%h/ a? . f f AN ECONOMIC EXAlINATION OF NATURE GAS IN NECOSTA COUNTY, NICHIGAN A Thesis Submitted To The Department of Economics Of Michigan State College of Agriculture And Applied Science In Partial Fulfillment of The Requirements For The Master of Arts Degree. By Karl G. Kerrill Big Rapids, Michigan May, 1938 THFET'K C O N T E N T S PREFACE Page Reasons for Making the StUdY-oooooooooooooooooo00 4 ACkDOWledgmentSoo00000000000000000000000...one... 6 CHAPTER I INTRODUCTION The Economic Objectives........................... 8 Nature and SCOpe of the Study..................... 8 Sources of the Data............................... 11 Limitation of Factual Data........................ 11 Validity and I:€li&~bilitbrooo00000000000000.00000000 12 CHAPTER II ECONOKIC FEATURES OF LECOSTL COUNTY Location and Extent one...oooooooooooooooooooooooo 13 T0pography........................................ 13 Pepulation........................................ 15 The Lumbering Industry ........................... 17 Transportation ................................... l7 Readjustment ..................................... 18 Map of Mecosta County ............................ 19 Manufacturing .................................... 21 Agriculture ...................................... 22 Resort and Tourist Trade ......................... 22 Ferris Institute ................................. 25 The Depression and Unemployment .................. 23 Summary .......................................... 24 CHAPTER III THE RELATION OF HECOSTA COUNTY TO THE OIL AND GAS AREAS OF MICHIGAA, ADD SKETCH OF DEVELOPUEET Oil and Gas Found in Michigan .................... 25 Prospecting in Necosta County .................... 26 Geological Easis for Exploration ................. 27 Discovery of the Austin Field .................... 27 Further Development of the Field ................. 30 Gas Withdrawn from the Austin Area ............... 36 Possibilities of the Austin Field ................ 37 Discovery of the Tri-township Field .............. 38 Lansing secures Natural Gas Service .............. 41 Grand Rapids Secures Katural Gas Service ......... 42 CHAPTER IV THE NATURE OF THE NATURAL GAS BUSINESS Type of Business.................................. 44 Natural Gas Defined ...........3.................. 44 Wild Catting ..................................... 45 Problems Confronting the Industry ................ 46 Factors Which Produce Conflicts and Controversies. 50 John Doe No. 1 Gas Well .......................... 50 Speculation Connected with Oil and Gas ........... 53 The Royalty Acre Racket .......................... 55 The Cause and Effect of Over-Drilling ............ 57 11592.1 CHAPTER V A REVIEW OF THE CONTROVERSIAL ISSUES CONNECTED WITH THE DEVELOPHENT 0F TEE TNT-TOWNSHIP NATURAL GAS AREA Dissatisfaction with the Petroleum Transportation Co. 59 Conspiracy to Hinder Narketing of Natural Gas Alleged 61 Controversy Over the Granting of Pipe Line Permits... 62 Summary of M.P.U.C. Opinion and Order of June 24,1936 65 Fact-finding Committee Appointed by Lt.Gov.Nowicki... 66 P. U. C. Aide Ousted Over Gas Estimate .............. 67 Thompson Lease Inc. vs. Consumers Power Co........... 68 CHAPTER VI PUBLIC CONTROL OF THE NATURAL GAS INDUSTRY The Theory of Government Control..................... 75 Control Exercised By the Conservation Department..... 77 Control Exercised By the Mich.Pub. Utilities Com..... 78 The Import of Judge Hayden's Decision................ 85 Natural Gas Legislation in 1937...................... 86 CHAPTER VII EFFECT OF NATURAL GAS PRODUCTION ON PUBLIC REVENUES The Severance Tax.................................... 91 Distribution of the Tax.............................. 93 Income of the County Government in Form of Fees, etc. 93 Income of the Townships from Natural Gas............. 95 Assessment on Pipe Lines, Neter Stations, Oil Nells.. 98 CHAPTER VIII BENEFITS TO LAND OWNERS, BUSINESS, AND LABOR Income from Oil and Gas Leases ...................... 100 Income from Mineral Deeds............................ 102 Income from Royalties................................ 105 Income from Payments for Right of way and Damages.... 106 Effect on Local Business ............................ 107 Effect on Labor ..................................... 107 CHAPTER IX BENEFITS T0 CONSUMERS Methods for Comparing Natural Gas with Other Fuels... 109 Benefits to Residential User ........................ lll Benefits to Commercial User ......................... 114 Benefits to Industrial User ......................... 116 CHAPTER X SUNNLRY AND CONCLUSIONS Summary of the Major Points ......................... 118 Conclusions ......................................... 120 Policies Which Might Be pursued ..................... 123 An Evaluation of the Prospects for Adoption of Policies Recommended ........................... 125 APPENDIX A COPIES OF: - - Laws and Rules and Regulations to Govern Oil and Gas Operations in the State of Michigan............. 128 Bond for Conformance with Laws, Rules and Regula- tions Governing Oil and Gas Operations in the State of Michigan............................... 157 APPENDIX B COPIES OF UTILITY RATE SCHEDULES Big Rapids Gas Company Rates ....................... Muskegon Gas Company Rates ......................... Grand Rapids Gas Light Company Rates ............... Consumers Power Company Rates ...................... APPENDIX C FCRNS USED IN CONLECTION WITH THE GAS BUSINESS Mineral Deed ...................................... Oil and Gas Lease ................................. Assignment of Oil and Gas Lease ................... Royalty Owner's Production Report ................. Producer's Production leport ...................... Pipe Line or Common Purchaser Monthly Statement (Royalty Interest--Gas) .............u........ Pipe Line or Common Purchaser Monthly Statement Nerking Interest--Gas) ...................... BIBLIL)GRA~PI{Y 0.000000COOOOOOO0.000000000000000000000000. 138 145 147 148 168 169 170 171 172 173 174 175 AN ECONOMIC EXAMINATION OF NATURAL GAS IN MECOSTA COUNTY, MICHIGAN P R E F A C E Reasons For Making The Study Curiosity having been aroused from.the association with people who had financial and other interests in the Austin gas field, and having observed the enthusiasm and excitement of people living in the vicinity of the field, the author of this report felt that it would be worth while to make an examination to determine the economic effects resulting from the discovery of natural gas in Mecosta county. This examination was based on the hypothesis that WRENEVER NATURAL GAS IS DISCOVERED IN CONKERCIAL QUANTITIES VARIOUS INTERESTS WILL BENEFIT AND MARKET- ING PROBLEMS WILL ARISE WHICH ARE PECULIAR TO THAT LOCALITY. To be more specific, the writer as a director of the Big Rapids Gas Company, which served Big Rapids with manufactured gas, spent considerable time discussing with the other directors the feasibility of securing natural gas for Big Rapids by means of a pipe line from the Broomfield area. The Broomfield area is but a short distance east of Necosta county. At the time referred to, gas had been discovered there and a market was being developed. The directors of the Big Rapids Gas Company authorized the president . -.~. ’ 51-": e. .. . . ‘A .¢'~—..‘ ‘ . 'v‘~.'.‘ .» . ~: “5 g. “" ‘ “I nu. I .'.a. - .‘3’ .~ r'. a 5.... C a ~"F‘- 1...” :1“ W" rs - s‘ ‘ o p A V. I‘ “.9 18...: In: ‘ l‘. ' V" a. .a ~e“~' 1 v n .I e .‘th’fia _ -.".'vl Rq’n“' .0! ‘ \tv'_.' ". ‘ I .... " . an, UaaA.’ .‘e' I: e .._ E...‘: “Fc‘ .Q-‘§" l..“ . l . ‘C' .- ‘ ' ~"‘. g.“ c 3' ".- ‘ .DG 0.: 4,. M- ‘.v‘.~ #- . rn ‘1 ‘._- ‘1 Q ,- . ‘ d": ,‘ V“ v“‘ t 5: . c -h and general manager, Mr. B. 0. Tippy, to make a thorough study to determine the feasibility of bringing gas by pipe line from Broomfield to Big Rapids. While this study was being made by Mr. Tippy, natural gas was discovered in Austin township, Necosta county, some seven:miles southeast of Big Rapids. The writer was present at the directors' meeting when Mr. Tippy reported conversations he had with the discoverers of the Austin field regarding the purchase of natural gas from.them. Taggart Bros. Inc. who controlled the gas wells in the Austin field, secured a franchise from the City of Big Rapids authorizing them to serve natural gas within the city. After a period of negotiation the common stock of the Big Rapids Gas Company was sold to Taggart Bros. Inc. Within a short time after the sale was consummated a pipe line had been laid and natural gas was being used in Big Rapids. A few months later a new area was discovered in Hinton township, Necosta county. Further dis- covery wells showed that the field extended across Nillbrook town- ship, Mecosta county, and into Belvidere township, Nontcalm.county. Additional drilling followed and proved that the Hinton-Nillbrook-- Belvidere area contained the largest natural gas reserves of any of the fields so far discovered in the state. The incentives which suggested the timeliness of an economic examination of natural gas in Necosta county were: lst. Experience as a.member of the Board of Directors of the Big Rapids Gas Company. 2d. Contact with residents of Mecosta county who exhibited their local pride and enthusiasm over the development of the natural gas fields. 3d. A realization that there was a lack of knowledge D."‘ .....¢ no I ‘V‘fl't A n.6- ... an. H a“ 'n . -u v e.- - e..- .......- 'I 1 M ‘II 4- '. euld V.; 1.. 4- u 414 | . 03 J. .. .. Eu .n. hm .r.. a. . . .. . a S .f. : . no a) Q T .5 . 0% ~ . .4 d .H. L A . rt. o , F a . -.. .- .4 n‘ r“ W... . . n e ‘ ~v w” L... .J .. . . a. r. O . .s. . a) ”PK. . a. .1 “He I ou‘ M I. Q “U. r . r ... . a‘b 9. . “L r... . I l C I a; nu \‘ ‘ Ps~ RH ; - fly a; B“. , Ed R M 2. ‘ .- I ‘ as .l - 93 .u. .n. flag it ~ 4 . :- VI- 1» L» In .. . in t . T G. 0 .fl 0 a . c F. 6 a w J.» .o‘ Q nu M -\ c 54 I um V. _ Inc. % .- 2. New neg 9—H IR P4 9- an Q n h . n. a: I .. 2. ‘7. V . 2. Yr” uh It} . . a.» n. .A. u: ‘. is .4 «d .u s: e 9 . . . a e A. L. n.\u . . - :- . a In. I.U ~ 1 u! C. .“I a C at. . . .u‘. of the extent of the financial results and the problems created. Acknowledgments It is extremely difficult to make a definite and complete acknowledgment for all the aid and cooperation received. The sources varied from the literature bearing upon the development of our petroleum resources, including articles in the trade journals and local and city papers, to public records, private records, and several score of personal interviews. The outline of the report was submitted to Dr. Harald S. Patton, head of the Department of Economics of Michigan State College, who aided very materially in the writing by giving many helpful sug- gestions. Dr. Herman Wyngarden read the first draft of the manu- script, and following his advice some additional material was added. Carl Werth, gas engineer of the Public Utilities Commission, gave suggestions as to scources from which data could be secured. Dr. R. A. Smith, the State Geologist, explained the relationship existing between his office and those who are conducting exploration work with the hope of finding oil or gas. W. C. Taggart, of Taggart Bros. Inc., who discovered and developed the Austin area, gave considerable time to conferences with the writer and also made available statistical data from his offices. A. W. Flowers, General Manager of the Mus- kegon Gas Company, arranged for an interview with and the furnishing 0f data by their gas engineer, Harry Gable. D. E. Karn, Vice-Pres. and General Manager of the Consumers Power Company, gave nearly a half day of his time to discussing the situation and sent one of their gas engineers, H. L. Fruechtenicht, Jr., to Big Rapids for a personal interview; Delbert Long of the local abstract office aided in the work of securing data regarding oil and gas leases. Public officials were courteous and considerate in making public records available. Indebtedness is acknowledged and appreciation extended to each and every one whose cooperation aided in carrying on this investi- gation. Big Rapids, Michigan Earl G. Merrill Ray, 1938 CHAPTER I I N T R O D U C T I O N The Economic Objectives The purpose of this examination was to determine the nature of the economic effects produced by the discovery of natural gas in.Necosta county. One of the aims was to find out how varied were these effects; another was to show how extensive were the effects. It was hoped that the report would be a contribution to human knowledge in that it would show what marketing problems were involved in the deveIOpment of the Mecosta county natural gas fields, and how if any way this knowledge might be of benefit when other fields were in process of development. Benefits were to be traced and the beneficiaries indicated. The application of the conservation laws were to be traced and some evaluation made thereof. The control exercise by the Michigan Public Utilities Commission was to be noted with an appraisal of the effectiveness of that control. Egture and chpe of the StuQX This study is of the analytical type and includes a small amount of historical data. Materials, data, etc. were gathered bYmeans of a field study; then evaluated and arranged in logical Sequence; conclusions drawn therefrom and stated in the form shown hereafter. . The work was started August 1, 1935 and continued ‘l- . *ou.._ ” CIIICC v..- uc §_‘...~ .. I c. Q {AC‘RE‘ to E ..:I IV!" on _ ' I I e 79... g. u‘..\. ~.. , ~-. V‘ ‘ .. " . v .. ..6 35¢“ ‘ nfiecu “'1“ - inn“ 5 e V . A u. ‘ . ‘2‘ .. Cn~r ~“‘ -~o - I Q "a.. "> \.~ :.uv"-u-¢. u.‘ ,-LP_ ".2 N‘hu. u..v ¢ ‘ ‘ .n. "7 Q" .sigt. --. \,'_ a" , n .. -- It‘5 ‘|“‘.‘\& -.. " r- “‘, . a 0_‘ s‘, a... .. - -_ . I "an ~§O “- 4‘ ‘ rvfit. ‘ h I'M . ‘ g..‘_“d‘ ‘ . r “O’:_\ .y‘ |‘§". ‘ {fipmg ‘ \_;-‘ L‘c‘p a__ -_ ‘4 . -' f ‘f. \ -~ 3' I '0' 1. “A LA-" . I) o (.l 7'" "'1‘? “o g ‘O. U, . until April, 1938. During this time many new phases of the work developed. Michigan ranks as one of the youngest members of the list of states producing oil and natural gas in commercial quantities. The extensive development of the industry began in 1926, and scarcely a year has passed since without the discovery of one or more new oil pools or natural gas areas. The reason that these natural resources were not deveIOped earlier can be attributed to the peculiar geological formation underlying the state. No other part of the continental United States lies so deeply buried under glacial deposits as the lower peninsula of Nichigan; therefore practically little stratigraphic information had been available. After the discovery of oil in Saginaw county in 1925 and gas in Nuskegon county in 1926, experienced oil men came to the state and the ”wildcatting" period began. Oil, commonly called "black gold", furnishes the incentive .for the search, with gas, sometimes termed the "step child" of the oil industry, relegated to a secondary consideration due to the (iifficulties encountered in finding a market outlet for natural gas. {The search for oil resulted in the discovery of the Vernon, Leaton, Eiroomfield, Clare, Austin, Hinton-Nil1brook-Be1videre, and other Eacattered areas of natural gas as shown in Figure 1, page 10. ITt is to be noted that the areas mentioned above which are outside th Mecosta county are connected by pipe line with the area in Necosta c«Dunty; therefore consideration of those areas must be included in 't11is study; likewise the territory covered in marketing the gas in 1‘. Lil? "O—u _. ' '. - 5‘ h’v. _ ~ v . . in - -- H‘ 5..‘ ' M- ‘s “'r—‘ "' o-‘ I p '~.-,_ ‘ - H - b ‘l \( a * It ‘. ‘ Q : -~ I h ‘ 9"! a?“ ‘ fir . 0- “i 1} .n ’drh‘ “ I “'3' 10 MICHIGAN GAS FIELDS--01L FIELDS July 16, 1937 WR‘IWI‘ I --' ';_“ V MICHIGAN again, __.,,..I-:;~ ,7 GAS FIELDS-OIL FIELDS '1 I W‘s/"’1' F JULY U937 ' ‘. “-1.: I 3-: I GAS new 0' OIL new . ms WELL CA5 W LINES ".95 us‘rmauTm LUIS .