Michigan’s fracking bonanza challenges state regulators

Phyllis and Bernard Senske’s daily rituals in their 1930-built stone house in Rapid River Township, near Kalkaska, mirror those of many rural Midwestern seniors. Phyllis, who just turned 81, plays ragtime tunes on her Gordon Laughead upright piano in the corner of their living room. At the coffee table a few feet to her left, Bernard, 82, hovers over a crossword puzzle. On occasion he goes outside to cut wood, or tend to the cattle and sheep, which they raise in the summer months.

Sitting at her piano, Phyllis Senske, 81, can see, feel and smell the Encana fracking operation outside the window of her childhood home in Rapid River Township. (Bridge photo by Jacob Wheeler)

But the view out the west-facing window from Phyllis’ piano bench is atypical. When she turns to her right, she sees the burning flare from a fracking well approximately 1,000 feet away. When the wind swirls about, she smells chemicals in the air — an odor she says she’s never gotten used to. On days and nights of activity at the well, industrial trucks hauling water, sand or chemicals rumble down rural Wood Road, spitting distance from the stone house where Phyllis was born. The house shakes and rattles enough to spill puzzle pieces off the coffee table. The windows require frequent cleaning from the diesel exhaust.

“Playing the piano is an escape from reality,” says Phyllis, who has the dubious distinction of living near Northern Michigan’s first fracking well in a residential neighborhood.

Hello, neighbor. The view outside Phyllis and Bernard Senske’s stone home. (Bridge photo by Jacob Wheeler)

Since early 2013, the Senskes have been forced to contend with a new neighbor in their neck of the woods: Encana, an Alberta, Canada-based oil and natural gas company, which bought land adjacent to their property. Encana’s big business is hydraulic fracturing, or “fracking”, an innovative drilling new technology that opens access to fossil fuels embedded in the bedrock more than a mile below the earth’s surface. While oil and gas have been extracted from this part of Michigan for decades, fracking offers a new bonanza. Between 2008 and 2010 Encana acquired more than 250,000 acres in the Collingwood/Utica Shale, which stretches across the northern part of Michigan’s Lower Peninsula, from the eastern sand dunes to the center of the state.

The drilling has escalated a fierce battle that is playing out in rural townships, in the state capital and in the courts this election year. The issue is also testing state environmental agencies as they try to balance the economic benefits the industry produces for Michigan with the safety and public health concerns of environmentalists and residents.

The latest chapter is the resolution of criminal and civil claims against the largest industry player in the state, Encana. Earlier this month, the company reached a settlement with Michigan Attorney General Bill Schuette’s office regarding collusion charges. The state contends the natural gas giant conspired with Oklahoma-based Chesapeake Energy in 2010 to avoid a bidding war in Michigan public auctions and private negotiations for oil and gas leases, causing prices on those properties to plummet.

The alleged conspiracy may have driven the state-held lease price from $1,510 per acre in May 2010 to less than $40 an acre by October 2010. The companies’ alleged bid-rigging efforts were first uncovered by the Reuters news organization. Tom Lyon, a professor of business economics at the University of Michigan’s Ross School of Business, testified that the companies’ actions cost the state roughly $62 million. The recent settlement requires Encana to pay $5 million, which goes into the DNR’s State Park Endowment Fund.

Encana spokesman Doug Hock issued the following statement on the settlement:

“Encana values its relationships in the State of Michigan, including with the Department of Natural Resources. Since our initial entry into Michigan in 2009, Encana has invested more than $230 million in the State, and created hundreds of jobs and opportunity to the benefit people and families across Michigan. Through this arrangement, Encana will continue to help fund initiatives which benefit Michigan residents.”

New rules from state

Meanwhile, Michigan’s Department of Environmental Quality, the agency tasked with regulating the industry, released new rules in April for oil and gas drilling that it said takes both the upside and potential danger of fracking into account. Reaction to the rules is mixed. Industry representatives claim they already follow the regulations on a voluntary basis. Some environmentalists see them as a step in the right direction; others say they fall short of protecting Michigan’s water and private landowner rights.

Fracking is a drilling process in which large amounts of water, sand and chemicals are injected deep into wells at high pressure to extract natural gas deposits trapped in the shale.

A primer on the technology behind hydraulic fracturing, or fracking, which has become controversial in Michigan and across much of the nation. Click to enlarge. (Graphic by Al Granberg, courtesy ProPublica, which has reported on fracking nationally.)

Proponents of fracking and horizontal drilling within the shale bedrock maintain the process is safe because the fossil fuel formations lie far below the water table that supplies drinking water. They say that tapping North America’s vast quantities of oil and natural gas will make the United States energy independent and less reliant on politically unstable “oiligarchies” such as Venezuela and the Middle East, and might one day enable us to export fuel to Europe, which currently relies on Russian natural gas to heat its homes and power its vehicles. Supporters tout the shale bonanza as an environmentally pragmatic “bridge fuel” which pollutes less than burning coal and buys time until renewable fuel sources such as solar, wind and hydropower become more cost effective and can compete on the open market.

Not incidentally, the oil and gas industry is also big business in Kalkaska County, and has been for decades, providing thousands of jobs over the years.

