The 1980s - Some Dig Deep, Others Dig Shallow

In the early 1980s deeper strata exploration, volatile wellhead prices, drilling permit processing backlogs and numerous new regulations affecting oil and gas exploration were just a partial list of Michigan oil and gas exploration and production issues. One of the main issues was the adoption of new lease regulations by the State of Michigan, who resumed State public oil and gas lease auctions, ending hiatus begun in 1979

In 1980, Mason Michigan's Dart Oil & Gas and PPG Industries drilled a deep well, the Edwards 1-36, in section 36 of Reeder Township, Missaukee County. The project was allegedly looking for potash, a commodity used in glassmaking. At 10,450 feet the well discovered natural gas and opened the Michigan Basin deep Ordovician geological formation to oil and gas exploration and development. The project had its share of mystery. The deep gas discovery was first rumored, then tested, then kept confidential and discussed in whispers for several months between the completion of drilling in October, 1980 and the formal filing of geological data in April, 1981.

What made the project so important was that it demonstrated once again that both oil and natural gas could exist independently of one another at various depths in the same geographical area. In the same region a Michigan Stray gas field had been developed at 1,790 feet in 1962, a Traverse gas field was developed in 1977 at 3,851, and a Dundee field was found in 1978 at 3,166 feet. Thus the Edwards 1-36 find at 10,450 feet added 3,000 feet to the deepest recorded Michigan natural gas zone and opened the way to petroleum production from the deeper geological zones below older, shallower, oil and gas wells.

The news touched off a flurry of national publicity and local leasing activity. At the time, the stock market was in the doldrums, oil prices, which had been regulated by the federal government to control inflation, had just been deregulated, and natural gas was declared the environmentalist's fossil fuel of preference. The possibility of striking three or four pools of natural gas in one area seemed too good an investment to ignore. For the first time ever, there was more money trying to get into the Michigan oil and gas business than there were professionally planned projects to support the investment. The deep hole play included 19 counties, most in the Central Michigan Basin.

Mother Nature proved not as generous as the wave of deep explorers hoped. The sands of the Prairie du Chien failed to give up natural gas in the quantities or with the ease at first thought. The "producible pockets" of the deep zones proved smaller and less easily detected than had been predicted. Many deep holes were drilled. Many of those holes were dry, while operating costs for deep hole drilling were high. At the same time, many operators were following the example of Dart Oil & Gas by holding their knowledge of the deep zones to themselves through "tite hole" (a term meaning not the density of the rock but keeping technical knowledge within the company) confidentiality. The end result was that knowledge about the nature of the deep geology emerged somewhat like five blind men trying to describe an elephant.

By 1985 the string of dry holes, combined with a slackening of the national economy and oilfield economics, cooled but did not kill "deep hole fever". While exciting and substantial, deep geological exploration of Michigan never proved in the 1980s to be a gigantic producer and remains a "sleeper" for future exploration and technologies.

As the deep hole play ran its course, the Michigan Basin provided a new avenue for those petroleum explorers and investors in search of cheaper, less risky, sustainable natural gas production: Antrim Shale. The Antrim play came at the right time, with the Niagaran pinnacle reef Trend development of the 1970s reaching maturity and the deep play proving to be a "big boys" game requiring extraordinary investment but without paying extraordinary returns.

Long recognized as a source of natural gas, the Antrim Shale had not been of great interest because of two problems. First, the shale tended to produce very steadily, but in very low volumes. Antrim Shale was a long-term investment, not a get-rich-quick scheme. Second, the natural gas found in the shale was usually associated with salt water. Critics argued that water disposal is too expensive, "you have to pump the ocean before you can get a favorable return." The same naysayers dismissed Antrim Shale by saying "the economics aren't there" and "it's a no-brainer, not the real oil business at all".

Despite these issues, modern Antrim play pioneer (and some say godfather) Martin Lagina of Terra Energy Ltd., was optimistic. Legend has it that young Marty Lagina, while working for Amoco years before, wondered aloud why his employer would drill through a zone with natural gas so abundant that it had to be held back because of a gas kick,only to drill deeper and declare the project a dry hole in the Niagaran Formation. Why not just take the easy find? Lagina spoke in Jackson, Michigan on October 12, 1987 on the subject of " Michigan's Other Gas Play Development of the Antrim Shale." He asserted that "more natural gas will be produced from the Antrim Shale than from the Prairie du Chien [a deeper zone] over the next 150 years." The claim seemed so audacious that the Michigan Oil & Gas News used the quote in the opening paragraph of the story covering the speech. It didn't take 150 years. Through 2004, the Antrim Shale has produced 1.8 Trillion cubic feet of natural gas while the deep zones have produced a respectable but still second 800 Billion cubic feet.

With determination and ingenuity, Antrim Shale developers whipped the brine disposal problem by developing a system to pump the brine down the hole to deeper zones. Simultaneous with those technical advances was a new emphasis on natural gas for generation of electricity. In particular the Midland Cogeneration Venture, a conversion of the 90 percent completed but never made operational Midland Nuclear Power Plant from nuclear fuel to natural gas, increased the regional market for a low volume, long-term, supply of natural gas exactly the kind of production that Antrim Shale delivered.

Because of Antrim Shale activity, the number of wells drilled began to grow astronomically and natural gas output reached new highs. In 1989 annual Michigan natural gas output smashed previous Michigan records. New names like, F.P.I Antrim One, Force Antrim Development, H.R.F. Exploration and Production, Howard Energy, Jordan Exploration, Mercury Exploration, Quicksilver Resources, Muzyl Petroleum Corp., Partnership One, Paxton Resources, SRW, Inc. and Ward Lake Energy appeared as operators of record, along with older guard companies such as Fruehauf Production Company, Muskegon Development, Trendwell Energy, Wolverine Gas and Oil all explored for, found, and sold this new supply of natural gas.


Other Michigan Discoveries and Developments in the 1980s

Mt. Pleasant's independent explorer/producer, K. P. Wood, consulting with geologist Earl Majeske, made a multi-zone field discovery in 1980 and 1981 in Williams Township of Bay County, causing another buzz of a more conventional nature than the exotic deep play. The Williams Berea Field 2,403 feet ended up with 86 wells drilled ultimately, while its Dundee pool brought 9 wells, all with gratifying production levels.

In southern Michigan, Jackson County's Hanover Township was the site of a new 1983 Trenton-Black River discovery, causing a new exploration stir in that region in the geological zone that had made the Albion-Pulaski-Scipio Trend so spectacular almost two decades before. New technologies enabled explorationists to examine smaller productive "lens" in the Black River zone and, for a brief period, southern Michigan had a new lease on oil and gas exploration.

Important as these developments were, it was Antrim Shale that spurred the major activity of the 1980s and Antrim Shale continued to lead the way in the 1990s. Significantly while natural gas production soared crude oil production stagnated and then declined. Michigan drillers were finding great quantities of natural gas but no significant fields of crude oil to replace older, played out, fields.