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U might tap into oil, gas

May 23, 2001

MSU may be able to add more funds to its coffers - without raising tuition.

Sturgeon Point Development Co. is drilling for oil and natural gas on the university’s property in Troy, Mich. If the Traverse City company discovers the pricey minerals on the property, MSU will collect royalties that could come to millions of dollars in added revenue.

“Since it’s taken from the land, we put it into what we call the land fund,” said Chuck Reid, director of MSU land management. “It’s used for future acquisition of the land or improvements for other areas.”

While this is the first time a company has drilled for oil or gas in Troy, this is not the first time MSU has been a part of such a deal.

“Periodically, we do lease out property for oil drilling,” Reid said. “It’s not uncommon. Once it’s up and running, it will be landscaped. It’s fairly hidden.”

Michigan Department of Environmental Quality officials say there are more than 16,000 gas wells throughout the state, although most of them lie in the northern part of the Lower Peninsula. Officials have never discovered oil or natural gas in the state’s Upper Peninsula.

Frank Mortl, president and executive officer of the Michigan Oil and Gas Association, said the drill is promising for MSU and all of Michigan.

“I hope it’s a natural gas well,” he said. “We all need natural gas - or crude oil. We all need that too.

“It provides jobs, it’s very safe. The wonderful news is that institutions like MSU who need funds can get royalty money.”

Sixty-three of the 68 counties in lower Michigan have active gas or oil wells.

The oil and natural gas industry is closely regulated by the DEQ, creating little or no risk for the areas.

“The modern technology is very sound,” Mortl said. “We’re pretty up on anything that happens.”

But before university officials can start counting their millions, the drilling company will have to find the gas or oil.

It will be two weeks before anyone knows how much the 3,000-foot drill can tap - if it finds anything at all.

“You never know for sure what you’re going to get,” said Bruce Waldo, the senior geologist for the Geological Survey Division of the DEQ. “It probably will be productive, but they can’t know how much it will produce on a daily basis.”

Waldo said DEQ workers believe the well is natural gas, but wells in the neighboring town of Sterling Heights have produced oil.

An ancient coral reef called the Niagaran Reef has been producing minerals across Eaton, Oakland, Macomb and St. Clair counties since 1968. It tripled the state’s oil and natural gas production during the 1970s.

“These Niagaran wells can be quite profitable because they tend to produce a lot,” Waldo said. “It depends on the price of oil and gas.”


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