For environmentalists, activists and some residents, fracking is anything but your grandpa’s oil and gas drill. They worry that mixing chemicals and sand with the millions of gallons of water injected into each well could pollute groundwater if well casings fail. The 2010 Academy Award-nominated documentary "Gasland" showed a Colorado resident who discovered methane gas in his water supply turning on his kitchen faucet and lighting the tap water on fire with a match.

Fracking companies are not obligated to disclose the chemicals they use, though many are known to be carcinogenic.

How to dispose of contaminated “frack fluids” is also cause for concern, environmentalists say. Meanwhile, bedrock fracking is being investigated by state agencies as possibly playing a role in inducing earthquakes in Ohio and California.

Perhaps the biggest concern for Michigan environmentalists is that the current fracking process involves removing as many as 35 million gallons of water per well from nearby aquifers, which they say could deplete local supplies. That’s more water per frack well than any other place in the nation, says Jacque Rose, an environmentalist who co-founded the website FARWatershed.com, a rallying tool for the Friends of the Au Gres-Rifle Watershed.

Encana is also seeking state approval for “resource play hubs” which would allow the company to run six or eight wells off of one frack pad, or surface location, with some wells running north and some running south. Encada says using a single location to launch multiple wells saves on production costs and reduces the environmental impact of drilling.

Environmentalists counter that doing so would exponentially deplete the local water supply. Paul Brady, a watchdog near Kalkaska who contributes to RespectMyPlanet.org, which has an interactive map that identifies all 58 frack wells in Michigan’s Lower Peninsula, has sued the DEQ to stop the state agency from allowing resource play hubs.

Critics, including David Hyndman, a leading hydrologist, professor and chair of Michigan State University’s Department of Geological Sciences, have decried the DEQ’s water measurement tool as grossly overestimating the amount of water that can be safely removed without adversely impacting the area’s groundwater.

Encana runs through it

The Collingwood/Utica Shale sits under sensitive and pristine watersheds, including the headwaters of the Manistee and Au Sable rivers. Encana has fracking wells on state land nearby, which worries some fishermen, for whom the Au Sable boasts some of the best trout fishing in the Midwest. In one instance, water withdrawals for a frack job in 2011 nearly dried up a segment of the Manistee’s north branch.

When energy company Halliburton fracked Encana’s Westerman 1-29 HD1 well last May with water taken from the Kalkaska Village municipal system, Phyllis and Bernard Senske suddenly experienced a significant drop in water pressure, which exhausted their pump. Before long, water the color of milk emerged from their faucet, likely the result of their well drawing air. Local environmental consultant Chris Grobbel inspected the Senskes’ well and concluded that it had sunk by 11 feet. “I’m inclined to believe they drew way too much water out of the aquifer,” Phyllis told the Traverse City Record-Eagle.

Encana ultimately reimbursed the Senskes the cost of a new pump, and undertook efforts to appease others in the neighborhood. Dick and Ruth Crawford, who live next door to the Senskes and even closer to the frack well, complained of continual noise, light pollution and dust during the initial drill, so Encana paid for them to stay for a week at nearby Deer Tracks Ranch. But once they returned, they said, the noise continued. The Crawfords considered selling their house and moving, but gave up after a real-estate agent told them their home, now next to an industrial-scale fracking operation, had plummeted in value.

“I think we should drill for oil,” Ruth Crawford told the Northern Express, Northern Michigan’s alternative weekly. “You don’t have to do it on top of someone’s house.”

Michiganders concerned about fracking also worry that the DEQ and DNR are unable or unwilling to effectively determine where fracking should be permitted and monitor water conditions when wells are injected. Critics say the state agencies take a cue from Governor Rick Snyder’s industry-friendly policy that favors extraction of natural resources.

“In my opinion, the DEQ has been lax on the oil and gas community,” says Grobbel, the environmental consultant, who once worked for the state agency. He cites a September 2013 report by the auditor general which, he says, found more than a dozen “shocking statements about the lack of vigilance and lack of quality at well heads.”

Rick Henderson, field operations chief at the DEQ, defended the agency’s performance. “I think we have an excellent track record here in Michigan,” Henderson said. “We regulate oil and gas activity from beginning to end, cradle to grave. I’m very confident that it’s not hurting water supplies.”

Debate on response

Michigan’s environmental community appears deeply divided about how to respond to fracking. FARWatershed.com’s Jacque Rose breaks down the movement into three camps with diverging strategies: those pushing for an outright ban on fracking in Michigan; those in favor of a temporary moratorium until more can be determined about how fracking impacts the environment, and those who don’t want to stand in the way of fracking but want more regulation from the state. Other organizations are focusing on ways to empower local municipalities and townships to combat fracking companies.

“We have a situation now in the legislature and regulatory agencies where we don’t have structures in place to safely regulate this,” laments Rose.

“If you destroy Northern Michigan, there goes the entire tourism industry,” says Luanne Kozma, co-founder of the group Ban Michigan Fracking. “That’s why we want a statewide ban.”

The battle playing out in Lansing and in Kalkaska’s Rapid River Township is also playing out in capital’s across the nation, as lawmakers and residents attempt to reconcile a technology that is unearthing enough fossil fuels to alter our energy landscape with concerns that not enough is known about its potential dangers.