~ I 8..., ‘ TRI-TOWNSHlP‘ , in black” 1 l s 4 “Ema",- Wms: MICHIGAN OIL AND GAS FINDS HAVE BEEN MADE: The map shows the oil and fields In the state of commercial importance. There have been some “shows" of oil and gas Other places but none of economic value. The map shows the present developed gas pools (in and the natural (as trommlssion and distribution lines. SOURCE: . Map made at the direction of Arthur W. Stace, Director Ann Arbor Bureau, Booth Newspapers, Inc., by Professor K. C. McMurry, chairman of the Geography Department of the University of Michigan. Data supplied by gas and 011 records, from copies of maps on file with the Biblic Utilities Commission, from in- formation available in the Oil and Gas Division of the Michigan Department of Conservation, and from other sources. (Used by permission of Arthur W. Stace) Figure I 11 must be taken into consideration. Sources of the Data The sources of data have been widespread. Statistical and other factual information, rules and regulations, blank forms, maps, etc., were secured from the offices of the Public Utilities Commission, the Department of Conservation, the State Geologist, the State Tax Commission, from the Register of Deeds, the County Clerk, the County Treasurer of Mecosta county, from township officers, from.the local abstract office, from the Consumers Power Company, the Muskegon Gas Company and the Grand Rapids Gas Light Company. The personal interview was used as a means of secur- ing data from industrial, commercial and residential users of natural gas. First-hand information was secured by visits to different gas and oil fields and to the Oil and Gas Expositions held at Lt. Pleasant in.August 1935, 1936 and 1937. Drilling methods were observed, equipment examined, and the "bringing in" of one of the largest gas wells was witnessed. liimitation of Factual Data The gas fields are of such recent discovery that the area (31‘some of the fields is not definitely defined. Dispute exists as to the amount of the natural gas reserves in the State, and especially in the Hinton-Iiilltbrook-Belvidere area. I“zips lines from the tri-township field have been serving Lansing a11d Grand Rapids for less than two years. Litigation is pending y .1 {‘0 in the courts. Consumers have not had sufficient time to record dependable data for securing comparative costs. The industry is in such an infant state that there is a lack of both public and private financial records. Validity and Reliability Attention has been paid both to the validity and the relia- bility of the data secured. Subjective material has been dis- regarded whenever the objective could be obtained. Whenever practicability and convenience permitted, the original or official records have been consulted, or statements taken from responsible officials or custodians. Sources of information have been in- dicated either in the context or by footnotes. CHAPTER II ECONOMIC FELTURES OF KECOSTA COUNTY The purpose of this chapter is to show the economic features of Mecosta county, and the situation which existed just prior to the discovery of natural gas areas within the county. Location and Extent Kecosta county lies a short distance west of the center of the Lower Peninsula of Kichigan. It is bounded on the north by Osceola county, by Isabella on the east, by Montcalm on the south, and by Newaygo on the west (See Figure 2). The county is square, consisting of sixteen townships which are described in the Government survey as townships 13, 14, 15, and 16 north, ranges 7, 8, 9, and 10 west. The area of the county is 368,640 acres "more or less". Topography The surface of the county is rolling, varying from level tracts and gentle slopes to steep hills and deep ravines. The Lhiskegon river flows through the western tier of townships (See :map, Figure 3, page 19), and the Little Nuskegon rising in the eastern part of the county flows across the southern townships to empty into the Euskegon just outside of the county, and thence l3 onmo ' I II— l '! libs-c?- I tunes: ' MlssAuke HOS- wmono I— E q— -.——I-_- I“ I __I_ —|00£MA COMMON ——.— 4—-——-———l-—'—- ocean I lawns-oi 553% “Luau | MIDLAND MUSKEF3_O_N_I KENT -'_-—-—- ———- RAND MCN ALLY + LETTER sIZE OUTLINE MAP SCALE In. Clo-nigh! by Rand 31.31:“; & Cumpsny, Chicago ..........., .i i MICHIGAN \ / The Law PM m or Reproduction by Any Process for Personal Use or Resale. Figure II _ ._I I _ _:._._._ I and“ . IIONIA |cumon |SHIAWAS cf . i i ALL—36A;— Talia—v- 'T 1337’ Tuom— luv 510:1 I i i _'_l l ' ‘| J, 1’ I . I _. ._ - ’ Imo— HE‘iJMAEfi-c-ATHB I lucxsoa __|w ' mwTwAvus _ . I . '-—-!—-—-' ' . I—-I——I I! I [0535 ISTJOSEPHIBRAucri—r IHILLSDAL—EI p . MONROE . A E...“_"i-__l,-J__-_-1_.-T_j,‘ L TIL“ \h J —- - " (9 \_/’ ' L ' 'C- ‘v' (- euvc ‘48:.» - t +2, .an. of .. 9:I 1 t’ I’E ‘-V I‘D. 0" ‘Le ...,l ‘ "‘ Cue... r q. . Adv l , “rr . . "~56 5.}:0‘1. ‘0 LC" fi 3’!- ' C, LCC:’ 1“ :w ‘I. E SE-‘Or av as. OI: ‘Kfl-Il’ '-‘0., v 0" 1L ' t lynx. “ , vzrflp Cr ( " I...“ ‘ ~44 ‘! .7;- 9n. ”VIPs-e r. '4 v. 15 into Lake Michigan. The Chippewa river rises in the northeastern part of the county and flows southeast, then east and empties into the Tittabawassee river, thence into the Saginaw river and Saginaw Bay. The waters of Black creek rise in the southeastern portion of the county and eventually empty into the Grand river. Nearly three score lakes(1), varying in size from an acre to nearly 800 acres are situated within the county. In places the soil is composed of a rich muck, in others a heavy clay; a larger area consists of a rich sandy loam, while those sections originally covered by the pine forests are sandy. Population The distinction of being the first white settlers in the territory now known as Fecosta county goes to two men, John Davis and John Parish(2) . John Davis, born in Belfast, Ireland, May 8, 1826, came to America in 1850 and after spending a season as a sailor on the great lakes, purchases 160 acres of land located on Section 27 of Necosta township and made a permanent settlement thereon in 1851. He built the first frame barn to be erected within the county in 1856, the lumber being cut with a whipsaw. In 1851, John Parish, a bachelor, settled and cleared a small tract of land within what is now the city limits of Big Rapids; but after three or four years he moved to Green township and later platted the village of Paris. In 1852 William Brockway and wife, Kargaret, 1. Scott, I. D., Inland Lakes of Michigan, Geological Bulletin No. 30 2. Mecosta County Album, Chapman Bros., Chicago, 1883, page 568 16 set up housekeeping in a shanty on the banks of Hitchell creek, and there their daughter Alice was born February 12, 1853. Records and tradition indicate that she was the first white child born in Big Rapids and in Necosta county. Thereafter the settlement was fairly rapid due to lumbering operations and to settlers seeking farm lands. An estimate of the population for 1859 places the number at 1000. The number of inhabitants continued to increase until about 1900; thereafter each census has shown a loss in population. The following table shows the population according to each census since 1870: TMflEI POPULATION OF IECOSTA COUNTY (U. 8. Census) Year Number of People 1870 5,642 1880 13,973 1890 19,697 1900 20,693 1910 19,466 1920 17,765 1930 15,738 The present population is almost entirely made up of those who trace their ancestry back to English, Irish, German, and Scandinavian stock. At the present time about two-thirds of the population is found on farms or in the small villages of Necosta, Remus, horley, Barryton, Stanwood, Paris and Rodney. These villages depend largely ‘upon agriculture, but benefit considerably during the summer from ‘tourist and resort trade. 1"? The Lumbering Industry Warren & Ives erected a saw mill on Kitchell creek, in Big Rapids, and on July 4, 1857, sawed the first lumber manufactured within the county.(1) This mill was long known as the "red mill" and it furnished lumber for many of the oldest buildings erected in the vicinity. As lumbering was the chief inducement for settlement, for many years it was the chief industry of the county. Logs were cut, hauled to the streams and floated to the mills. At that time hardwood was of little value, so the operations were confined to the white pine. By 1887 practically all the large scale lumber- ing operations had ceased. Transportation In October, 1869, the Grand Rapids & Indiana Railroad (now a branch of the Pennsylvanie) begin running trains daily from Grand Rapids to Korley, Mecosta county. By midsummer of 1870 Big Rapids had a daily train service south. In 1873 the Chicago & west Michigan Railroad begen operating a line from Big Rapids to Ruskegon. Later this line became a branch of the Pere Farquette System, but becoming unprofitable was discontinued between Big Rapids and White Cloud in 1926. The Detroit, Lansing & Northern Railroad completed its line to Big Rapids in the Spring of 1880. This road is still being operated as a part of the Pere Marquette System and serves the villages 1. Mecosta County Album 0p. cit. p. 572 18 of Rodney, Mecosta, Remus, and Nillbrook. At the present time (winter 1937-38), the Pere Farquette operates a mixed train out of Big Rapids each morning and back at night. The Pennsylvania Railroad now operates one passenger train north and one south daily from.Mackinaw City through Big Rapids to Grand Rapids, and not more than one freight train each way daily. At the Pennsylvania station one man now handles both passenger and freight traffic. Formerly several men were employed. Buses run several times each day, carrying passenger traffic north and south; two buses a day connect with Mt. Pleasant. Less than car load shipments of freight tend to be handled by the Assoc- iated truck lines which makes daily trips north and also south to Grand Rapids. Highway 20 crosses the county from east to west; M 66 crosses the county from north to south near the east boundry of the county. U. S. 131 is a paved highway crossing the western tier of townships from north to south. Readjustment After the large commercial lumbering operations were discon- tinued, the county started through the cycle of readjustment so familiar to those who have watched the evolution of communities similarly situated when they were force to cease depending upon lumbering, and were forced to turn to agriculture or other activities. 'While going through this stage, the panic of 1893 complicated progress. The assessed value of property decreased by more than 50 % from 1883 to 1899, then increased to nearly $16,500,000 by 1920; the assessed valuation of 1935 had fallen about 33 1/3 % below the 1920 total. MECOSTA COUNTY, MICHIGAN In neck and for m]; 5y T/ze Central Printers, Alt. Plaaxant, Mic/zigan I OSICEOLA R. 10 W. R. 9 W. R. 8 W. R. 7 W. ‘ ' CO. I . . 8 A w -- ‘ _ I a / _ @ dffdi 1.. . . I 6\\5/ 7 3 .z I 4. 5 \‘f\/\3/ //\\6 5' 7 3 . 2 I 5’ 3 . .92. / 8 bf \\ I ' Bloc/9311‘ ”I fi w A (t9? 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L.- L94, \\ l ”3.5%: a 3 y I 7 o 4/ 3;. .23 ac/ I 7 o a I 3.1 =13 a 7 ‘ “W (”\. __ . \ r ' 1 \ b o 8 O ' 47 =14 a5 30 .17 28 a7 .26 h. as ’ :10 .17 NY 3:7 «16'. . as S I >4. 9 a: II‘E\ ” :5 <1: 2 A ‘a F/ / 6: g . d 3 3‘! 35 3!» 3! 3:. 33 3: 35 3]; _ 3.1 I2 33 3‘! . 3 "g 34, m n: I. II“ 4: z * g 'MONTCA'LM _ . I ,_ ' _ "'_ II C0. Changes in property values from the lumbering period in the early 80's to the low valuations of 1899, and the upward trend reaching more than $16,000,000 in 1920 and a decline to less than $12,000,000 are shown in Table II. TMflEII VALUATION OF PROPERTY IN RECOSTA COUNTY Source: Liber A, B, D, & E Supervisors' Journal Townships, Etc. 1883 1899 1920 1935 Aetna $192,480 $124,450 $677,455 $529,852 Austin 267,028 92,348 490,480 357,350 Big Rapids Twp. 312,790 158,180 722,476 480,070 Chippewa 426,680 114,985 575,040 404,960 Colfax 264,842 103,468 774,275 555,695 Deerfield 300,080 149,745 859,625 545,830 Fork 122,795 117,555 881,279 543,139 Grant 240,107 89,565 489,025 298,725 Green 418,676 203,490 966,505 628,510 Hinton 302,298 158,580 1,008,485 667,887 Martiny 424,478 79,710 521,850 356,450 Mecosta 195,035 104,655 1,091,520 1,063,360 Millbrook 564,748 123,515 1,091,595 669,749 Morton 257,680 93,750 635,560 443,250 Sheridan 204,139 102,963 639,866 414,250 Wheatland 424,214 173,340 1,308,575 914,125 City of Big Rapids 1,743,720 1,108,815 3,668,470 2,995,723 Total $6,661,790 $3,099,114 $16,402,081 $11,868,315 Note: Rogers Dam, a unit of the Consumers Power Company, is located in Mecosta township, and would account for the large increase in valuation of 1920 and for the fact that the valuation did not ShOW'a greater decrease in 1935. manufacturing Big Rapids (population of 4671 by U. 3. Census of 1950) has been fortunate in having three furniture factories operate over a long period of years. The Big Rapids Furniture Company was organized in 1872 and has continued until the present time, giving a maximum.employment to about 35 men. The Crescent, later the Griswold-Guest, and more recently the M.A. Guest Company, operated from 1887 until, as a result of the depression, the company failed in 1934. Prior to the depression the Guest plant employed a maximum of 85 men. The Falcon Manufacturing Company during the period from 1911 to 1913 employed about 100 men with portable saw mills cutting hardwood within the county, and reached a peak of 163 men employed in its two local plants during the period of 1917 to 1920. Some years ago the smaller plant burned, but the main factory has continued operations, though curtailed, through- out the depression, producing a cheap grade of furniture. During the lumbering period John and Volney Lanchett opened a small plant to produce swages which were used in setting of saws. This plant continued its growth, producing various types of grinding and sharpening machinery. The present organization is known as the Hanchett Hanufacturing Company. The product may be used ‘wherever there is a demand for grinding machines in lumber mills, paper mills, leather processing, automobile plants, etc. Shipments are made to various parts of the United States, Canada, Hexico, to Europe, India, and the Orient. In January, 1935, large machines 223 were shipped to Russia. In 1935, when running at capacity the plant would employ about 150 men. The plant was enlarged in 1937, so that it could furnish employment to 230 men. Agriculture Much of the soil of the county is a light sand which is unfit for farming; a considerable portion is just "fair"; and a still (1) smaller area, estimated not to exceed 15 % of the total area is excellent farming land. General farming and dairying is the pre- vailing type of farm Operation. Potatoes, cucumbers, and contract vegetables for canning factories are types of money producing crops. The eastern part of the county is served by a creamery at Remus. The Farmers' Co-operative Creamery, located in Big Rapids, has had a rapid and consistent growth. It now claims to be the largest producing unit within the state. About 3,150,000 pounds of grade 92 butter were churned during 1935, the largest part of which was sold at top prices. This concern stood up in first-class shape during the depression, and was able to meet payments for cream on schedule even during the banking holiday of 1933. Resort and Tourist Trade Chippewa Lake and Clear Lake have attracted the summer cot- tager for many years. - Many of the other lakes were growing in popularity previous to the depression. During the summer of 1935 the demand for cottages far exceeded the supply, according to the “I: Veatch, J. 0., Agricultural Land Classification and Land Types in Michigan. Bulletin 231, hich. Agricultural Exp. Station Vial r 9W»... report of the secretary of the Chamber of Commerce of Big Rapids. The sale of land on the lakes, the building of cottages, and other work in connection with their upkeep have given considerable employ- ment to labor and have increased the sales of the merchants who handle builders’ supplies. Cottagers, fishermen, and resorters have proven to be a source of considerable income to the merchants. Ferris Institute The late WOodbridge N.Ferris (Governor of Michigan, 1913- 1916; U.S. Senator, 1923-1928) opened the Ferris Institute in the fall of 1884. The school grew as the years passed, bringing students to Big Rapids frmn every county of Michigan, from other states, and from some foreign countries. The several hundred students in attendance each year bring in large sums of money, in the aggregate, which is spent for tuition, room rent, board, amuse- ments, and for general purchases from the merchants. O The Depression and Unemployment The first year or more of the depression caused little unemployment and hardship; but by December, 1933, the welfare load had become heavy, delinquent taxes continued to increase, and the county government which had no bonded indebtedness prior to the depression soon found itself faced with a serious problem in order to meet its obligations for operating expenses and to care for the needy. The census of 1930 showed that there were 4193 families and.124 single persons on relief--—-l9.8 %(1) of the population. 