Alternative Energy Exploration Team, Knox Western

10 November 2010

Northern Michigan is a Likely Hotspot for Natural Gas

Executive Summary:
Due to the depth of the natural gas discovered in the Collingwood Shale, it is likely that natural
gas compressors will be needed for extraction purposes. Despite the present low cost of natural
gas, many companies such as EnCana Corporation have expressed interest in purchasing mineral
rights over speculation that the price will increase this winter. The Antrim Shale, although
largely exploited, has produced upwards of 2.6 trillion cubic feet of natural gas since
development.

Discussion:
Two miles beneath the exploited
Antrim Shale lays the Collingwood
Shale which, according to EnCana
Corporation, could be “the source of
Michigan’s third largest major
hydrocarbon development era of the
last 40 years”.1 The first test well
drilled into the Collingwood Shale
produced 2.5 million cubic feet of
natural gas per day.2 Companies are
positive that the Collingwood Shale
will produce more natural gas than its
‘shallow’ Antrim Shale counterpart
which has produced 2.6 trillion cubic
feet since development began.3

In 2008, EnCana Corporation began

buying mineral rights acreage
(250,000 net) in the Collingwood
Shale natural gas field.4 The average
depth of the shale is roughly two miles beneath the surface meaning that its drilling costs would
be very expensive; however, if this season's weather turns cold quickly, the cost of natural gas
will likely increase bringing more The location of Collingwood Shale in Michigan.
attention to the region.5 Nonetheless, the
company said the play could add Courtesy of: oilshalegas.com
"meaningful future resources and production to our North American portfolio of prolific resource
plays".6

The discovery of the Collingwood Shale has brought more attention to Michigan's Lower
Peninsula.7 While the industry has been exploiting Antrim Shale for years, the state's auction
over mineral rights netted $178 million8 compared to its previous record of $23.6 million in the
1980s.9 Presently, Michigan produces about "400 Mmcfd of natural gas from wells in other
formations in the Michigan Basin".10

Analytic Confidence
Source Reliability: Medium
The analyst's confidence is in the medium range. The analyst's knowledge base on this topic is
moderate though the sources are reliable with virtually no conflictions between them.
1
http://www.circleofblue.org/waternews/2010/world/michigans-new-natural-gas-rush-energy-and-water-in-play/
2
iBid
3
http://www.ogfj.com/index/article-display.articles.oil-gas-financial-journal.unconventional.other-unconventional.encana_-
several_other.QP129867.dcmp=rss.page=1.html
4
http://www.encana.com/news/newsreleases/2010/0507-michigan-basin.html
5
http://oilshalegas.com/collingwoodshale.html
6
http://www.pennenergy.com/index/petroleum/display/8775318448/articles/oil-gas-journal/exploration-development-
2/2010/05/michigan-collingwood-utica.html
7
http://www.ogfj.com/index/article-display.articles.oil-gas-financial-journal.unconventional.utica.encana_-
several_other.QP129867.dcmp=rss.page=1.html
8
Ibid
9
http://www.boynegazette.com/index.php/news/headlines/gas-rush-in-charlevoix-county
10
http://www.pennenergy.com/index/petroleum/display/8775318448/articles/oil-gas-journal/exploration-development-
2/2010/05/michigan-collingwood-utica.html