measures that are taken.

MDEQ representative Hal Fitch noted that national regulations are still catching up to Michigan’s regulations. Fitch said that there have been isolated problems with wells drilled in the past, but said Michigan’s groundwater is adequately protected by current practice.

“We’ve had commercial oil and gas development in Michigan since 1925. About 50,000-plus wells have been drilled. I’m not going to apologize for the sins of our fathers. Some of these things were done out there when we really didn’t know better, but we’ve got a lot better handle on things now,” he said. “The risks are pretty low with our current safeguards.”

The safeguards include wells that are double and triple cased, baseline water quality testing and monitoring water quality in the aquifer.”

Rohde said residents in Saline and Lodi townships have a list of worries, ranging from the noise of truck traffic to carcinogens in drinking water.

Plus, he said, there was always the possibility of a spill or an accident.

“The Kalamazoo River accident certainly wasn’t planned,” he said. “And two years later, they’re still cleaning it up.”

Rohde said he paid $650 to have a baseline test done on his water well.

“I would suggest, whether you are for or against the drilling, that you get a baseline assessment done,” he said. “That’s all the proof you’re going to have that your well wasn’t contaminated before it gets contaminated.”

Rohde said No Paxton isn't anti-oil.

"We just don't think it's a good idea to drill for oil in a residential area," he said.

Paxton officials said there are no plans to use hydraulically fracture for natural gas. The controversial practice, known as fracking, has been the subject of controversy.

“We’re in a Trenton Formation drilling oil wells. We’re not drilling gas wells. There is no intention of fracking these wells. We have no plans to start producing gas,” Vadnais said. “Take a look at the price of natural gas right now. It’s a problem.”

Natural gas is trading at less than 20 percent of 2006 prices.

Still, Vadnais wouldn’t commit to signing a binding agreement not to frack.

“We’re bound by our partners to maintain a certain level of latitude,” he said.

Clift said the interest in fracking will change when the market changes.

“A decade ago, natural gas was five or six times higher. So all it takes is a change in market conditions to change the technique someone might use in any formation,” said Clift.

There is a market for oil. Paxton’s Ray Barnhart said a company in Jackson County is pumping 500 barrels a day from the same reservoir as Saline’s.

Vadnais said there’s a lot of money to be made. He said that the Paxton drilled two wells on a 160-acre farm in Calhoun County and that the landowners were making $90,000 a month off the oil.

Paxton bought mineral rights leases for 25,000 acres of land in the area when it bought the old Philips Petroleum project. Since then, it has added another 3,000 acres. But he cautioned that people with a lease shouldn’t expect that an oil well would soon follow.

“If you really want a well, you can say a million prayers. With this project, so many things just have to line up just right in order to get a well drilled. I certainly don’t want anyone with a lease thinking that any day now, they are going to get a well,” Vadnais said.

Vadnais said that technology has led to the oil boom in Michigan. He said 3-D seismic technology has changed the game.

“They can take an image of specific geologic strata underground using basically sonar technology. You give that data to a geophysicist and they identify what areas have the natural ability to hold hydrocarbons,” Vadnais said. “Then after you’ve got your lease and your data, you still have to go down there and drill. It may just be full of brine. There’s a huge return, but every well you drill does not make oil. My dad was in the business for 30 years before drilling his first oil well four years ago.”

Some Saline township residents are hoping to get in on the action.

“They haven’t come as far as us yet. But I’d be interested,” said Jim Marion, who farms in Saline Township.

Gene Heusel agreed.

“They could put it right there in my front yard,” he said.

Ouimet held the forum in the hopes that people might find answers to questions they have.

“It’s an educational process to go through,” said Ouimet. “The feedback I’ve been getting is that it was very helpful. People were glad to have a chance to ask they questions they had.”