On September 5, 2013, the University of Michigan released seven technical reports concerning hydraulic fracturing. 

These Michigan-focused reports conclude the first phase of a two-year University project entitled Hydraulic Fracturing in Michigan Integrated Assessment. Public comment on these reports may be submitted through October 7, 2013.

A brief description of each report follows.

  • Technology: In view of the currently low price of gas, the high price of drilling deep shales, and the absence of new discoveries, it is unlikely that there will be significant growth of the oil and gas industry in Michigan. Hydraulic fracturing has not found widespread application in Michigan, except for a few exploratory wells in the Utica/Collingwood shale where considerable reserves of natural gas are believed to exist.
  • Geology and Hydrogeology: Currently there is minimal drilling activity within Michigan that qualifies as high-volume hydraulic fracturing. There are fewer than 60 existing permits or permit applications for hydraulic fracturing. However, there has been a recent increase in mineral rights acquisitions, suggesting anticipated potential growth in unconventional reservoir production via hydraulic fracturing potential growth in unconventional reservoir production via hydraulic fracturing. “Michigan is thus in a unique position to assess the future of high-volume hydraulic fracturing before the gas boom begins and learn from experiences in other states like Pennsylvania.’
  • Environment and Ecology: Shale oil gas development, if not properly managed, could adversely affect water quality due to surface water and groundwater contamination as a result of
    1. spills and releases of produced water, chemical, and drill cuttings, 
    2. erosion from ground disturbances, or 
    3. underground migration of gases and chemicals.
    • Public Health: Possible environmental hazards include impaired local and regional air quality, water pollution, and degradation of ecosystem services. Possible hazards in nearby communities include increased traffic and motor vehicle accidents as well as road degradation and a strained healthcare system.
    • Policy and Law: State regulations govern hydraulic fracturing. Michigan requires disclosure of the chemical constituents in hydraulic fracturing fluid within 60 days of well completion. Operators need not disclose trade secrets.
    • Economics: Hydraulic fracturing may lead to greater disparity in property values. The gas extraction industry creates employment and income, but the effects are modest compared to other industries. This analysis suggests that Michigan may enjoy stronger job creation by encouraging the rework of existing as wells rather than by drilling new wells.
    • Public Perceptions: A slight majority of Michigan citizens believe that the benefits of hydraulic fracturing outweigh the risks.

    This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright’s Energy Practice Group.