November 26, 2014

Oil and gas explorers leasing land from Standish

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STANDISH — The city of Standish may get an economic boost – a la Jed Clampett.

Thursday, Standish City Council heard a presentation from a West Bay Exploration Company leasing agent, who was discussing with council a contract to lease 60 acres on Foco Road, near where the city’s wastewater treatment plant is located, to explore for oil or natural gas.

City Manager Mike Moran said the company had offered up a draft to the city in the past, which was reviewed and modified by Moran and the city’s legal counsel. West Bay came back to the city on Dec. 17 approving of the modifications, which includes a one-sixth of oil or natural gas royalty if one of the fuels is discovered on the land and then collected for a period of time.

“I still want the city attorney to look at it one last time before we sign it,” Moran said. “If they find something, we’ll make some money.”

City Council gave Moran the green light to sign the contract if the city’s attorney approves of the negotiated contract.

Initially, Moran said West Bay would lease the land for $20 per acre, $1,200 for the total property, while the Traverse City-based company explores for oil or natural gas.

Patrick Gibson, head of West Bay’s Land Department, said the company would first perform seismic tests on the land, which would then be analyzed by the company’s geophysicists.

“If those seismic tests are positive, then we’d drill an exploratory well,” Gibson said. He added that out of all exploratory wells West Bay puts in, about half produce oil or natural gas.

While the royalties, if oil is in fact present, would benefit the city of Standish, others may also be able to make some money from the venture.

“We do our very best to try to use local contractors to tie in our pipelines, if that’s the case,” said West Bay operations department spokesperson Ann Baker. She added that a pipeline would require a hefty source of oil or gas, though. “We use all local welders, if that need arises, truck drivers, bull dozer drivers. … We use contract employees to do everything.”

Baker added a “roust about” crew, on-call employees that help with operations, would also be needed.

“We have to have somebody close,” she said.

Moran added that if enough fossil fuels were present that a road is laid directly to a well or wells, the cost per acre of land used to put in the road would dramatically rise, adding more to the city’s coffers.

There is currently no West Bay Exploration Company oil or natural gas wells in Arenac County. The company’s leasing agent present at Thursday’s meeting, Chad VanHaitsma, said seismic testing is usually done in the early winter or late fall. While he said it might be possible to perform the testing still this year, it would be more likely to occur in 2010.

Solid environmental record

When it comes to West Bay’s record in being friendly to the ecosystem, Baker said the company is flawless.

“We have not had any complaints or issues with the DEQ (Department of Environmental Quality),” she said. “We have never had any monitorable spills or issues with that.”

“Everything we do is with the environment in mind,” Gibson added. He said that West Bay for a long time held itself to high standards than the DEQ required, until the DEQ’s regulations became stricter, matching West Bay’s company standards.

Baker also said that West Bay’s exploration doesn’t harm the water table.

“We use the same materials that’s used to drill a water well in your home,” she said.

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