Exploratory Well: ‘What All the Coffee Shops Are Buzzing About’
HART, Mich. (AP) _ The wintertime doldrums disappeared from this quiet farm town after a small army of well drillers rolled onto the property of Phyllis and Gerald Slocum, unloaded a mammoth cargo and began to overhaul the landscape.
″You should have seen the little city they put in,″ Mrs. Slocum recalled. ″Overnight, there was this city, with a great big tower all lit up 24 hours a day.″
The structure was an exploratory well, an early step in a bid to tap deeply hidden, relatively pure ″sweet gas″ - if the drillers hit the right spot.
″They wouldn’t bring in all that equipment just to fool around,″ Mrs. Slocum said.
That is the notion that captivates people here. Ever since Shell Western Exploration and Production Co. sank a drill into the Slocum property in November, Hart has been in the throes of gas fever.
″It’s like gold fever,″ Mrs. Slocum said.
The Slocum well has triggered a land-lease competition by energy interests.
″It happened very suddenly over Thanksgiving,″ said Lawrence Konopka, a lawyer in nearby Ludington who handles oil and gas leases. ″Overnight, the hotels filled up. All the rental cars were booked. All of a sudden our phones began ringing off the hook.″
Konopka said farmers are being offered rapidly escalating amounts for their oil and gas rights by companies lured to the area by Shell’s well. Rights that sold for $15 an acre a year ago are going for $150, he said.
But that money would pale in comparison with potential royalties from a successful well.
″That could accumulate into several hundreds of thousands of dollars, maybe into the millions,″ Konopka said.
Lowell Skinner, a fruit farmer, said he just leased rights to his 90 acres for $9,000, more than he paid for the land. ″There must be something in the wind or else they wouldn’t have leased it,″ said Skinner, 74. ″For a lot of farmers, these leases are a lifesaver.″
Houston-based Shell Western minimizes the well’s significance. Most of the drilling in Michigan is done in the northern and northwestern Lower Peninsula, where oil and gas have been brought up from depths of 5,000 to 6,000 feet.
But in the lst two years, exploration companies have been pursuing deeper, purer and perhaps more abundant natural gas reserves in a 50-county basin in the central Lower Peninsula.
Shell spokesman Rich Hansen said the Hart well is Shell’s first on the western side of that largely untapped formation and the first deep well in Oceana County in six or seven years.
″What happened up there is typical when you have a Shell or an Exxon or an Amoco coming in,″ he said. ″People tend to think that you know something others don’t and they’re willing to take a gamble. Shell’s the largest oil producer in Michigan and it has its camp followers.″
The state Department of Natural Resources, at Shell’s request, is keeping details of the well confidential for 90 days, as allowed by law. Shell will remain mum until later this month on whether the well has gas-producing potential, Hansen said.
But others figure Shell wouldn’t invest $2 million unless it had high hopes and promising seismographic data.
At the Hart Motel, owner Stuart Knox said his rooms probably would be empty at this time of year. Instead, he’s been booked full for several weeks because of the influx of lease brokers.
″Couple of the oil men here were saying this is the hot spot, that they wouldn’t be here if there was anything else going on in the country,″ Knox said.
Lease brokers line up daily at the county office building to pore over deeds, looking for properties where oil and gas rights still are available, said Oceana County Register of Deeds Joe Merten. The office took in $1,200 in fees in one day last week, compared to a typical day’s take of $300.
″We got people from Louisiana, Oklahoma, Texas, Alabama,″ he said. ″Up and down the streets, that’s what all the coffee shops are buzzing about.″
The scramble to snap up drilling rights is highly competitive, said a lease broker who was thumbing through deeds last week. The broker, who declined to be identified by name, said she was contacted by an oil company and sent to the area two weeks ago to secure drilling rights.
″These people (brokers) are secretive,″ Merten said. ″A lot of times they don’t even want to give you a full name when you write a receipt.″
Western States Oil Co. of Traverse City recently purchased some drilling rights in the area, but company President Thomas Thompson said such flurries of lease activity are fairly common.
″Sometimes it pays off. We’ve purchased some leases but I’m very cautious about it,″ he said. ″Most of what we know now is rumor.″
End Adv Thurs AMs Jan. 15