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Michigan A Top Oil-Producing State?

May 24, 2016

Most don’t think “oil” when they think “Michigan,” but the Great Lakes State has the capacity to produce at least 53 million barrels of oil, according to an economic impact study conducted by the Michigan Oil and Gas Association (MOGA).

In 2014, Michigan produced 7.1 million barrels of oil, placing it in the top quadrant of oil-producing states. The report says that the production, transportation and refining of oil and gas had a direct economic impact on 82 of the states 83 counties, resulting in 22,781 Michiganders directly employed by the industry.

Houghton County is the only county not directly benefitting from the state oil and gas industry because it neither produces oil or gas nor is along a transportation corridor, said MOGA president Erin McDonough. Jackson and Hillsdale counties are the highest-producing counties in the state.

McDonough said that Michigan’s abundant natural gas and oil supply will help the state’s compliance with the federal Clean Power Plan as energy plants in the state transition from coal-fired facilities to gas, which is mandated by 2025.

Unlike states like North Dakota, Michigan does not suffer from “boom and bust cycles,” but is susceptible to fluctuations in oil price. “If the price goes low again, maybe some of the projections for gas will have to be revised in the short term,” McDonough said.

“We have been through these type of trends before,” McDonough added. “Michigan is lucky in that it has a steady, stable production rate. ”

The “most surprising thing” demonstrated by the study, conducted by Public Sector Consultants, McDonough said, was the amount of royalty payments to private landowners. Oil and gas production resulted in $250 million into the pockets of private landowners.

The oil and gas industry has generated $1 billion in grants to local government from the Michigan Natural Resources Trust Fund, which provides funding for public parks, trails and ball fields, she said.

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