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The Natural Gas Boom in Michigan PDF Print E-mail
Written by Erik Hanser   
Friday, 20 June 2014 20:54

 

            Due to improvements in drilling technology and newly discovered pockets, there has been a natural gas boom in the United States since in 2008. Increased supply has driven costs down and caused some states to begin the switch from traditional coal-fired plants to natural-gas powered ones. Michigan’s aging coal-fired plants make it a prime location for natural gas expansion. However, natural gas drilling has actually decreased since the initial 2008 boom as environmental concerns, slow conversion of coal-fired plants, and a gas glut has led to decreased demand and controversy surrounding the industry. Still, several plants have already switched over to natural gas even amid these concerns.

 

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         Michigan’s natural gas is primarily located in the northern Lower Peninsula and according to the Public Service Commission, accounts for about 15-20% of the gas consumed in Michigan. (see Figure 1) The rest of Michigan’s supply comes from Texas, Oklahoma, Louisiana, and Canada. This trade imbalance is due to Michigan’s relatively high overall energy consumption due to its northern climate and energy intense manufacturing sector. Still, the Public Service Commission notes that Michigan stores over 10% of the nation’s natural gas supply in underground facilities, more than any other state. In the winter, this gas is then sold to both in and out of state energy suppliers, helping meet Michigan’s high heating demands. Not surprisingly, natural gas provides the majority of Michigan’s energy consumption with the U.S. Energy Information Administration reporting that natural gas consumption levels in 2012 were about 30% more than coal consumption. (see Figure 2) Still, coal leads the way in net electricity generation even as some natural gas plants start to come online.     

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            Michigan’s aging coal-fired power plants have served the state well, but natural gas power plants do come with benefits. Not only is natural gas cheaper and Michigan-native, it also emits about half the carbon emissions than coal does. According to Michigan Radio, a new natural gas power plant in Holland, MI is set to be completed in 2016, being about twice as efficient as its old coal-fired plant. Increasing national and state energy efficiency and carbon emission standards have caused energy suppliers to see natural gas as a cheaper and more effective way to reduce emissions without having to install expensive technology on their old coal-fired plants. Natural gas supporters see it as a “bridge fuel” to transition the U.S. economy towards renewable energy while phasing out nonrenewable energy sources. While increasing natural gas production in Michigan comes with many positives, environmental concerns have slowed the growth of the industry.  

            Horizontal hydraulic fracturing, or fracking, is the main concern over expanding natural gas production in Michigan. Fracking allows energy suppliers to access gas locked in shale formations, allowing them to build few wells and dramatically increase the supply of natural gas from individual wells. However, this process uses a massive amount of water, several million gallons per well, which can put a strain on the region’s water supply. This water, mixed with sand and several toxic chemicals for the fracking process, must be disposed of deep underground, essentially taking this water out of the water cycle. Consequently, Michigan requires monitoring of the aquifer near hydraulic fracturing sites to ensure water levels remain normal.

 Environmentalists and property owners are also concerned that this contaminated water can find its way into the water supply, contaminating the aquifer for the region. This fracking liquid if made up of 99.5% water and sand with the remaining .5% a mixture of various chemical additives. Natural gas producers say that the water is stored too far underground for water contamination to occur, yet there have been several documented cases where the evidence points to well contamination by fracking. This remains an issue to this day as the federal government cannot legally regulate fracking as it exempted from the Safe Water Drinking Act. Luckily, Michigan has implemented several new regulatory standards requiring natural gas companies to disclose the chemical additives involved in fracking, document where they will acquire fresh water from, and submit fracturing records which allow the state to keep track of any problems that may occur. However, Michigan has relatively strong regulations compared to other states where safety standards are lower.

Lastly, a report by Science magazine has concluded that the United States’ natural gas production system leaks greenhouse gases such as methane into the atmosphere, negating some of the fuel’s “clean” charm. Since methane leaks naturally happen in the gas industry, it is hard to quantify how much is leaking into the atmosphere but Science and the EPA agree that natural gas is still a cleaner source than coal, even at the highest carbon emission projections. Recent EPA standards have tried to cut back on the amount of leakage for the system. In fact, companies might find that plugging there leaks can benefit them as well, as they lose less product. 

