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City to hold public hearing on possible oil, gas exploration

September 20, 2013

UPDATE: A public hearing for consideration of a proposed agreement with Jordan Development Company for the leasing of gas and oil leasing rights on city property has been rescheduled from Sept. 23 to the Rochester City Council meeting at 7 p.m. Oct. 14 at Rochester City Hall.

ROCHESTER — The Rochester City Council is giving the public a chance to weigh in before members decide whether to let a pair of oil and gas exploration companies lease oil and gas rights on city-owned properties.

Representatives from Jordan Development Co. and West Bay Exploration Co., both of Traverse City, approached the city last month to consider the possibility of leasing city-owned land to find oil or gas.

Since then, a number of residents have contacted city officials to ask questions about the process and voice their concerns.

“I think a number of us received many, many emails and calls — all very negative,” Mayor Stuart Bikson said.

Councilmember Ben Giovanelli agreed.

“I received many communications — emails and phone calls — none of which were in support of this, so it’s going to be a tough uphill battle if anybody still wants to do it. … You would think if people thought this was a really good deal, and we should do it, I would hear from that side of the coin,” he said.

Council member Kim Russell said the emails and phone calls she received were “mixed.”

“It wasn’t that they were for it or against it; I think that they were inquisitive,” she said. “It got a lot of buzz, and people were talking about it.”

“I think it’s only fair that the community voice their opinion — good or bad — so I think it’s a good way to start,” Council member Cathy Daldin said.

The oil and gas leasing rights agreement with the city would be nondevelopmental, meaning no actual drilling or surface activity could take place on city land.

Instead, crews would get approval from private property owners up to two miles away from the target to drill down 3,000-4,000 feet and then drill horizontally over a mile or two to get to the source. Under the terms of the lease, the city would be paid $150 per acre to lease the rights to the roughly 120 acres targeted by the companies, which have five years to find oil or gas. If they are successful in doing so, the lease becomes indefinite and the city would be paid a one-sixth royalty until the well is plugged. Property owners would receive a royalty of around one-eighth until the well is plugged.

Under the agreement, hydraulic fracturing, otherwise known as “fracking” — a process in which fractures in rocks below the earth’s surface are opened and widened by injecting chemicals and liquids at high pressure to extract natural gas or oil — will not be used. Environmentalists link fracking to the contamination of groundwater and risks to air quality.

The jury is still out as to whether the council will decide to support or nix the idea.

“I think we all struggle because we don’t want to do this, but we all drive to work and use oil and stuff like that,” Bikson said.

Giovanelli said he said remains skeptical of the whole thing.

“It’s not like we are hurting for the money right now, and I really don’t want to sell out our natural resources for this,” he said, “so I’m not sure I’m prepared to be in support of this. I may open, but I’m a long way away.”

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