Politics Aside, Facts Show Little or No Risk from Slant Drilling

The following article originally appeared in the Feb. 11, 2002, Detroit Free Press (http://www.freep.com/voices/columnists/elaf11_20020211.htm).

A vote is nearing in the Michigan Senate on whether to ban the extraction of oil and natural gas from beneath the Great Lakes. Fear of a spill or other potential contamination has largely driven the debate.

But sound policy demands facts. And while there may be aesthetic reasons to support a prohibition against onshore drilling, insurance data confirm that the actual environmental risks are negligible.

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The proposed ban would apply to so-called directional drilling, which enables oil and gas deposits beneath the lakes to be tapped from a distance. As currently regulated, a rig is located 1,500 feet or more inland from the shore, where a vertical bore is drilled to a depth of some 1,000 feet. The hole is then deviated at an angle toward the bedrock underlying the lake until it reaches oil or gas deposits some 4,900 feet beneath the water's surface.

The state House voted on Jan. 29 to ban directional drilling as a precaution of sorts. But the environment will not be protected if lawmakers and regulators, however well-intentioned, misconstrue risk. Focusing attention on phantom threats diverts attention from the real source of actual dangers. Nor is legislative accountability possible if we allow political motives to substitute for science.

Insurance data provide a dependable assessment of risk, which is reflected in the cost of coverage. Premium rates essentially transmit information about hazards and safety. In this instance, underwriters are willing to insure slant drilling operations at an affordable cost—proof positive that such excavation methods are not fraught with environmental peril.

Indeed, according to insurance industry data, only 12 claims nationwide involving drilling to depths of 5,000 feet have been recorded between 1981 and 2000—and none in Michigan. (The Mackinac Center for Public Policy was granted access to the database by Marsh Inc., a global insurance firm.) In fact, control-of-well insurance, which covers environmental damages, is available in Michigan for as little as $33 per year per well, depending on the number of wells being covered. This reflects the fact that more than 3,800 directional well bores have been drilled in Michigan without incident, including 13 beneath the Great Lakes. Moreover, Canadian firms have safely drilled 2,200 wells under Lake Erie since 1913, and two pipelines have carried oil and natural gas beneath the Mackinac Bridge for more than three decades.

The Michigan Environmental Science Board likewise concluded in 1997 that "there is little to no risk of contamination to the Great Lakes bottom or waters through releases directly above the bottom hole portion of directionally drilled wells. . . ." The one small risk identified by the board was contamination at the wellhead, far from the water's edge.

The far greater threat to environmental quality comes from oil tankers crisscrossing the oceans to deliver foreign oil to American shores. To the extent the United States develops domestic sources of fossil fuels, such risks may be diminished. In addition, lakes experts largely agree that the gravest environmental threat to the lakes is biological in nature, not industrial. The invasion of non-native exotic species such as the zebra mussel is disrupting the lakes' ecological balance.

Lawmakers' desire to protect our beloved Great Lakes is certainly understandable. But lakes policy is only as good as the facts upon which it is based. In reality, directional drilling represents only a remote risk to the environment, and the Legislature would do well to devote its time and taxpayers' hard-earned dollars to rectifying real problems.

MICHAEL LaFAIVE is research project manager at the Mackinac Center for Public Policy, a Midland-based research and educational institute. Write to him in care of the Free Press Editorial Page, 600 W. Fort St. Detroit, MI 48226.

"Underwriters are willing to insure slant drilling operations at an affordable cost-proof positive that such excavation methods are not fraught with environmental peril."