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Rochester Hills

January 22, 2014

City answers concerns about oil and gas drilling

By Linda Shepard
C & G Staff Writer

ROCHESTER HILLS — After listening to almost a dozen residents opposed to gas and oil drilling in the city, city officials said their hands are tied when it comes to individual property owner rights.

Jordan Development Company, which owns West Bay Exploration Company, has contacted city officials and residents, seeking approved leases for exploration drilling and permission to extract gas or oil. If gas or oil is found and extracted, property owners are paid a royalty.

Many of the residents who spoke to the Rochester Hills City Council Dec. 13 opposed the use of fracking, where fractures below the earth’s surface are opened and widened by injecting chemicals and liquids at high pressure. Some environmentalists link high-volume hydraulic fracturing to the contamination of ground water and risks to air quality.

In addition, “many homeowners are being deceived by strong arm and presumable compliance sales tactics that the oil company is employing to tell the people that they will lose rights/compensation if they do not join voluntarily,” said city resident Mike Gruber in an email.

Other residents said their property values could fall if gas and oil drilling is done in the city, and they asked for a city ordinance prohibiting gas and oil drilling.

According to the terms of the lease agreements with Jordan, “There would be no high-volume fracturing,” said City Council President Greg Hooper. “So this shouldn’t be an issue. There are high-volume and low-volume fracking procedures. There is no fracking allowed in Rochester Hills.

“As far as private property owners in the city signing leases, we are not a part of that,” Hooper said. “It is a private party transaction.”

Hooper addressed the issue of home values.

“Anytime something occurs and people are against it, the first thing they raise is that it is going to affect home values,” he said. “It is an issue that can’t be proven or disproven one way or another. The seven of us all live here in the city. We all have a vested interest in maintaining our home values, as well. In my opinion, it doesn’t affect our home values.”

According to Council member Mark Tisdale, currently more than 400 city residents have signed leases for gas and oil drilling.

“All the residents that have signed a lease (have) nondevelopmental leases, meaning there are no surface activities,” he said. “The population of the city puts us into a category where no drilling site or wellhead can be any closer than 450 feet to an existing structure. You’ve got 1 1/2 football fields between a drilling site and the nearest home.”

Council member Adam Kochenderfer said a city ordinance would be ineffective. 

“The bottom line is, if we terminated the lease agreement and pass an ordinance, none of that would prohibit Jordan Oil from drilling for oil in Rochester Hills,” Kochenderfer said. “State law is trumping us, and we can’t stop it. Some cities have written ordinances, but the problem is, they are unenforceable. That is the reality. In some situations, if a property owner does not sign a lease, they can still drill under your house. Our hands are a little tied.”

Rochester Hills Mayor Bryan Barnett said the city has no authority to prohibit gas and oil drilling on private property, and an ordinance forbidding it could do more harm than good.

“In other cities, from what we understand, those ordinances are not enforceable,” he said. “One of the cities had a lawsuit over the ordinance and the city had to pay $800,000 in the settlement because the ordinance, was found to be not compliant with state law.

“The limitations of the mayor and the city council are pretty concrete, as we have been advised,” Barnett said. “We all live in this area and are happy to continue the discussion. We know that when it is a matter of your home, it matters a lot.”

According to the Michigan Department of Environmental Quality, permits have been issued for more than 60,000 oil and gas wells in the state.

“Michigan is quite well-known for its oil and gas production,” said Ben Brower, vice president of Jordan Management Company, based in Traverse City. “We are 17th out of 33 for oil, and 10th for gas (in the country).”

You can reach C & G Staff Writer Linda Shepard at lshepard@candgnews.com or at (586)498-1065.

Saying that the "City answers concerns about oil and gas drilling" is a loose usage of the term "answers." The City Council and Mayor basically pointed the dirty finger at the State and the DEQ and referred their citizens to them. In other words, they denied responsibility - when they very clearly signed away city land.

This racket is dependent on Jordan Oil/West Bay securing over 51% of any 40 acre parcel. The city was given far better terms than an individual landowner because the oil company knows (when negotiating with individual landowners) that they can now refer back to the city and say, in effect, "well, your city has already agreed to these terms....you should too." Jordan did exactly that at a recent Auburn Hills Council meeting telling the Auburn citizenry "Well, Rochester Hills has already leased their city owned land, you should too."

When 51% of a parcel is secured through their leasing process the oil companies can then COMPEL the remainder of the owners in the remaining 49% to give up their mineral rights! That's garbage, but the City is playing right into that bad deal. Good for the City ($$, cha-ching), bad for the citizens with oil wells next door and all the health, safety, and property concerns.

The city was offered $150/acre/year and a 1/6th royalty. Individual landowners are being offered $10/acre/year and a 1/8th royalty. Small change for homeowners in the 26th wealthiest county in America - and certainly not worth the considerable risks and damage to local infrastructure.

The Council/Mayor have defaulted on their role of providing due diligence and due process to their citizens. "Our hands are tied" is the lamest of excuses. Their hands weren't tied when they signed away two R. Hills parks and a cemetery (shameless).

This issue is far from dead. Concerned citizens will continue to make the issues known at the City and State levels, and we'll continue to let our neighbors know this deal is rotten.