1. Monthly Bulletin Public Relief Statistics, Michigan Emergency Relief Administration, January, 1935, and November, 1935. (,1 i 24 This lead had decreased to 726 families and 128 single persons by November, 1935, or to 17.3 %. Summary Mecosta county is located west of the center of the Lower Peninsula, in a region once partly covered by white pine forests. The land is not all adapted for farming. Many of the farms occupy sub-marginal land. Only a few of the farmers can be said to be well-to-do. There is very little prospect for the county to become very prosperous, if it is to depend upon agriculture. Nearly three-fourths of the population live on farms or in the small villages. Big Rapids with a population of less than 5,000 is the trading center for the people living in the western half of the county. Factories in Big Rapids give employment to a limited number. While the population would generally be classed as industrious, with the majority owning their own homes; very few would be classed as even moderately wealthy. CHAPTER III THE RELATION OF MECOSTA COUNTY TO ThE OIL AND GAS AREAS OF MICHIGAN, AKD SKETCH OF DEVELOPXENT Oil and Gas Found in Michigan As a gas and oil producing state, Michigan is relatively young. The reason why oil and gas were not discovered sooner may be ascribed to the fact of the peculiar geological formation existing in the Lower Peninsula. Since the rock is so deeply buried beneath glacial drift, very little has been known as to the strata. Such information could be obtained in no other way than from deep boring. Newcombe(1) relates that in the period of the early 1870's the lumbering interests centering in Muskegon on the west side of the state, having considerable waste material which could serve as fuel, made several deep borings near the city of Muskegon but failed to find rock salt. Reports indicate that small quantities of oil were found. The discovery well in the Huskegon field was located by Hugh D. Crider, geologist for the Dixie Oil Company, and was brought in on December 8, 1927. Development of the field for oil and gas continued for some time, but due to wasteful methods the natural gas reserves were soon depleted. 1. Neweombe, Robert B. Oil and Gas Fields of Michigan. Publication 38, Mich. Geological Series 32 (1933), page 136. 3:: 3 On the eastern side of the state, the Dow Chemical Company(1) had drilled for brine since 1890 but withheld records of their wells, but drillers and residents remembered finding showings of gas and oil, and the Saginaw oil field was discovered in July, 1925. The Mt. Pleasant field was discovered by the completion of the Root well in February, 1928. Later the Porter, Clare, Vernon, and Broomfield areas were developed and furnished an incentive for additional “wild catting". Prospecting in Necosta County The earliest record found in connection with exploration for oil or gas in Mecosta county appears in the Big Rapids Pioneer of August 6, 1887, which refers to proposed prospecting for natural gas, and the August 16, 1887, issue states: "A meeting of the stockholders in the Big Rapids Natural gas company will be held Thursday evening in the council room. At this time it will be decided whether further effort to raise the additional $1400 will be put forth. Cur faith in the project has not left us yet." On the Gilbert farm, about two miles south of Big Rapids, a well about 900 feet deep was drilled some 40 years ago. There seems to be some dispute as to the purpose of the drilling, but mineral water was found and intermittent efforts were made over the years to develop it on the basis of the properties of the water. Dr. Newcombe reports six unsuccessful wells,(2) four being drilled deeper than 3700 feet. The Grove well (rm 1/4 mar 1/4 313 1/4 1. Newcombe, Robert 8., page 155 0p. cit. 2. Newcombe, Robert 3., page 235 Idem '2“? Sec. 14 T 15 N.R 7 W) struck the Michigan "gas sand" at 1387 feet with a showing of gas at three different depths and black oil at 1692 feet, but nothing in deeper formations. Two attempts were made in the vicinity to find gas horizons shown by the Grove well but neither produced gas. Geological Basis for Exploration Mecosta county, being located just west of Isabella county where several pools had been found, overlays a geological structure indicating three lines of "highs" or anticlinal foldings:(l) (a) One being the Broomfield "high" extending from Isabella county northwesterly across Sheridan, Chippewa and Fork townships (T 15 N R 7 w; T 16 N R s w; T 16 N R 7 w). (b) A second seems to cross from the southeast corner of the county towards Big Rapids. (c) The third may cross in a similar direction across the southwestern part of Deerfield township (T 13 N R 9 W) and through Aetna (T 13 N R 10 W). Thus there appears to be a geological basis to encourage exploration. Gas and oil appear in a number of forms of rock structure. The anticlinal type, mentioned above, is illustrated by drawings showing a cross section of rock formations in Figure IV, page 28. Discovery of the Austin Field W} C. Taggart and his brother James, both born and educated in Big Rapids, formed a partnership and opened the first gasoline 1. Newcombe, Robert B. Op. cit. page 235 28 ANTI CLIT‘TAL R0 CK STRUCTURE (Not drawn to scale) Figure IV E ’16,-gz I u“ , -il I. . o.lh . h.’ v‘ . I'uwrllmlhllhl'lll «“4 station to be operated in the city. Their business prospered and when oil discoveries were made in Kichigan they entered the field, leasing and drilling for oil. They erected refineries in Saginaw and in Big Rapids. The crude oil for the Big Rapids refinery was brought in by trucks. The Taggarts were firm be- lievers in the possibility of finding oil in Mecosta county. They secured title to a plot of some 3200 acres in Austin township and leases on about 10,000 acres of adjoining property. Their first attempt at drilling on this acreage was climaxed at the end of five weeks by the bringing in on Thursday, March 16, 1933, of a gas well on Section 11 of Austin township (T 11 N R 9 W). The estimated capacity of the well was 4,000,000 cubic feet of dry gas, daily open flow. Since they were seeking oil rather than gas, they proceeded to drill for another 30 days}1 Not finding oil, the problem confronting the Taggarts was to find a market for the gas. Neanwhile 120,000,000 cubic feet of gas escaped into the airfz) Before a market could be found, it was necessary to prove the field. After putting down four wells, the American Light & Traction Company was contracted by the Taggarts and induced to advance funds for further proof of the field. The field proved to be some 2 1/2 to 4 miles long and from 1 1/2 to 2 miles wide, extending in a northwest by southeasterly direction. l. Taggart, W. C. Personal interview 2. Gabel, Harry (Gas Engineer American-Michigan Pipe Line Co.) Testimony before Hich. Pub. Utilities Com., Aug. 7, 1935 5. Taggart, W. C. Testimony before hich. Pub. Util. Com. Aug. 7, '35 After the granting of a franchise by the city of Big Rapids to Taggart Bros., Inc. permitting the company to serve natural gas within the city, Kr. B. 0. Tippy sold the controlling interest in the Big Rapids Gas Company to Taggart Bros. Inc. W.C. and James Taggart then formed the Mecosta Pipe Line Company, and during the winter of 1933-34 built a pipe line from the Austin field to Big Rapids and began serving consumers with natural gas. During the first year of natural gas service about 174,000,000 cubic feet of gas was used. This compared with about 14,000,000 cubic feet of manufactured gas served the previous year. Further Development of the Field The reserves being considered sufficient for furnishing natural gas to Muskegon for a period of ten years, the American Light and Traction Company (parent company of the Muskegon Gas Co.) formed a subsidiary known as the American-Kichigan Pipe Line Company, and built a 52 mile line to Muskegon (Figure V) at a cost of about $382,000. That company purchases gas from the Taggart interests, pipes it to Muskegon, and sells the gas to the KuskegonGas Company. Reserves of the Austin field are variously estimated. H.D. Crider, Consulting Geologist for the hichigan Pipe Line Co., estimated as of August 5, 1935, that the field had a "proved" acreage of 3160 acres and "proved" reserves before withdrawals of 12,180,000,000 cubic feet, and that withdrawals to that date were 1,074,985,000 cubic feet. As of January 1, 1935, the United States Bureau of Mines gave an.estimate of the initial recoverable reserves which they placed at 1. 2. 3. 4. 5. 6. Meyers»- 31 MAP SPOWING THE RELATION OF MVCOSTA COUNTY TO THE GAS TIELDS AWD EARKET OUTLETS GAS FIELDS 9 Austin 7 <3 Hinton-Millbroo - Belvidere Broomfield Vernon Clare Huskegon C/ore Meccsfov .3” ,1?“ . 6 C917}? .‘7 } I M (I 1 ,. Pl:¢£“f ”wi‘f‘".), / é PIPE LINES Gron Mecosta Pipe L e Co. AmericaneMichi-:n Grand Rapids L A G. 0°, Consumers Powe Co. Consumers Power :0. Gas Corporation .- Michigan Figure V ti 4 0“: 9,720,000,000 cubic feet, with possible reserves in extensions of 4,900,000,000 cubic feet. These estimates of so-called reserves are shown in Table III as follows: TABLE III ESTIMATE OF KICHIGAN KATURAL GAS RESERVES BY UNITED STATES BUREAU OF EINES As of Jan. 1, 1935 Est Recover- Gas Producing Area Initial Recoverable Withdrawals Reserves, M cu. ft. M cu. ft. able Res. Broomfield ................ 14,800,000 2,570,000 12,230,000 Clare ................ 1,190,000 negligible 1,190,000 Vernon ................ 2,020,000 634,000 1,386,000 Austin ................ 9,720,000 184,000 9,536,000 Hinton-Nil1brook—Belvidere 6,660,000 negligible 6,660,000 Martiny-Morton-Nillbrook 1,260,000 negligible 1,260,000 Tota 1 “ :5 5 ,‘6‘5 0' [066 ”3:3 "adjo‘o‘o" :5 2 , 2 6 2 ,‘o‘b‘o‘ The above estimates were made on the basis of a possible recovery of 90 per cent of the gas in the reservior based on an abandon- ment rock pressure of 50 pounds. A number of factors enter into the making of estimates, such as the definitely proven acreage, the thick- ness of the pay (porous rock containing gas), porosity of the rock, reservior pressure, and temperature. Estimates made by different experts will differ due to different interpretations placed on avail- able data. As of January 1, 935, the Bureau of Mines made an estimate of possible extensions as shown by Table IV. These estimates are for Michigan "stray sand" only. The "stray sand" is a layer of sandstone rock which underlies some parts of the state and not other parts, being irregular in its occurrence. (.4 TABLE IV FUTURE POSSIBLE EKTEKSIOLS OF GAS FIELDS Estimate by U. S. Bureau Mines As of Jan. 1, 1935 Gas Producing Area Extension of Acreage Possible Reserves M cu. ft Broomfield ................ 2,750 Acres 3,700,000 Clare ................ 1,000 1,200,000 Vernon coo-00000000000. 600 375,000 ADStin 00.000000000000- l,920 4,900,000 Hinton-Mil1brook-Be1videre.. 3,500 6,600,000 Kew Fields (possibly) ...... 24,000 40,000,000 Total of Extensions and new fields 56,775,000 The producing wells in the Austin field as developed prior to December 31, 1935, are shown as numbers 1 to 16 inclusive in Table V. Taggart Bros. No. 21, number 17 in the table, was brought in early in January, 1936. This well tOpped the Nichigan stray sand and pay at 1350 feet, and then drilled into the sand ten feet to a total depth of 1360 feet. The well has an 8 1/4 inch casing. At the time it was brought in, it had the largest open flow of any well in Michigan. The flow blew the mercury from the gauge at a pressure indicating a daily flow of 45,000,000 cubic feet; but the estimate was placed at 50,000,000 cubic feet. Later the well was deepened and capacity rated at 97,000,000 cubic feet. In comment- ing on this well, the Michigan Oil and Gas News of January 9, 1936, stated: "Taggarts' rotary crew on Michigan's new gas Colossus were in an uncomfortable and dangerous position as they drilled in and capped the screaming well. The outfit 'worked with waste stuffed in their ears to protect them. Despite this safeguard they were practically deaf until Honday." (hell was brought in late Sunday afternoon) ()4 ..«_4 TABLE V GAS BELLS - AUSTIN AREA Source: The State Conservation Depart- ment and the Public Utilities Commision Offices, Lansing, Bichigan Number of Well as Name of hell shown Figure VI F‘h‘ hac>u>al~ao>o1¢-oaaohl H N H CA l4 l5 16 17 18 19 Note: Barton No. 1 Fish No. 2 Spitler No. 3 Fish No. 3 Fish No. 4 Johnson No. Shuberg No. Johnson No. Dart No. l Mecosta-Development No. 1 Alma-Fecosta Gas Corp. Taggart Bros. No. l Hal-be-oyle Oil & Gas Corp. Taggart Bros. No. 1 Hal-be—oyle Oil 2 Gas Corp. Taggart Bros. No. 2 Hal-be-oyle Oil & Gas Corp. Taggart Bros. No. 3 Taggart Bros. No. 4 Totten No. 1 Taggart Bros. No. 21 Rennie No. l dal-be-Oyle Oil & Gas Corp. No. 6 Hfom O Taggart Bros. No. 21 was deepened and then flow of 97,000,000 cubic feet. A map showing the location of each of these as Figure VI on page 35. 44 Driller's Report of Initial Open Flow in M cubic feet 4,195 4,000 14,400 30,000 34,000 13,000 15,000 15,000 8,196 7,500 8,000 2,000 9,000 5,500 5,000 1,250 50,000 had an open wells appears IDCATION OF GAS WELLS IN THE AUSTIV FIELD run/v a?” 76.9w Figure VI 35 36 Gas Withdrawn from Austin Area Since the Austin gas field has been connected to markets by pipe lines to Big Rapids and Fuskegon, there appears to be an increased consumption each year. Figures for withdrawals are shown in Table VI. TABLE VI WITHDRAWALS FROM THE AUSTIN GAS FIELD Source: Michigan Department of Conservation, Nov., 1937 Reported for 1954 ................. 178,552,000 cu. ft 1955 ................. 772,149,000 1936 ............... 1,167,082,000 1st 9 mo. of 1957 ............... 841,056,000 Total 2,958,819,000 Note: The Nuskegon Gas Company reports total take for all of 1937 to be 1,228,723,459 cu. ft The Department of Conservation states that it has no figures for wasted gas. It is estimated that 120,000,000 cubic feet was wasted by being blown into the air at the discovery well. A reliable source estimates an additional 330,000,000 cubic feet used for drilling, heaters, blowing drips, etc., making total additional withdrawals of 450,000,000 cubic feet. Fr. W. C. Taggart estimates the additional withdrawals at not to exceed 600,000,000 cubic feet. Taking the larger estimate of withdrawals of waste gas, the total withdrawals to October 1, 1937, would not exceed 3,558,819,000 cubic feet. 37 Possibilities of the Austin Field Up to October 1, 1937, a total of 2,958,819,000 cubic feet of gas had been withdrawn from the Austin field, according to the figures issued by the Department of Conservation. At fifteen cents per thousand cubic feet (the customary price at the well), this gas was worth $433,822,85 at the well. On the basis of the Bureau of Mines estimate of 9,720,000,000 cubic feet as the original reserve, less the amount Withdrawn plus an unreported 450,000,000 cubic feet used in drilling, blown into the air, etc., there would be left in reserve 6,311,181,000 cubic feet, worth about $946,000. If the larger estimate by Mr. Crider is used, the gas still in the field is worth perhaps 51,275,000. This would give the Austin field a total possible ultimate return of between $1,380,000 and $1,700,OOO.