Julie Mason, environmental scientist, a staff member for four years in the Michigan Department of Natural Resources, Oil and Gas Division. Her answers are paraphrased from the interview.
Question: Why does Michigan choose to sell its mineral rights?
Answer: The oil and gas lease auctions are for the privilege of leasing state-owned oil and gas rights. The state is not selling the mineral or oil and gas rights permanently.
Q: What types of revenue does the state of Michigan generate from gas leasing?
A: Leasing of the state-owned oil and gas rights for exploration and development generates revenue in three ways:
1. Lessees pay a “bonus” to acquire the lease rights
2. Lessees pay rent on acreage leased
3. Lessees pay royalties. Royalty payments are a percentage of the gross value of the
gas produced and are determined at the time the product is sold. Michigan law requires that this revenue goes into the Michigan State Parks Endowment Fund and the Game and Fish Protection Trust Fund. These funds allow for improvements and increased recreational opportunities.
Q: How is the environment on state lands protected under Michigan law?
A: There are several ways Michigan tries to mitigate environmental concerns with gas development:
• Parcels nominated for leasing go through a field classification review by professionals to determine the appropriate level of surface use
• The state lease prohibits drilling within wetlands; habitat identified as critical to the survival of endangered species; and any drilling within 1,320 feet of any lake or stream.
• The lease is subject to all existing or subsequent federal and state laws and rules.
• The lease within itself is not an authorization to drill; separate application and
approval by the DEQ is required prior to drilling activity.
• DEQ’s regulatory rules are continually updated to ensure protection of the natural
resources while balancing the development of both private and public minerals.
• If a well pad location is proposed on state surface, additional site review is
completed and separate written approvals are required from field biologists, foresters and others to limit surface disturbance.
Q: How do the Department of Natural Resources make the public aware that it is going to be leasing public lands to gas companies for drilling?
A: The DNR tries to be as transparent as possible when dealing with the public regarding state owned lands that are being leased. Our website contains a wealth of information including the nomination information for leases, auction catalogs, the results of leasing auctions and the leasing procedures. We also distributed public notices at the time of lease auctions to give the public a chance to comment on the lands up for lease.