Rochester Considering Horizontal Oil, Gas Drilling Agreement

There might be oil or gas about a mile beneath Rochester's surface and Traverse City-based Jordan Development and West Bay Exploration are looking to tap into the earth beneath the city to see if there is anything to extract.

Ben Brower from Jordan Development and Pat Gibson from West Bay Exploration addressed the Rochester City Council on Monday, looking to enter into a five-year lease with the city at a rate of $150 per acre for the roughly 100 acres targeted by the companies. Under the lease terms, the companies have five years to find oil or gas, and if successful, the lease becomes indefinite and property owners will receive monthly royalty checks until the well is plugged.

The City Council agreed by consensus to continue talks with the companies to reach an agreement. 

If oil or gas are found, about one-sixth of royalties would go back to landowners in the city, the same amount afforded to the state and the same amount Rochester Hills had agreed to in a similar proposal.

The agreement would be a non-development lease, meaning drilling will not occur on the surface within Rochester's city limits. Instead, crews would drill through the surface outside the city about a mile into the earth, then drill horizontally up to 1-2 miles beneath Rochester's surface.

Controversial hydraulic fracturing—or "fracking"—methods, which fracture rocks with a pressurized liquid to extract gas and oil, would not be used, Brower and Gibson said.

Brower said Oakland County has plenty of gas and oil potential. Since about 1960, extraction efforts in Oakland County have produced 7 million 42-gallon barrels of oil and 50 billion cubic feet of gas. The companies would be able to produce up to 200 barrels of oil and 200,000 cubic feet of gas per day, according to state regulations. 

The efforts could spell big royalties for Rochester property owners. Brower said one gas well that has operated at the Crooks Road exit behind the Michigan State University Extension ad agency has netted close to $10 million in royalties since 2003, split between the state, which owns the expressway, and MSU, which owns about 20 acres at the site.