(1) Out of this would come a severance tax of between $27,600 and $34,000; drilling costs of probably from $6.50 to $7.75 per foot of depth for each well drilled, depending upon type of equipment used (cable tools or rotary), size of easing, varying labor and material costs, cost of land purchased, sums paid for leases and royalties and other expenses; leaving a balance varying according to the recoverable reserve for profits for the operators. l. Stace, Arthur W., and Thorn, Willis W}, Michigan Natural Gas Is Now Being Supplied From 10 Active.Fields. Booth Newspapers, Inc., July 21, 1937 Estimate placed at $1,284,000.00 iNote: The M. P. U. C. has a report from a Col. Miller placing the reserves in the Austin Field as 34,560,000,000 cubic feet. 38 Discovery of the Tri-Township Field The discovery of gas in Austin township proved to be a further incentive for exploration along the line of the anticlinal folding or "high" to the southeast, and during 1934 some seven wells were drilled-e-six being producers. The discovery well, known as Dutmers No. 1 was drilled on St 1/4 SE 1/4 NW 1/4 Section 23, T 13 N R 8 W (Hinton township) and was brought in May 11, 1934, with the drillers reporting an open flow of 7,520,000 cubic feet. This was followed by the Forgar No. l on July 23 with an open flow of 5,360,000. The Forgar well was nearly seven miles southeast of the Dutmers No. 1, being located on Section 11 of Belvidere township, Montcalm county. On August 21, the third well, Sheets No. l, on Section 35 of Millbrook township was brought in with an open flow of 3,500,000. Three other wells were completed before the end of the year, giving proof that the field was nearly seven miles in length. During 1935 development proceeded with the glamour and excite- ment attached to the discovery of an extensive field. A large number of companies were operating in the area, and by the close of the year some sixty odd wells had been drilled-—-near1y all being producers. See Table VII for a list of these wells. The producing wells ranged in capacity from 441,000 cubic feet open flow shown by the Youman A l on Section 35 Millbrook, to a maximum of 35,000,000 for the wm. J.Richardson well on Section 3 of Belvidere. A.majority of the wells gauged from 5,000,000 cubic feet to 12,000,000, with many between 12,000,000 and 20,000,000. Serial No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. Source: TABLE VII G A S W’E L L S HINTON-HILLBROOK-BELVIDERE AREA Compiled reports in the office of the Michigan Public Utilities Commission as at Dec. 26, 1935 Name and Number of Gas Well and Owner or Holder of Lease Dutmers #1 Forgar-fil Sheets #1 Garner Bros. #1 Byron Youmans %1 Arnette Bros. #1 Isabell Wood {1 E. Tiffany #1 R. Freeman #1 Allen Williams-#1 Elsie Taylor #1 Roberts et a1 fl Satterlee #1 E. Tiffany #1 T.Bright #1 Schuberg #1 T. Bright #1 Bissell #1 Byron Youmans #2 H. Houghton £1 Trecyifil Thompson #1 Bailey #1 C.VanHoughton #1 E.Sa1esbury #1 Garner Bros. #2 P.Brayley #1 Mockerman #1 E. P. Taylor #1 F. A.‘WinleW'#1 Withey et al-#l G. Wilson #1 Keilholtz‘#l T.F. Wilson #1 Braley #1 Columbia Oil & Gas Co. Old Dutch Oil & Gas Assoc. Bryan & Martin Gordon Oil Co. Mich. Exploration Co. Columbia Oil & Gas Co. Gordon Oil Company Gordon Oil Company Columbia Oil & Gas Co. Gordon Oil Company Gordon Oil Company 39 Drillers Reports of Initial Open Flow 7,520,000 cu. ft. 5,360,000 3,500,000 4,801,000 6,000,000 8,500,000 1,000,000 7,212,000 7,460,000 9,126,000 6,250,000 Gordon Oil Co. & Ed.Stewart 11,000,000 Charles H.Bell Fletcher & Leman Wiser Oil Co. 9,900,000 4,845,000 9,600,000 Bundy Hill Nat. Gas & Oil Co.5,350,000 Roy F. Ide D.F. Jones Mich. Exploration Co. Stewart-Atha Interest Gordon Oil Company J. P. Mikesell Tr. Charles H.Bell Superior Dril. & Prod. Co. Wiser Oil Co. Gordon Oil Company Edmore Oil & Gas Co. Carmanson Oil & Gas Co. Fletcher & Leman Ide & Glavin Gordon Oil Company Wiser Oil Co. Mohawk Oil Dev. Co. D. E. Jones Prudential Oil & Gas Corp. Clark & Ina Miller Refiners Petroleum Corp. Bellows Est. #1 L.F. White jr Alpha Cogswell #1 Edward Stewart (Continued next page) 11,500,000 7,960,000 5,630,000 10,000,000 14,000,000 5,890,000 14,400,000 1,500,000 13,500,000 11,200,000 11,000,000 14,100,000 5,600,000 2,864,000 8,760,000 7,900,000 6,500,000 16,750,000 10,857,000 4,050,000 16,850,000 9,860,000 40 TABLE VII (Continued) Serial No. Name and Number of Gas Well and Owner or Drillers Reports Holder of Lease of Initial Open Flow 39. Mary Dibeam.#l Gordon Oil & Gas Co. 12,500,000 cu. ft. 40. F.Garner 4 F.M.hilsonr#l Wiser Oil Co. 12,780,000 41. F. L. Stebbins #1 Columbia Oil 8 Gas Co. 4,950,000 42. Peter Hough #1 Wiser OilCo. 10,200,000 43. Garner Bros. #3 Gordon Oil Company 2,370,000 44. c. B. Loughlin #1 Gordon Oil 5 Gas Co. 16,150,000 45. Houghten #1 Midland Petroleum & Gas Co. 3,000,000 46. Isabel Wood #1 Ide & Glavin #2 Gas Co. 17,900,000 47. Perry J. Calkins et al Columbia Oil & Gas Co. 9,800,000 48. s. J. Bolger #1 D.F. Jones 18,875,000 49. v. V.Sheets #1 Coll-Graves & Mechling Inc. 728,000 50. Youmans A-l Frank V. McCollester 441,000 51. Saterlee #2 Charles Bell 15,500,000 52. wm. J. Richardson #1 lich. Exploration Co. 55,000,000 (deepened for Oil) 53. J. Dargitz #1 G.G. Hanners 54. Statsick fl Refiners Petroleum Co. 12,000,000 55. Van Houten #1 LeRoy K. Chamblin 56. Houghten #1 LeRoy K.Chamblin 57. Ernest Bissell #1 Riser Oil Co. 58. W. J. KcAllister fl Goll-Graves & Hechling Inc. 59. Van Houten #1 Michigan & Ohio 011 C0. 60. Salisbury-#1 Rex Oil 4 Gas Co. 5,000,000 61. Amsden #1 Ed. Stewart 5,050,000 62. Edith Reynolds £1 Refiners Petroleum Corp 63. walter Mackeyafll L.D. Hendershott & H. L. horillan 17,200,000 64. Miller #1 J. P. Mikesell Tr 65. Bellows Est. #1 Gaylord'W. Norton 66. Anna Bissell #1 Gordon Oil Company 475,000 67. Verne wood #1 Bryan & Martin & Millbrook 0i1 & Gas Co. 68. Academy=#l H.C. Butler-~Bruesback & Pearce 69. lilo Peterson #l Fletcher & Leman 15,000,000 41 The development proceeded at a faster pace during 1936. Several additional wells were drilled during 1937. By January, 1938, there were some 218 gas wells in the tri-township field. The proven field appears to be about eight miles long. In the northwest portion it is less than one-half mile wide; but gradually widens toward the southeast where it is shown to be about two and one-half miles wide, just north of the village of Six Lakes. The wells showing the greatest open flow are located in Belvidere township. (See Map of Tri-Township Field in pocket) LansingiSecures Natural Gas Service The Consumers Power Company completed a 10 3/4 inch pipe line from the tri-township field to Lansing in time to put on a campaign during the summer and fall of 1936 to secure house-heat- ing customers. The cost of building the line was about $585,OOO.(1) These figures do not include costs in the field nor in the various cities where there was a considerable amount of additional expense in order to distribute natural gas. By the close of 1937, twenty-six communities were being served with natural gas in the Lansing Division of the Consumers Power Company. These communities are listed in Table VIII. As of November 30, 1936, there were 2,602 house-heating customers served by the Lansing Division of the company. As of November, 1937, the house-heating customers totaled 4,192.(2) 1. White, W. E., Gas Engineer, Consumers Power Co., Letter, Jan. 3, 1938 2. White, W. E. Idem. 48 This increase in one year's time Should not be taken as an average increase to be expected in the years to follow, as that is not the experience of companies supplying natural gas. TABLE VIII CITIES AND TOWNS SERVED LITH NATURhL GKS Lansing Division, Consumers Power Company, Dec. 51, 1957. (1) Brighton Howell Okemos Charlotte Ionia Portland East Lansing Lake Chemung Sunfield Eaton Rapids Lake Lansing Vermontville Fowlerville Lansing webberville Grand Ledge Lake Odessa Williamston Haslett Hason Woodbury Hastings Mulliken 'Woodland Holt Nashville Grand Rapids Secures Natural Gas Service On December 20, 1935, the Grand Rapids Gas Light Company filed its petition for permission to build a pipe line to the tri- township field. The petition was granted on April 13, 1936; and by the fall of that your natural gas was being served to the customers of the Grand Rapids Gas Light Company. The first petition filed by the Grand Rapids Gas Light Company asked for permission to serve a mixed gas, 50 % natural gas and 50 % manufactured gas. The petition ‘was granted. A second petition to serve 100 % natural gas was denied. The company secured an injunction against the Commission, restraining the Commission from interfering with the company's serving 100 % gas. (See The Import of Judge Hayden's Decision, Chapter VI) There is a petition before the Public Utilities Commission for a Certificate of Convenience and Necessity to build a pipe line to serve Pontiac, Flint, Jackson, Battle Creek, Kalamazoo and other Michigan cities. Sources of gas named in the petition were Mecosta, Isabella, Montcalm, Gratiot, Shiawassee, Livingston,Wayne, Allegan and Clinton counties. This petition was filed by the Producers Natural Gas Pipe Line Association and will be heard in Lansing, May 24, 1938. 44 CHAPTER IV THE NATURE OF THE NATURAL GAS BUSINESS Type of Business The natural gas business may be classified as an extractive industry closely related to mining. The sole proprietorship, the partnership, and the corporation conduct enterprises connected with the industry. The business may be divided into three functional stages; viz., exploration and discovery, transportation to market, and distribution to consumers. The first stage is highly speculative due to the fact that it costs several thousand dollars to put down a test well, and many of the tests result in failure. If gas is discovered, then other wells must be put down to determine whether the field is large enough to warrant the large investment necessary to construct a pipe line to transport the gas to a market. The distributive function is usually performed by a public utility which was in operation prior to the introduction of natural gas. Natural Gas Defined Up to the present time science has been able to furnish theories only as to the origin of natural gas. Analysis shows that natural gas contains a number of fixed gases. Methane is the predominating constituent, representing about 80 % in volume. Ordinarily there is from 10 to 20 % of ethane present, some nitrogen, and often hydrogen sulphide, carbon dioxide, and in some cases helium. These gases are lower members of the series of hydro- carbons which constitute oil. Because the gases result from the same processes as petroleum, natural gas will be found in connection with oil deposits. Due to the fact that gas has a greater pene- trating power than oil, it may be found in porous rock at some distance from.oi1 deposits. Pure natural gas is odorless, colorless, and burns with a slightly luminous flame. It is highly explosive if mixed with air. When natural gas is associated with oil in the same field--- maybe in the same well---it is called "wet gas". The "dry gas" is usually not associated with oil in the sand, and is under high pressure where it occurs in the porous rock. ‘Wild Catting Exploration work in unproven territory is termed "wild catting". The "wild catter" prefers to find oil rather than gas, because oil can be marketed with less difficulty. If there is not sufficient oil to warrant building a pipe line, the oil can 'be taken tOTnarket by truck. Natural gas can be marketed only through the use of a pipe line, and there must be sufficient gas 'to supply a market. For this reason natural gas is looked upon as a "step child" of the oil development industry; in other words, :natural gas is often regarded as a consolation prize to those in search of oil. 46 Problems Confronting the Industry 1. Locating a Gas Field: In unexplored territory where the rock is as deeply buried under glacial drift as in Michigan, the "wild catter" has very little definite geological data to guide him. He knows something of the general trends in rock structure; but must depend largely on trial and error. Before drilling he must secure leases of sufficient acreage to protect himself in case he makes a discovery. In the Austin and Tri—township fields the gas—bearing rock is found at a depth of between 1200 and 1300 feet. Oil wells in the Michigan oil fields have usually struck oil at from 2700 to 3700 feet. The operator may own.a drilling outfit, or he may hire some one to drill for him. These outfits are expensive, and are of two types---cable tools, and the rotary. The cable outfit employs a long steel cable wound around a drum. One end of the cable passes over a pulley at the top of the derrick and is connected to one end of a heavy drill, which operates by being lifted and dropped, thus pounding its way into the rock. The rotary type operates in a manner similar to an auger. Gas wells cost anywhere from $7,000 to $10,000, depending upon time 'when drilled, type of outfit used, thickness of the drift, composition of the rock, size of easing, etc. An oil well operator(1) stated that an oil well approximately 2700 feet deep costs around $12,000, and wells of 3600 feet cost about $17,000 to $18,000 each. 1. Personal communication, Nov. 24, 1937. Name withheld by request. 4‘ .' b 7 53¢- ‘ 2 a; ,0 . . . v- ' ‘ . . . . 0 .. A ‘,‘i. illr ‘- - [MEIR . A?“ IN! 'K“ . \- v "" ‘/ V a . A Rotary equipment drilling for gas in tri-township field. Figure VII .. «.- A"‘\,« \ e. g \ \a x “w \ ”or ‘ \,\\.\\_ \ _ y \\~’\_~-“‘—\‘~"\ . \\.-’\N \ ~X._ ‘\\""\, -—-\.‘ ~ \l,\\ \ Another view of same well. View of a well being ”brought in". Photograph courtesy of Fortney Oil Co. The smoke-like cloud issuing from the well is much darker when coming from an oil well than from.a gasser. The gas well gives forth a loud whistling sound which may be heard a long distance. 48 When gas is discovered, drilling continues several feet into the "pay" (porous rock containing gas); perhaps drilling may continue entirely through the gas bearing stratum. As drilling progresses into the pay, instruments are used to determine the amount of gas flowing from.the well. The reading of the instrument (gauge) in- dicates the amount of gas that would flow from the well in a 24-hour period if permitted to flow unrestricted. The quantity shown by the gauge is termed the "open flow". (See Tables V and VII) A discovery well not only indicates the presence of natural gas, but also shows quantity of gas which will flow from the well as initial production. It is to be expected that the daily pro- duction will decline as gas is withdrawn. Before a market can be secured, other wells must be drilled and the possibilities of the area estimated. The estimates will be based on the area of the field, thickness of the "pay", porosity of the rock, rock pressure, temperature, etc. The estimates are termed "reserves". 2. Finding a Market: Any city which is not being served with natural gas :may be considered as a potential market. The distance from the city ‘to the field, the size of the city, and the amount of the reserves are important factors. If the reserves are sufficiently large, it is possible that the gas will be piped to a city many hundred miles :from fihe field; 6. g., natural gas is brought by pipe line from Texas 'to Chicago and Detroit. The company furnishing manufactured gas 49 in some city must be contacted and induced to signify a desire to purchase natural gas. Sometimes the utility furnishing the manu- factured gas will take the initiative and seek contracts with the producers in the gas area. 3. Arrange for a Pipe Line: The third step will be to arrange a plan for financing a pipe line from.the gas field to the city where the gas will be used. Pipe lines are expensive to build. In addition to the cost of material and labor, the right of way across property must be purchased, and damages to growing crops, etc. must be paid. The pipe line may be financed in one of three ways: (a) Form a company for the purpose of building the pipe line and induce investors to buy the stock or the bonds of the company. (b) The pipe line may be financed and built by the utility that has contracted to buy the gas. (0) The owners and operators of the gas wells may finance the pipe line. 4. Securing Permission from the State: The modern state views the marketing of gas as being subject to state control. In Michigan, the Public Utilities Commission has control over granting of pipe-line permits, and super- vision over the private utility company serving customers with gas and electricity; Therefore, before gas can be marketed, permission lnust be secured from.the Michigan Public Utilities Commission. If the Commission consents it issues a Certificate of Convenience and Neces- sity. 50 Factors Yhich Produce Conflicts and Controversies A careful inquiry into the gas situation indicates that a variety of interests will be involved if the field extends over a considerable area. These interests would appear to be: 1. Land owners who lease mineral rights, usually for a l/S royalty. 2. The holders of mineral deeds. There is no custom as to how large or how small an interest may be con- veyed by such a deed. One deed is on file in Mecosta county which conveyed a l/B40th interest in a certain description. 3. Operating producers who lease and drill with the purpose of having a gas producing well. 4. Promotional producers who lease and offer for sale interests in wells yet to be drilled, and who seek to profit whether the wells become producers or not. 5. Dealers and speculators in royalty interests. 6. Speculators and investors who buy interests in gas leases, wells, or other preperty anticipated to yield a revenue from the sale of natural gas. 7. The public interest. With so many people financially involved, some of whom have conflicting interests, it would appear to be very difficult, if not impossible, to proceed in the development of a gas area without causing dissatisfaction and criticism. In order to show the interests involved in the deve10pment of a natural gas area, an illustration dealing with a particular well follows: John Doe No. 1 Gas Well‘ John Doe, a farmer living on an 80-acre farm, leases the oil and gas rights in his farm to Richard Roe. He received a down 51 payment of one dollar. Under the terms of the lease he is to receive a royalty of l/S of all oil or gas produced from the well or wells drilled on his farm. In case a well is not drilled within three months, he is to receive one dollar per acre per annum, pay- able quarterly in order to continue the lease in effect. (See form of lease in Appendix C) Richard Roe places the lease on record with the Register of Deeds. A short time thereafter Richard Roe assigns this lease, with other leases which he has taken on property in the same neighborhood, to the Bland Development Corporation. This assignment is placed on record with the Register of Deeds. The corporation did not have sufficient funds to drill a well, so sold an additional $5,000 worth of stock, at $5 a share. The smallest sale of stock was for $50, and the largest was for $500; the average purchaser paying $200. The Bland DevelOpment Corporation did not own a drilling outfit; therefore, they let a contract to the Rotary Drilling Company for $9,350. Before drilling was started an application was made to the State Department of Conservation for a permit to drill a well, to be known as the John Doe No. l. The application was accompanied by a fee of $25. The Rotary Drilling Company filed a required bond (See form of Bond, Appendix A). Drilling operations are subject to the supervision of the Supervisor of wells who is the head of the Department of Conservation. (See Rules and Regulations, Appendix A). While drilling is in progress, gas is discovered about a mile away, and a speculator approaches John Doe and offers him $1,000 for one-half of his l/S royalty interest. John Doe accepts the offer, and gives a mineral deed to the speculator, I. Rant Easymoney. The mineral deed is placed on file with the Register of Deeds after the Federal Government stamp tax was paid to the County Treasurer. Mr. I. want Easymoney goes to a nearby city and using high pressure sales tactics proceeds to sell fractional parts of his interest to whomsoever will buy. Thomas Thoughtless buys one "royalty acre" in the John Doe farm for $100. This means he has purchased l/SO of the l/S interest retained by John Doe when the lease was granted. The mineral deed received by Thomas Thoughtless is sent to the Register of Deeds of the county where the Doe farm is located. (See Appendix C for form of Mineral Deed) The drillers strike (top) the gas bearing rock at 1284 feet, and after drilling into the stratum ten feet, gauge the well at 12,500,000 cubic feet. The well was then capped and derrick and rig removed. At that time there was no sale for the gas. Six months later, enough wells had been completed to define the field. The Utility Gas Company of Blank City contracts with the operators to buy gas from the wells. Application is made to the Public Utilities Commission for permit to build a pipe line. Four months elapses while hearings are being conducted, due to objections having been filed by another city about equal distance from.the field. Eventually the Public Utilities Commission issues a Certificate of Convenience and Necessity, and work is started on the pipe line. If no injunctions are issued against building the pipe line, the work may be completed in six or eight weeks. In the 53 meantime the Utility Gas Company has sent out solicitors to induce home owners to equip their furnaces for burning gas. When the pipe line is completed, the operating company, the Bland Development Corporation secures a permit from the Public Utilities Commission to connect the well to the pipe line. The take from the various wells having been prorated by the Commission, and since it is summer or early fall and very little gas is being used, the meter at the well shows that for the first month the withdrawals were but 1,500,000 cubic feet. The Commission fixed the price for gas at the well at 15 cents per thousand cubic feet. The operating company received $225, which is an excellent return for that season of the year. John Doe receives one half of his originally contracted royalty, since he sold by mineral deed one half of his share, or $14.06. Thomas Thoughtless receives $0.35. Both are disappointed, dissatisfied and critical, and ready to accept the suggestion that there is a conspiracy in restraint of trade preventing the extension of the markets for natural gas. p§peculation Connected with Oil and Gas While the entire business of exploration for natural gas, and the development of the areas, and the campaign to secure market outlets are speculative by their very nature; there are two forms of speculation peculiar to the oil and gas areas. These two forms have occurred in connection with the exploitation of the gas areas_ in Meccsta county. Both are likely to be found in connection with the opening of other areas. These forms are known as the "pool" and.the "royalty acre racket". 1. The Pool: Land owners join a pool because they hope that by so doing they may participate in the profits accruing from the discovery of natural gas or oil on the property of some other member of the pool. The various land owners who join the pool assign to the pool their royalty interest in whatsoever oil, gas, or other minerals which may be found on their respective properties. Each member of the pool, under the terms of the contract, is to receive a specified share of the receipts of the pool. These pools may be formed on the initiative of several of the land owners, who induce their neighbors to join with them. On the other hand, the pool is likely to be the handiwork of a promoter. The promoter comes in from outside, forms a corporation known as the pool, and induces the land owners to sign up. For his services in promoting the pool, the promoter is entitled under the terms of the contracts to a specified percentage of the receipts of the pool. His contract usually calls for 20 or 25 % of all royalties received by the pool. The Pipe Line corporation or other common purchaser in pay- ing for the gas or oil taken from a well, divides the payment between the producer and the holder of the royalty interest. (See forms Appendix C, Pipe Line or Common :urchaser-—-Yorking Interest—--Gas, Royalty Interest---Gas) In the case of the pool, the royalty interest has been assigned to the pool, and usually under the terms of the pooling agreement the proceeds under the royalty are to be paid by the purchaser to the members of the pool according to the terms of a partition order. How, the purchaser wishes to protect himself or itself. If payment is made to the wrong person, then that person who should have been paid has legal grounds for a suit to collect. The method used to safe guard the purchaser's interest is to require the pool through its attorney to appear in circuit court and secure what is called an ex parte order confirming and approving the partition or division order. When this has been done, the purchaser makes payment according to the division order. The Royalty Acre Racket The second of these peculiar speculative features is known as the "Royalty Acre Racket". By the terms of a mineral deed a promoter may secure from a land owner all or a part interest in the mineral rights vested in the land. An owner of a fee in land may sell all or a part interest in his mineral rights or he may give a lease of the land. The oil or gas lease permits the lessee to enter on the land for the purpose of mining, drilling, building tanks, pipe lines, etc. The usual procedure under the terms of the lease is for the land owner to receive a royalty of l/B of all gas or oil produced on the land. If the land owner sells an interest in his royalty to a speculator who, in turn, sells fractional interests in the royalty to whomsoever can be pursuaded to buy, then a considerable number of people may have an interest in the proceeds "royalty acres." from the royalty. These interests may be known as A "royalty acre'may be defined as the interest which each acre of a given tract of land would take in the total royalty to be received under a lease of the entire tract. If a forty acre tract of land is under lease, then each acre has a 1/40 interest in the 1/8 royalty claimed under the terms of the lease. The monetary return from one of these royalty acres might be estimated as follows: hhen gas is selling at 15 cents a thousand cubic feet at the well (the present price), each acre would be entitled a I/AO interest in the 1/8 royalty due under the terms of the lease ----- 1/40 of 1/8 of 15 cents for each thousand cubic feet of gas sold from the forty acres. Purchasers of royalty acres sometimes acquire the right to a very small fraction of the gas sold from a tract of land. The abstract office in Necosta county reports one deed on file that con- veys a 1/540 interest. Stace and Torn report that a laborer in a Pontiac factory paid $275 for 1/2560 interest in a prOperty where there are four gas wells in the Tri-township field. Over a period of eleven months this man received monthly checks ranging from one cent to eleven cents, or a total for the period of forty-nine cents.(1) They mention another case where $1,000 was paid for 16/5120 interest in two wells on eighty acres. Of course honest men can sell "royalty acres", and purchasers may receive adequate return; but there is a ten- dency for chislers to enter the game and for it to develop into a so- called "racket". The Michigan Corporation and Securities Commission has taken cognizance of the situation in respect to gas and oil as well as in other fields. Chairman Olsen recently stated(2) that the Com- l. Stace & Thorn, Royalty Acre Game is Worst of Rackets in Oil- Gas Fields. Booth Newspapers Inc. July 28, 1937 2. Olsen, Carl. Personal communication, January, 1958 5? mission is attempting to COOperate with honest brokers, and at the same time endeavoring to drive the racketeer and chisler from the state. The Cause and Effect of Overjprilling Over-drilling may be defined as that situation where more wells have been drilled into a natural gas reservior than are needed for the removal of the gas, thus causing many wells to be Operated at an annual loss. When one operator has sufficient acreage under lease so that he practically controls an entire gas area, as the Taggarts have in the Austin field, there is likely to be but little danger of over- drilling. When the field is large and many different firms hold leases, as in Hinton-Eillbrook-Belvidere area, there is a tendency to over-drill. Competition forces the different operators to drill more wells than they otherwise would; because they do not want the well of a competitor to draw gas from beneath land they held under lease. Title to land is frequently held covering but forty or eighty acres in a tract. Each land owner is anxious to have a well on his land in order that he may participate in profits from sale of gas. The closer the wells are spaced, the greater will be the amount of gas available for sale each day, week or month. During the deve10pment of the Tri-township field, wells were drilled on nearly every forty-acre tract. This indicates that there ‘was an investment of from $7,000 to $10,000 for each completed well--— a sum of money which must needs be recovered from the sale of gas from 457!“ :I.l;o 5...! . handily-Ix.“ I 4y I. “a h . n . E n-e‘l . 0' CD the well before a profit can be realized. Estimates based on the quantity of gas that would be yielded by wells, and experience gained after wells were connected with pipe lines, showed that many wells would be unprofitable. With fewer wells, all the gas could be taken from.the gas-bearing layer of rock, and more wells would be profitable; 0n the basis of the experience gained, the Department of Con- servation changed its rule permitting a well for each forty acres, to a well to each 160 acres. In order that land owners would not suffer from having their gas drawn off by a well on adjacent property, it was arranged by the Department that the royalty from the well should be paid on the basis of an entire 160 acres irrespective of whose land the well was situated. Under this new plan, if a well is put down in the center of 160 acres, each forty acres is entitled to one fourth of the total royalty._ The quantity of gas that may be taken from each of the wells in a gas area is determined by proration based on the capacity of each well. In figuring proration, or determining permissible withdrawal per month, a well withdrawing gas from 160 acres would be deemed to have four times the capacity of a well with- drawing gas from 40 acres even though both wells would gauge the same daily open flow capacity. CHAPTER V A REVIEW OF THE CONTROVERSIAL ISSUES CONNECTED WITH TEE DEVELOPMENT OF THE TRI-TOhNSHIP NATURAL GAS AREA Before the quantity of natural gas contained in the reserves of the Hinton-Millbrook-Belvidere area could be definitely estimated, attempts were made to secure a market, with resulting discontent, confusion and bitterness. Gas was discovered in the area in 1934. By mid-summer of 1935 rumors were current throughout the state that a conspiracy existed, on the part of the public utility companies, for. the purpose of resisting the development of the natural gas resources. On account of these rumors the Michigan Public Utilities Commission called a hearing to determine whether or not the rumors had any factual basis. The hearing was held August 7, 1935. The strife had continued up to the present time, April,1938. The opposing factions do not appear to be willing or able to compromise their differences. It is the purpose of this chapter to review the outstanding controversial issues. Dissatisfaction with the Petroleum Transportation Company According to the statements of Mr. D. E. Karn,(1) Vice-President and General Manager, the Consumers Power Company spent $673,000 in l. Testimony given at hearing before the Michigan Public Utilities Commission, August 7, 1935 60 making natural gas available to the consuming public of Bay City, Saginaw, Midland, Auburn, Essexville, Frankenmuth, Caro, Vassar, Reese, Zilwaukee, and Carrollton. The gas serviced to these com- munities were brought by pipe line from the Broomfield area in Isabella county. Mr. halter E. White,(1) engineer for the Consumers Power Company, claimed that during the winter of 1934-35 a cold spell caused the use of the maximum amount of gas that could be secured from the Broomfield wells, and that additional gas must be available to warrant the company taking on additional space- heating customers. The Consumers Power Company petitioned for and secured a Certificate of Convenience and Necessity which enabled them to build an extension of some 15 miles southwesterly from the Broomfield area to the Hinton-Millbrook-Belvidere field. They purchased gas from a gathering line. This gathering line, (the Petroleum Transportation Company's line), was built by natural gas well operators of the tri-township field. The formation and operation of this company as a gathering line caused much dissatis- faction and enmity on the part of farmers on whose land wells were located. This was due to the fact that they felt that the line ‘was formed and Operated as a means of lowering the price paid them for their royalty. If the Consumers Power Company paid fifteen cents per thousand cubic feet for gas delivered to its pipe line, and the gathering company took three cents for its services, then the price at the well would be but twelve cents. The land owners royalty would then be one eighth of twelve cents, rather than one eighth of fifteen cents. 1. Testimony given at M.P.U.C. hearing, August 7, 1955 Conspiracy to Hinder Marketinggof Natural Gas Alleged By mid-summer of 1955 a rumor was current to the effect that "certain interests" were retarding efforts to develop a market for natural gas. One basis for such a rumor would be the fact that manufactured gas contains approximately 550 B.t.u., while natural gas from the Michigan "stray sands" contains about 1050 B.t.u. Since natural gas is nearly twice as hot as manufactured gas, consumption of gas would be lowered when a change over is made. If natural gas costs 15 cents at the well,transportation costs over a considerable distance will make the natural gas cost the distributing company nearly as much as manufactured gas. These two facts taken into consideration indicate that the income of a gas distributing company will fall off very materially when natural gas is introduced unless customers can be induced to use more gas. Equipment used for burn- ing manufactured gas must be adjusted at a considerable expense to the gas company when natural gas is introduced. Probably another basis for the rumor that "certain interests" were unfavorable to developing markets was that the gas companies in the larger cities of the state were making no apparent effort to secure natural gas. As a result of these rumors a legislative committee had been appointed to investigate, and the Public Utilities Commission called a public hearing to be held at Lansing on August 7, 1955. Producers, city officials, land owners, and public utility officials were asked to attend. Among those called to give testimony were: W}.C. Taggart of Big Rapids, Dr. R. A. Smith, the State Geologist, Dr. 62 Robert B. Neweombe, the petroleum geologist of the Geological Survey staff, Carl worth, the gas engineer for the Public Utilities Commission, H.D. Crider, geologist for the American-Michigan Pipe Line Company, Harry Gabel, the gas engineer for the American-Michigan Pipe Line Company, Dr. Virgil D. Kirkhmm, an economic geologist repre- senting operators, Virgil NcClintic representing producers in the Broomfield area, Glen Chamberlin of the Grand Rapids Gas Light Co., Dan E. Karn, Vice-President of Consumers Power Company, and others. Mr. Henry Hunt, secretary for the Michigan Oil and Gas Association, conducted cross examination of witnesses, and any person present was permitted to ask witnesses questions. {ayor ShakeSpeare of Kalamazoo asked, near the close of the hearing, for the privilege of making a statement and said he was tremendously affected by the fairness of the Commission. Following the hearing rumor called it a whitewash of the big utility companies. Chairman Smith stated that it was the policy of the Commission to be ready and willing to grant a Certificate of Convenience and Necessity for a pipe line when- ever the Commission was convinced that there was a sufficient reserve of natural gas to supply the proposed market area for a reasonable time, provided the petitioner could show financial ability to construct. the pipe line. There was no testimony introduced which indicated that there were "interests" hindering the marketing of natural gas. Controversy Over the Granting of Pipe Line Permits (1) In the early fall of 1955 the Consumers Power Company filed an application for a permit to construct a pipe line from the tri- township field to Lansing. This application was opposed by the 63 Grand Rapids Gas Light Company (an affiliate of the American Light & Traction Company) on the ground that they had under commitment about 50 % of the proved acreage and felt that the gas should not be diverted to areas more remote from the field than Grand Rapids. At a hearing held October 22, 1935, Ganson Taggart, city attorney for Grand Rapids, asked delay in granting the permit until a study should show sufficient reserves. Independent producers likewise protested because they did not wish the Consumers Power Company to have a mon0poly of the field. The hearing was adjourned to November 1. Early in December the permit was granted. In commenting on the granting of this permit, D. A. Craig, in the January 16th issue of the Nichigan Oil and Gas News, stated in part as follows: "When the Consumers Power Company was granted the right to build a pipe line to Lansing over objections of the farmers, royalty owners, and producers, one of the greatest scandals in Michigan's history had been enacted." The City Council of Lansing also filed a protest with the Commission, due to the fact that they had started a survey to deter- mine the feasibility of a natural gas system for the city. The taxpayers of Lansing on Tuesday, February 25, 1936, voted on the question of issuing bonds to finance a natural gas collection and distribution system for the city. The prOposal failed to receive the necessary three-fifths vote. There were 2710 votes cast in (I) favor of the proposal and 2405 against. 1. Michigan Oil Monthly, Earch, 1936, p. 5 64 (2) On December 20, 1935, the Grand Rapids Gas Light Company filed its petition for permission to build a pipe line from the tri- township field to Grand Rapids. A similar petition was filed by the western Michigan Pipe Line Company together with a proposal to take gas from the Operators in the tri-township field and sell to the local distributing company. A third application for a pipe line from the field to Grand Rapids was filed by the General Gas Transportation Company. The General Gas Transportation Company was organized by a group of Mt. Pleasant operators who had a large acreage under their control. The date set for hearing these three petitions was January 20, 1936. A Certificate of Necessity and Convenience was granted to the Grand Rapids Gas Light Company on April 13, 1936. This permit authorized the sale of a mixed gas, 50 % natural gas and 50 % manu- factured gas. At a hearing before the Commission held May 28, 1936, the Grand Rapids Gas Light Company presented a petition for permission to serve lOO % natural gas. The question of granting a permit to serve 100 % natural gas appears to have been decided on the basis of estimates of the reserves in the field, and estimates of the amount. of gas needed to satisfy the requirements of the customers served by the Consumers Power Company, and the customers to be served by the Grand Rapids Gas Light Company.(13 In an OPINION and ORDER issued by the Commission on the 24th day of June, 1936, the application was denied. 1. Mich. Public Utilities Commission D-SOOO OPINION and ORDER issued June 24th, 1936 Summa:y_of M. P. U. C. OPINION and ORDER of June 24, 1936 The estimates reviewed by the Commission as stated in the OPINION and ORDER may be summarized in the following table: TABLE IX ESTIMATED RESERVES IN TRI-TOWNSHIP FIELD Source of Estimate As of Reserves in cubic feet based on abandonment pressure per square inch of 50 pounds Of 125 pounds Max w. Ball Feb. 3, 1936 27,74o,ooo,ooo Max W. Ball May 27, 1936 44,148,934,000 Rollins & Shellhardt Feb.1, 1936 29,720,ooo,ooo 25,4oo,ooo,ooo Eng. Dept. of Mich Dept. of Conserv. May 20, 1936 . ... ... ... 34,000,000,000 Eng. Dept. m. P. U.C. (Exhib. 9-14) . ... ... ... 39,ooo,ooo,ooo The Commission stated that the reserves in the Brownfield and the Crystal-Ferris areas must be taken into consideration with the HintonAMillbrook-Belvidere field in determining the total quantity of gas available for the markets served by Consumers Power Company and the Grand Rapids Gas Light Company. Based on the estimates and exhibits submitted, the Commission concluded that Grand Rapids market would consume perhaps 3,000,000,000 cubic feet annually. The Consumers Power Company had submitted testimony showing that their requirements for eight years would be 36,900,060,000 cubic feet for the SaginawaBay City area and the Lansing area. The latest report of the Bureau of Mines estimated the Broomfield area to have reserves of 5,500,000,000 cubic feet; which was close to the estimate of Ralph Note: A letter from the offices of the M. P. U. C. of January 10, 1938, stated that the estimates as shown above were the important estimates to date, except an estimate of Col. Charles W} Miller, geologist of the Independent Gas Producers Association. Col. Miller estimated 149,890,000,000 at 50 pounds pressure. E. Davis, Inc. The Bureau estimated Crystal-Ferris reserves at 2,750,000,000 cubic feet. The Commission assumed that on the basis of estimates and testimony that the reserves might "reason- ably be placed at not much in excess of 42,000,000,000 cubic feet of gas", and that the market requirements for serving full natural gas to the communities served "would be approximately 61,000,000,000 cubic feet for an eight year period". 1) The Grand Rapids Gas Light Company decided to defy the Commission and serve'lOO % natural gas. Therefore, they secured a temporary injunction against the Commission to prevent it from enforcing its order. On September 24, 1937, Circuit Judge Charles H. Hayden, sitting in Ingham county, ruled that the Commission had no right under the statutes of the state to order the Grand Rapids Gas Light Company to refrain from using natural gas entirely. The decision has been appealed to the Supreme Court of Michigan.(2) Fact-finding Committee Appointed by Lieut. Gov. Lowicki In May, 1937, Lieut. Gov. Nowicki named a committee of five to conduct a thorough study of the natural gas situation and to recom- ment a policy to be applied. The committee's make-up represented a cross-section of those interested--——producers, consumers, and government. He appointed to the committee C.A. Winder, rate engineer of the Michigan Public Utilities Commission, as chairman; Dr. S. G. Bergquist of the department of geology at Michigan State College, secretaryg'William A. Thomas, geologist for the McClanahan Oil Company, 'to repgesent producers who are members of the Oil and Gas Association 1. M. P. U. C. OPINION and ORDER, June 24, 1936, p. 9—10 2. Implications of this decision discussed in Chapter VI p. 85 av of hichigan; Roy F. Ide to represent producers not members of the Association; and George F.Garner, tri-township farmer. An Associated Press article from Lansing published March 26, 1938, quoted the chairman as saying that the committee was split into two factions and were so far apart in their estimates a report would be impossible and useless. Roy F. Ide and George. Garner were reported as placing the reserves at 4000,000,000,000 cubic feet, while Dr. Bergquist and William A. Thomas subscribed to the theory that the reserves in Michigan do not exceed lO0,000,000,000 (1) cubic feet. P. U. C. Aide Ousted Over Gas Estimate "C. K. Wirth, gas engineer for the Michigan Public Utilities Commission since 1934, had been ousted Saturday because his estimates of the proven natural gas reserve in the state were lower than those accepted by the Commission. Paul H. Todd, chairman of the Commis- sion, confirmed the report of the dismissal, explaining that Wirth's viewpoint was inconsistent with that of the members of the Commission. 'Hr. Wirth, we consider, has excellent qualifications, but his view- point is somewhat prejudiced against the interests of independent Michigan gas producers,‘ the chairman said. 'He is habitually in- clined to give the big interests the break against the Michigan pro- ducers.’ " 1. Grand Rapids Press. Gas Fact-Finding Body Dies, Victim of Disagreements. March 26, 1938. p. 3 2. Grand Rapids Press. Ousts P.U.C. Aide Over Gas Estimate Dec. 4, 1937. p. 2 (Article by william F. Pyper) 68 Thompson Lease Inc. vs. Consumers Power Co. et a1. (1) On October 4, 1937, the Thompson Lease Inc. filed,(l) in the Circuit Court at Big Rapids, a Bill of Complaint against the Consumers Power Company, Hinton—Belvidere Gas Gathering Co., the Michigan Public Utilities Commission, and the Michigan Supervisor of wells. This suit has attracted publicity throughout the state, and has been a subject of conversation among men interested in the oil and gas business. Some of the more serious allega- tions in the case at issue have heretofore served as the subject matter of current rumors. If the evidence offered, when the case comes to trial, proves to be sufficient to establish proof that conditions were and are as charged, then there may follow serious political and financial repercussions. The chief purpose of the suit appears to be the desire of the plaintiff to be freed from a contract which requires Thompson Lease Inc. to sell the gas from its well to the Consumers Power Co. In addition the plaintiff asks to be relieved from conforming to a regulation of the Kichigan Public Utilities Commission. The regulation to which exception is taken requires a well Operator to sign a contract to sell gas to a common purchaser, before the Com- Inission will grant a permit to connect the well to a pipe line. The plaintiff also asks the court to require the Supervisor of Wells 'to assist the plaintiff and others in a preper development of the natural gas resources of the state. 1.. Docket No. 3357, Circuit Court, In Chancery. Mecosta County . ...: “—4 The charges contained in the Bill of Complaint may be summarized as follows: 1. 6. That on October 1, 1935, plaintiff completed drilling of a commercial—producing natural gas well, known as Thompson No. 1, on the NW I/G SW'l/G Sec. 54 T 13 N 7 W’ (Millbrook township, Mecosta County) That the only pipe line available was owned by the Petroleum Transportation Co. which was an affiliate of the Consumers Power Company, and further that the Petroleum Transportation Co. was created as creen behind which the Consumers Power Company cou d create and acquire a monopoly of the natural gas produced or to be produced in said field and elsewhere in Michigan in violation of law and to the damage of the people of the state. That now knowing of such affiliation or conspiracy the plantiff applied to the Michigan Public Utilities Com- mission for a standard gas connection permit in order to connect its well to the pipe line, and that the Mich- igan Public Utilities Commission refused the permit until plaintiff executed a certain gas purchase contract with the Petroleum Transportation Co.---such contract to be in such manner and form as said Petroleum.Transportation Co. should direct---and that it did so sign contract. That the Consumers Power Company at that time exercised great political and financial power in Michigan, and that such power was used to influence the Michigan Public Utilities Commission as to function under direction of the Consumers Power Company whenever the Consumers Power Company was financially interested, and that the Michigan Public Utilities Company was so under control knowingly or not as to further conSpiracy in restraint of trade and illegal monopoly. That the Consumers Power Company is part of a combine having interests in several states and has interests in Texas and distributes to many states including Michigan, and part of such program.is to strifle production of natural gas in Michigan. That a take of 17 1/2 % is permitted by the Michigan Public Utilities Commission, but that the Consumers Power Company schemed to bring producers to ruin and failed to develop markets and resisted extension of markets so that the take from'wells is less than 1/2 of l % of the daily natural open flow, and that the income of the plaintiff decreased from.t700 per month to less than 70 cents per month and for the last six months the plaintiff has received no income whatever, and that this is typical of other wells under contract to Consumers Power Company, and unless relieved will be "frozen out" and "squeezed out" of business. 7. That the Supervisor of Wells is charged with the duty of proration of production and that since the matters above charged are against public interest he should appear so the people may be freed from the present insidious con- trol by such combine. 8. That the Consumers Power Company has disseminated false information and propoganda regarding reserves in order to prevent people from purchasing natural gas, but that the plaintiff will show that there is sufficient natural gas to supply the Southern Peninsula of Michigan including Detroit for many years, and that the Consumers Power Company has facilities to extend natural gas service to other mar- kets were it permitted by the combine of which it is a part. The relief asked in the Bill of Complaint is of a threefold nature: 1. That the contract executed by the plaintiff with the Petroleum Transportation Co. be determined to be a contract in restraint of trade and a conspiracy to monopolize nat- ural gas in Michigan against public policy and therefore void. 2. That hereafter the plaintiff may have an order to connect to a pipe line without the Hichigan Public Utilities Com- mission requiring the plaintiff to execute a gas purchase agreement. 3. That the Supervisor of Wells be required to assist the plaintiff and other producers in affecting a conservative and proper development of the natural gas resources of NiChlgan. (2) The Michigan Public Utilities Commission filed its Answer to the Bill of Complaint in due form. After admitting certain non- controversial statements made in the Bill of Complaint, the Com- mission made the following assertions: 1. 2. (3) The somewhat l. The Commission admitted fixing the price for gas as alleged in the Complaint. The Commission asserted that it had no knowledge sufficient to form a belief of the affiliation and conspiracy charged. It denied furthering any conspiracy, but admitted that some member or employees may have, as individuals, furthered a conspiracy. In one case the Consumers Power Company did resist the extension of markets; and the Commission believes that is the policy of the Consumers Power Company. Answer of the Consumers Power Company may be briefed as follows: It enters a denial of the charge that the Petroleum Transportation Co. was an affiliate of the defendant or was created by the defendant or was completely con- trolled by the defendant; but admits purchasing the capital stock of the Petroleum Transportation Co. on the 27th day of March, 1936, and asserts that heretofore the stock of the company was owned by producers in the field. It admits that it approved of the form of the contract executed between producers and the Petroleum Transporta- tion Co. because it contracted with the Petroleum Trans- portation Co. to»purchase its gas and had a large invest- ment to protect. It denies scheming to strifle production or to bring finan- cial ruin to producers. It states thst the rules coverning withdrawals were adopted in November, 1934. It asserts that the percentage of plaintiff's well of the total cpen flow of the field was .033 %, as of October, 1937. It enters a denial of the other damaging allegations charged in plaintiff's complaint. ”8 (4) A Consent for Trial has been filed with the clerk of the court. Pay 16, 1938, is the date set for the trial. (5) Fifteen Petitions to Intervene were filed, and April 7 and 8 were dates fixed for hearing the petitions. Now a Petition to Intervene is an application presented to the court by some person or firm not a party to an action pending before the court. The petitioner asks to be allowed to join with either the plaintiff or the defendant because of the fact that the petitioner has a direct interest in the subject matter of the case in question and will gain or lose along with the original parties to the suit when the case is decided. These petitions all ask to be permitted to intervene in Cause No. 3357, Thompson Lease Inc., Plaintiff vs. Consumers Power Company et al., Defendants. These petitions all set up shnilar representations as fol- lows: 1. The petitioner is a corporation organized under Nich- igan laws. 2. The petitioner is the owner of a mineral lease and gives the description of the property and the well thereon. 3. The petitioner was forced to execute a contract for sale of natural gas to the Consumers Power Company under relative and similar conditions to those in Cause 3357; is now selling and will be forced to continue to sell all gas from said well under the terms and conditions of such contract in order to market any natural gas whatsoever from said well unless relieved from the obligation of the contract. 73 4. That the contract marked Exhibit A in Cause 3357 is similar in fact and effect to the aforementioned contract executed by petitioner. 5. That the onerous, inequitable and illegal conditions complained of in the Bill of Complaint are generally typical in the entire field. 6. That the petitioner is without adequate relief in the premises except in this court of chancery, and that unless relief is accorded as herein prayed, it will suffer irreparable loss and damage. The petitions were filed by the following corporations, etc.: American Gas and Oil Corporation Burke Gas and Oil Corporation Refiners Petroleum.Corporation Ide & Glavin No. 2 Gas Company Mutual Natural Gas Corporation No. 1-2-4-5-6-8-10 Edmore Oil and Gas Company Ide & Glavin No. 4 Gas Company Mecosta Oil & Gas Company Prudential Oil & Gas Corporation Ide & Glavin No. 5 Gas Company Hy-Nor Gas & Oil Corporation Ide & Glavin No. 3 Gas Company Ide & Glavin No. 8 Gas Company Roy F. Ide and Anna E. Ide Ide & Glavin No. 6 Gas Company Anyone examining these petitions will note that they have been filed by R. A. Whitehead, a Lansing Attorney; and further that practically all the petitioners have the same Detroit address. Roy F. Ide, who is one of the petitioners, was a member of the fact- finding committee which failed to agree as to the quantity of natural gas reserves in Michigan. These petitions came up before the court on April 7 for hearing. During the course of the proceedings, the petitions were ‘withdrawn. Presumably they were withdrawn rather than have an adverse decision by the court. No doubt the court would have rendered 74 a decision denying the petitioners the right to intervene. Such a decision would be expected because the petitioners could not show that they had a direct interest in the contract.executed between Thompson Lease Inc., and the Petroleum Transportation Co. The petitioners have similar contracts, and might avail themselves of like alleged charges if they were to seek relief from the courts. *3 0| CHAPTER VI PUBLIC CONTROL OF THE NATURAL GAS INDUSTRY The Theory of Government Control Public control of the natural gas business can be justified on the basis of the belief in the need for conservation of our natural resources and from the public utility concept. 1. CONSERVATION: It has long been a principle of law that the preperty rights in all material things first vest in the state. Later the state transfers to individuals title to certain material possessions but retains therein the right of eminent domain, and the right known as "police power". The police power is exercised to promote health, safety, the convenience and general welfare of the people as a whole. The individual may not use his preperty to injure the health or the safety of other people; nor may he use it in such a manner as to become a nuisance, or contrary to the welfare of the people as a whole. Natural resources which are subject to depletion through use may take on a special public interest which warrants the passing of laws to govern such use and to prevent waste. Deep borings, such as are found in gas wells, may strike fresh water or brine which if not.given preper attention may cause damage to adjoining property interests, polute streams, and injure health, and escaping gas may cause fires or other damage. A gas well on one tract of land may drain the gas from beneath adjoining property. For these and other :reasons, legislatures and the courts favor certain restrictions. 76 These restrictions are worked out under a plan or a series of plans--- in thme the plan or plans take the form and shape of a fixed policy, known as a Conservation Policy. 2. The PUBLIC UTILITY status is special and peculiar and not subject to a definition that can be accurate for all places at all times.(1) The courts have certain criteria that they use to deter- mine if any interprise is a public utility. In general, if a business (a) operates under monOpolistic conditions, (b) devotes its preperty to the public use, (c) renders a service which is considered necessary for the public welfare, (d) and is "peculiarly burdened with the public interest", then courts will hold that it is entitled to the - public utility status. Some other tests may be applied; such as (a) does the business hold an exclusive franchise or charter, (b) does it use the public highways, (c) has it the power of eminent domain, Legis- lative action by itself designating a business a public utility is not final, but must be sustained by the courts. The public utility has certain rights and duties. It must serve all who apply up to the limit of its capacity, and it must expand its capacity within its market territory as long as it is profitable to do so. It must charge a reasonable price for its services. It must not discriminate among its customers as long as they use the same amount of product or service under similar conditions. The facilities offered Inust be adequate and safe. In turn it is entitled to collect a fair price and to require the public to conform to reasonable rules and regulations. 1. Dorau, Herbert B. Economic Principles and Problems Farrar & Rinehart, Inc. New York. 1936 Vol. II, p 490-494 ...-3...! 1‘ tmk'rrilru 15.x 1....» gm '7’? Economically the utilities have some peculiar characteristics which are not evident in the ordinary enterprise. The following points are worthy of note: 1. The fixed capital is not only large, but large in relation to the income produced. This is due to the fact that ordinarily the product cannot be stored, and a capacity must be maintained capable of handling a peak load. 2. Fixed costs are relatively large, and therefore as the business increases, costs per unit decline, and a proper- tionately larger part of the increased income is profit. 3. Competition is uneconomic because it requires duplication of facilities, and since each competitot’is doing business on a smaller scale costs are higher per unit of output and the tendency for cut-throat competition tends toward estab- lishing a return to monopoly. 4. Customers depend upon the enterprise, and lack a dependable substitute at a reasonable price. Control Exercised By The Conservation Department The legislature of 1929 added to the duties of the Department of Conservation the supervision and control of exploration for oil and natural gas, and authorized the making of rules and regulations to govern the operation, the use, and the abandonment of oil and gas 'wells. The act placing control of oil and gas wells under the juris- diction of the Department of Conservation is known as Act No. 15 of the Public Acts of 1929. Act No. 15 was later amended by Act. No. 185 of the Public Acts of 1931. As of September 10, 1931, the Director of the Department of (Runservation, in accordance with the authority vested in him under tin: acts referred to above, issued Rules and Regulations to Govern 78 Oil and Gas Operations in the State of Michigan. (See Appendix A for copy of these rules) In brief these rules cover: 1. 9. 10. ll. 12. 13. 14. 15. The inspection of drilling and operation of oil and gas wells in order to prevent waste or damage to other resources. The supervision of plugging and abandonment of wells. The visiting of operations carried on for discovery. The collection of information concerning wells. The making of rules and prescribing forms for keeping of records by operators. Requiring of tests to prevent waste. Prescribing methods for correcting conditions leading to damage and waste. Determining the percentage of potential capacity of a gas well which may be utilized. Assisting and advising owners and operators in making tests. The issuing of drilling permits on preper application. The requirement that operators file a bond. Regulations for the keeping of a log, or record of the drilling of each well. General rules to be followed by drillers. Methods of appeal to the Oil and Gas Appeals Board. Penalties for the violation of laws and rules. Control Exercised By The Michigan Public Utilities Commission 1. Authority Conferred in 1929: The Nuskegon Gas Field “was the first natural gas area to be developed in hichigan. Until that field was practically depleted there were no laws regulating blowing of gas into the air, for proration of production, or for mak- ing pipe lines public utilities. Four different pipe lines trans- 79 ported gas from the field to Nuskegon.(1) The wasteful practices indulged in, and the signs of early depletion of the field, hastened the passage of laws regulating the production and distribution of oil and natural gas. The legislature of 1929, recognizing the necessity of statu- tory control, enacted legislation known as Act No. 9, Public Acts of 1929. The title of this act states: "AN ACT to regulate corporations, associations or persons engaged in the business of carrying and transporting natural gas through pipe lines and to regulate the production, purchase and sale of natural gas; to provide for the control and regula- tion of such corporations, associations and persons by the ”' Michigan Public Utilities Commission; to define the powers and duties of the Commission relative thereto; to prescribe penal- ties for the violation of the provisions hereof; and to repeal Act number twenty-nine of the Public Acts of eighteen hundred eighty-nine." ‘. f.- :73: As evidence of the recognition of an emergency, Section 20 of the Act states: "An emergency is hereby declared by reason whereof it is necessary for immediate preservation of the public peace, safety, convenience and welfare that this Act take immediate effect." The Act was approved March 19, 1929. The Act provides, in brief, as follows: 1. That the Public Utilities Commission shall have the con- trol over persons, associations, and corporations enéaged in the business of purchasing, transporting, or selling natural gas for use by the public. 2. That the Public Utilities Commission shall make rules and regulations to effect the equitable purchasing and collec- tion of gas, and the prevention of waste in the production and distribution. 1. Newcombe, Robert J. Op. Cit. p. 148 4 I"? ...-1 cl- ("i l "PF‘ ‘ ‘.,u~u 1 rp r “untv - Pan. ' o . .. Fc‘.’ .4. V g . .... 5-4. C931: r. '40,.“ '1‘ I ',’; $.45! c 6. 10. 11. 12. 2. 80 That all persons, associations or corporations claiming the right to transport natural gas through pipe lines shall comply with the provisions of the act. That those purchasing gas in a locality served by a pipe line must purchase from all wells which could be reasonably served by the pipe line, and that no preference be given to any producer. That the meximum withdrawal from any well be limited to 25 % of the daily natural flow, unless the Commission due to an emergency shall establish a higher or a lower per centum. That if production is in excess of market demand, then the amount of gas taken be pro-rated among wells according to their capacity. That those desiring to construct a pipe line must petition the Commission for a Certificate of Convenience and Necessity, and that the Commission shall inquire into the necessity and the practicability thereof, and if such lines when con- structed will serve the convenience and necessity of the public, the Commission may grant approval. That the operation of pipe lines for hire be deemed common carriers as at common law--—and may have the right of eminent domain, and the use of public highways for said pipe lines. That the Commission may prescribe the system of accounts to be kept by common purchasers and carriers. That common purchasers and carriers must file an annual statement on blanks furnished by the Commission, showing expense, income, etc., also copy of contracts entered into for the purchase and sale of gas. That every common purchaser or common carrier of natural gas shall file schedule or rates and prices which it shall pay or charge. That certain penalties are to be applied for violation of the act and the provisions thereof. Certificates of Convenience and Necessity: The Commission, acting under the powers conferred upon it by the Act of 1929, has issued Certificates of Convenience and Necessity for pipe lines to carry natural gas from fields located wholly or partly in lecosta county as follows: 1. To Taggart Bros., Inc., for the construction of a pipe line from the Austin field to the City of Big Rapids, a distance of about seven miles. 2. To the American-Michigan Pipe Line Company for gathering and transmitting lines from the Austin field to the City of Muskegon, a distance of about 50 miles. The gas to be sold to the Muskegon Gas Company for distribution to residents of Muskegon and Huskegon Heights. 3. First, to the Consumers Power Company to carry gas from the Broomfield Area, about 14 miles west of Mt. Pleasant, easterly to Bay City and Saginaw; Second, an extension of about 15 miles in a southwesterly direction to the Kill- brook, Hinton-Belvidere gas area in hecosta and Montcalm counties. 4. To the Petroleum Transportation Company (formed by natural gas well owners in the Hillbrook-Hinton-Belvidere area) to collect gas and deliver it to the Consumers Power Company pipe lines. 5. To the Consumers Power Company for a pipe line from the Millbrook-Hinton-Belvidere area to the city of Lansing. 6. To the Grand Rapids Gas Light Company to construct a pipe line from the Millbrook-hinton-Belvidere area to Grand Rapids, a distance of about 45 miles. 3. Production Control---Limitation of Flow: A very important feature of the jurisdiction exercised by the Michigan Public Utilities Commission over the production and distribution of natural gas comes from the recognition by geologists and well Operators that to conserve a gas field it is necessary to place a limit on the amount of gas which Inay be taken from any given well. If no restrictions are enforced and gas is permitted to flow from a well as fast as it will flow, the ‘pressure will soon go down and water will come into the well, and in a short time the well, and the field, will be out of production. This was well illustrated by the experience in the Nuskegon field. As an aid toward preventing such a catastrophe in other fields, Section 7 of the law provides: —————— "All corporations, associations and persons, whether pro- ducing or receiving gas from producers in any productive field are hereby prohibited from taking more than twenty-five per centum of the daily natural flow of any gas well or wells, unless, for good cause shown under the exigencies of the particular case, the Commission shall establish a higher or lower per centum under the prescribed rules and regulations thereof." Paragraph 12 of the Rules and Regulations Covering the Pro- (2) duction, Transmission and Distribution of Natural Gas reads as follows: "The maximum withdrawal rate from any 3aS'we11 shall average on a yearly basis not more than 17 1/2 X of the natural flow modified by the acreage factor defined in Rule 13, said maximum withdrawal being called allowable annual withdrawal. ---------------- The following percentages may be taken but not exceeded in any six consecutive months, 66 % of the allowable annual withdrawal last determined; in any one month 12 1/2 % of the allowable annual withdrawal last deter- mined, and in any one day .6 of 1 % of the allowable annual withdrawal last determined." ~ 4. Production Control---Permit For well Connection: The jurisdiction of the Public Utilities Commission starts at the well xnouth as stated in Rule 7(3) which reads as follows: "The jurisdiction of the Commission shall begin at the well mouth when the producer makes application to connect the well with a pipe line." The owner or operator of the well, before connecting it with a pipe line, must make application on forms provided therefor, and the Com- 1. 2. 3. Act No. 9, Public Acts of 1929 Order No. 2883, Michigan Public Utilities Commission, effective November 20, 1934, p. 12 Order No. 2883, Idem. p. 10 (I) 04 mission will then issue a standard permit which will specify the rating to be used in determining the withdrawal of gas from the well. In case of an emergency a temporary permit may be issued by wire. ‘With each permit a metal plate is issued showing permit number. This plate must be affixed to the well-head. Each producer must keep in his office a meter record for each well, and these records are available to authorized representa- tives of the Commission. The producer is required to fill out and file with the Commission on or before the 25th day of each month FORM 18 giving information for the preceding calendar month as to name and number of well, thousand cubic feet of gas withdrawn, the estimated amount of water from well and certain figures as to well- head pressure. 5. Distribution Control: (1) Rule 25 deals with the authorization to use natural gas. Rule 26 authorizes the distributor to adopt rules and regula- tions governing its relations with consumers. Rule 27 requires the distributor to file with the Commission up-to—date maps of the territory served, and to keep copies of such maps at division or district offices of the distributor. Rule 28 provides for the inspection by the distributor of all installations before establishing service to an applicant. Rule 29 to 32 inclusive relate to size of service connections, the house governor or regulator, shut-off on service connections and type of meter installation. Rule 33 to 40 inclusive apply to meter records, test records, methods of testing meters, accuracy of meters, periodic testing, meter testing equipment and the standardization of testing equipment. 1. M. . U. C. Order K0. 2883 Op. Cit. p. 15 84 Rules 41 to 45 inclusive govern operating standards, such as the heating value of gas, pressure of gas, specific gravity of gas, purity of gas, and interruptions of service. Rules 46 to 51 cover transactions with customers, such as complaints, use of meters, meter readings, information on bills, tests upon request by consumer, and adjust- ment of bills for meter error. Rule 52 permits the distributor to require a cash deposit from the customer as a guarantee of payment of current bills, requires the payment of interest thereon at 4 % per annum, provides for the return of the deposit when the customer's credit is satisfactorily estab- lished, the crediting of the deposit and accrued interest against customer's bill when service is dis- continued; the use of a guaranty in lieu of a deposit. ‘~_“_.. .1 _ Rule 53 provides for discontinuance of service if a customer's bill remains unpaid for ten days after the expiration of the discount period provided the distributor gives in writing five days' notice. Ru14 54 requires each distributor to file complete rate schedules with the Commission. Rule 55 makes it obligatory on the distributor to keep on file and open to public inspection a copy of its rate schedule. Rule 56 and 57 set up regulations for the extensions of gas service to prospective consumers owning premises which are located on a present main, and for free extensions and restricted extensions when prospective consumers are not on line of a present main. 5. Required Forms: The following "forms" are prescribed (1) by the Commission in reSpect to natural gas: FORM 15---App1ication For a Standard well Connection Permit FORM 16---Standard Well Connection Permit FORM l7---Allowab1e Withdrawal FORM 18---Producer's Monthly Report M.P.U.C. Order No. 2883 Op. Cit. pp.27 to 40 85 FORM 19-1,2,3 ---Transmission Line Construction Application (Natural Gas) FO W 20 ---Tas Transmitters Nonthly Report FORM 21-l,2,3 ---Distribution and Transmission Conversion Application FORM 22-1,2 ---Distribution Application Natural Gas Legislation in 1937 The legislature of 1937 attempted to redefine the duties of the Department of Conservation and of the Public Utilities Commission by two bills which were introduced. One failed of passage, the other passed and is known as Act R0. 326, Public Acts of 1937. The title of the act is long, but may be summarized as ---- An act to provide for a supervisor of natural gas wells, to prescribe his powers and duties, and to provide regulations for locating, sinking, drilling, casing, deepening, operat- ing, and plugging of natural gas wells; to provide for pay- ment of fees, to provide for an appeals board, to prohibit waste, and to provide penalties for the violation of the act.and to repeal Act No. 15 of 1929 as amended being sections 5696 to 5712 of the compiled laws of 1929. The law covers several pages, 649 to 659, and raised some question as to the authority of the Department and of the Commission. Both asked the Attorney General to rule or interpret the statute. His opinion as summarized in the Michigan Oil and Gas News of Jan- ‘uary 14, 1937, is to the effect that the statute does not take any :powers from the Commission and confer same on the Department. The Legislature of 1937 passed an act giving laborers and 'vendors of material a lien on gas and oil wells. This act is of some importance. (1) Its purpose is well stated in the title: IL. Act No. 146, Public Acts of 1937 86 "An Act to establish, protect and enforce the rights of laborers, contractors, sub-contractors and material men and other persons furnishing labor, tools or materials or other things of value for the drilling, boring, torpedo- ing, acidizing, completing operating, or repairing any oil or gas well, or the constructing or repairing of any oil or gas pipe line, oil or gas derrick, or oil tank." Under this law a lien may be filed within six months of the date when the last labor was performed, or the last material or service furnished. It applies to any and all forms of prOperty connected in any way with the operation of the leasehold upon the premises where the material or labor was furnished and extends to any estate which the lessee has or may thereafter have, and follows the property wherever it may be removed. It is provided that such liens be filed with the Register of Deeds in the county where the well is located, and such filing is constructive notice of the lien. Such a lien continues for one year from date of filing unless pro- ceedings are instituted to enforce the lien. If more than one lien is filed by different parties against the same property, the liens shall be of equal rank and shall share in the proceeds of any sale pro rata. These liens take priority over garnishments irre- spective of date of filing and are preferred over other titles, liens, or encumbrances which are given or recorded subsequent to the date of the commencement of the furnishing of material, labor or service. The Import of Judge Hayden's Decision After the Grand Rapids Gas Light Company's application for permission to furnish 100 % natural gas in lieu of 50 - 50 % natural and.manufactured gas was refused by the Public Utilities Commission 8? on June 24, 1936, that company secured a temporary injunction (enjoining the Michigan Public Utilities Commission from interfering with the company's serving full natural gas in defiance of the Com- mission's order. On September 24, 1937, Judge Charles H. Hayden in the Ingham County Circuit Court rendered his decision making the injunction permanent. The judge ruled that the Com- mission had no right under the statutes of the state to order the Grand Rapids Gas Light Company to refrain from using natural gas entirely. Quoting from his decision: "I am brought to the conclusion the Grand Rapids company's claim is well-founded. There is no showing that if this order is not enforced the wasting of the natural gas supply of the state will result. "No claim is made that the company has sought or now is seeking to take natural gas from the producers with whom it contracts in excess of the requirements of its operations. "I do not think it can be said that the act of the legis- 1ature---the construction of which was involved---is broad enough in its scope to justify such limitation by the defendant Commission. "If the statute were so construed, we obviously would be confronted with the question of its constitutionality. "For the reasons suggested, I am.brought to the conclusion the order of the Commission is not within the scope of the statute, construed in the light of the obvious purpose of the legislature and under constitutional inhibitions." Several implications are suggested by the ruling; such as, (a) The Act of 1929 is unconstitutional in whole or in part. If the legislature has exceeded its authority under the constitution in passing this law, then the parts of the law which do not comply to the constitu- tional requirements will be held by the courts to be null and void. Some parts only might be held void, or the entire statute. The judge distinctly states that the question or constitutionality might be raised if the same construction is placed on the law as was “.C‘l H... G i . IG (b) (c) 88 placed on it by the Commission. The Commission's power extends only to the prevention of waste. Now the Commission in its order refusing the application of the company did so on the grounds that there was insufficient gas to warrant 100 fi for Grand Rapids and to leave a reasonable supply for those already receiving service from.the field. The judge emphasizes the question of waste as if it were a para- mount issue to be considered when an application is made to go into a gas area for the purpose of securing gas for customers in a new territory. There is an inference in this decision that the purpose of the act is the prevention of waste. In this connection it should be noted that the act confers certain powers on the Commission which were not a matter of controversy in this action. The rulings of the Commission.may be defied with the expectation that learned counsel may secure decisions unfavorable to the Commission. Constitutionality of the statute may be questioned when an exception to the rulings of the Commission is desired, or the question may be raised that the statute does not give authority to the Commission to make a ruling in the case under dispute. If in this particular case, the Commission can be defied and sustained by the courts, then encouragement is offered to others to go and do likewise. So far as control over the production, transportation, and marketing of natural gas, the people of the sovereign state of Michigan are headed back to where they were prior to 1929 when wasteful practices were indulged in at the Muskegon field. This appears to be a break in the chain of control built up since the passing of the laws of 1929. If the Commission cannot maintain its jurisdiction in this case, encouragement is offered to others to question its jurisdiction. Such decisions tend to discourage the Commission, and to encourage the greedy and the careless who are not interested in any conservation policy, but in immediate gain. Heretofore progress has been made in the deve10pment of public policy and control. This may be the turning point. With the dissatisfaction and criticism now existing, such a decision may possibly though not probably be the incentive for a movement to limit the power of the Com- mission. 89 (e) The consumer may be exploited by a utility through being induced to invest in expensive equipment for burning gas for heating under conditions where the supply is insufficient to last over any reasonable pariod of years. In this case the Commission had denied the Grand Rapids Gas Lirht Company its permission to serve lOO % natural gas on the grounds that there was not sufficient gas to serve both the consuming public in the Lansing area and in the Grand Rapids territory, and that service had started in Lansing and consumers had purchased equipment at a considerable expense. If the Commission cannot limit withdrawals from a field, except as to prevent waste of gas, than perhaps other communities could secure gas from the same area, thus materially short— ening the life of the field. If a consumer spends $125 or more for gas-burning equipment, it would seem that he should be assured of a supply of gas sufficient to last several years. This decision indicates that the Commission lacks the power to regulate withdrawals for the purpose of protecting those customers who have already contracted for service, unless it is shown that the utility is wasting gas. The Consumers Power Company was a party to the suit before Judge Hayden as an intervening defendant, but did not join the Public Utilities Commission in its appeal to the Supreme Court of the State.(1) The Supreme Court has not yet rendered a decision. The attitude of the present Commission can be expressed \ by quoting from a statement by Chairman Todd:(2’ "It is, I believe, the unanimous opinion of the present Commission that the conditions justify the taking of one hundred per cent natural gas by the Grand Rapids Gas Light Company. "The matter has been appealed to the Supreme Court simply for the purpose of retaining jurisdiction by the Utilities Commission. An effort was made to adjust the matter through withdrawal of the injunction on the Commission so that a court decision would not be necessary. The Commission was unsuc— 1. Chamberlain, Glenn E., