ONSTED, Mich. (WOOD) - The depth meter reads 3,027 feet, but these roughnecks know they've got a long way to go. They'll have to drill down to at least 4,000 feet before they hit their goal -- crude oil -- if they hit it at all.
With gasoline prices nearing $4 a gallon and oil at $108 a barrel, rigs like this, on a United Methodist church camp southeast of Jackson, are the future of Michigan's oil industry.
Oil companies are forced to look harder and spend more to find it.
The goal: To reverse a decline in Michigan's oil industry that has led to production levels not seen since the Great Depression.
Last year, the state issued just 258 oil and natural gas drilling permits -- the fewest since 1932.
"As time passes, the easy ones are found already, and so it becomes harder and harder," said Western Michigan University Professor Emeritus William B. Harrison III, who studies the geology of petroleum. "There are fewer to find; they have to drill deeper and they have to use different kinds of technology."
At this drilling site in Onsted, West Bay Exploration Co., of Traverse City , used 3D seismic technology -- basically shaking the ground and analyzing sound waves to find this potential pocket of oil, and is spending about $1 million to drill for it. It would be the company's 28th well in the Jackson area.
West Bay Vice President Pat Gibson said higher gasoline prices are making it easier to explore. "Because prices have been somewhat elevated for one-and-a-half years, we're continuing with a strong drilling program," he said. "If oil prices were not this high, we wouldn't be drilling what we are."
The crude -- formed by decayed plants and animals -- is stuck in the pores of dolomite rocks formed 400 million years ago when Michigan was tropical, Harrison said.
In the late 1970s and early 1980s, Michigan's oil production peaked at 35 million barrels, according to the State Department of Environmental Quality.
In 2009, that dropped to 5.5 million barrels. Last year, for the first time in at least a decade, that climbed slightly, to 6 million barrels, state officials said.
"Our petroleum economy, both oil and natural gas, is a finite resource and eventually we'll use it all up," Harrison said.
Last year, just a tiny fraction, 61,000 barrels, came from the Walker Oil field, an old field that stretches from Walker west into Ottawa County's Tallmadge Township.
David Davis, Michigan DEQ supervisor of permits, blamed the economy for the decline in oil and natural gas permits. Those numbers jumped to more than 900 in 2008, when gas prices last spiked. But, he said, they have yet to recover.
"Bankers weren't financing anything, not grocery stores or houses, and they don't finance oil wells either," Davis said. "Most projects in the oil business are done with other people's money."
Michigan uses 173 million barrels of crude oil a year to keep its economy churning, Harrison said. The state's oil wells produce about 3% of that, though it doesn't necessarily stay here.
Most is piped or trucked to out-of-state oil refineries in places like Sarnia, Toledo and Chicago, Harrison said.
"Once it goes into a pipeline, it goes into a big network," he said. "It's kind of like electricity, you know. Once you put electricity into the grid, it's just going all around the place."
Still, he said, it's good for the country.
"Every domestic barrel of oil means that that money stays in the United States; it's energy that we're using from our own resources," Harrison said.
Experts, including Harrison, say the best hope for Michigan's oil industry is in southern Michigan, especially near Jackson.
"It's a very exciting play right now because a number of companies are involved in it and they're finding multiple new oil fields using this new technology," Harrison said.
It's where oil companies, led by West Bay Exploration, are tapping sweet crude discovered several years ago in a fault line about 4,000 feet deep.
That new field produced 94,000 barrels in 2009 but jumped to 750,000 barrels last year, state officials said.
West Bay's production alone has nearly doubled in two years to 1.3 million barrels, according to the DEQ.
Experts say the Jackson discovery could extend the life of Michigan's oil industry.
"Ten years ago, they were saying we'd be done by 2030," Harrison said. "I think some new discoveries have pushed that on forward maybe 30, 40 more years."
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