Currently, drilling for natural gas has slowed in Michigan as energy suppliers consider new regulations, environmental concerns and conduct investigatory surveys of available wells. In 2010, Michigan’s Department of Natural Resources auctioned off 118,000 acres of state land for $178 million in revenue. Such a large purchase suggests that energy developers are seriously considering a major natural gas expansion in the state as natural gas becomes more popular from a business sense as well as environmentally. Michigan’s 2014 energy appraisal shows that due to a long, cold winter this past year, energy prices are expected to rise over the next year. Natural gas demand is expected to increase 9.7% from 2013-2014 as Michigan’s storage facilities were drawn down over the winter. Higher gas prices and promising findings from new gas discoveries may be the incentive that the gas industry needs to increase production in Michigan.      

Natural gas’s rising popularity in the environmental and business world could make it the fuel of the future for much of the United States. A cleaner, cheaper energy source would be welcomed by all and would push the country towards energy independence. The switch from coal to natural gas has only just begun even amid environmental concerns over hydraulic fracturing and water contamination. In the long run, it is doubtful that the country can resist the attraction of this efficient, more competitive fuel.  

Sources

Energy From Shale, “Fracking Fluids.” http://www.energyfromshale.org/hydraulic-          fracturing/hydraulic-fracturing-fluid.

Graham, Lester. “Fracking for Natural Gas, the Benefits and the Risks.” Michigan Radio.                                 http://michiganradio.org/post/fracking-natural-gas-benefits-and-risks.

Greene, Jay. “Hydraulic Fracturing in Michigan: Waiting for the Boom.” Crain’s Detroit Business.             http://www.crainsdetroit.com/article/20130324/NEWS/303249962/hydraulic-        fracturing-in-michigan-waiting-for-the-boom.

McMahon, Jeff. “4 Reasons Coal Declines Even as Natural Gas Prices Rise: EIA.” Forbes.             http://www.forbes.com/sites/jeffmcmahon/2013/04/23/4-reasons-coal-declines-even-            as-natural-gas-prices-rise-eia/.

Michigan Public Service Commission. “About Michigan’s Natural Gas Industry: Exploration and          Production.” http://www.dleg.state.mi.us/mpsc/gas/about1.htm

Michigan Public Service Commission. “Michigan Energy Appraisal: Summer Outlook 2014,”             http://www.dleg.state.mi.us/mpsc/reports/energy/14summer/ea-summer14.pdf.

Michigan Public Service Commission. “Michigan Energy Overview.”             http://www.dleg.state.mi.us/mpsc/reports/energy/energyoverview/.

Payette, Peter. “Watchdog Groups Wary of Proposed Fracking Rules” Michigan Radio.    http://michiganradio.org/post/watchdog-groups-wary-proposed-fracking-rules.

Smith, Lindsey. “Frugal Holland Takes on Biggest One-time Debt for Natural Gas Plant.”          Michigan Radio. http://michiganradio.org/term/holland-coal-plant.

Union of Concerned Scientists. “Ripe for Retirement: The Case for Closing America’s Costliest            Plants.” http://www.ucsusa.org/clean_energy/smart-energy-solutions/decrease-  coal/ripe-for-retirement-closing-americas-costliest-coal-plants.html.

U.S. Energy Information Administration. “Michigan State Profile and Energy Estimates.”            http://www.eia.gov/state/?sid=MI#tabs-5.

U.S. Energy Information Administration. “Natural Gas Supply and Disposition by State.”             http://www.eia.gov/dnav/ng/ng_sum_snd_dcu_SMI_a.htm.

Zielinski, Sarah. “Natural Gas Really is Better than Coal” Smithsonian.        http://www.smithsonianmag.com/science-nature/natural-gas-really-better-coal-   180949739/?no-ist

 

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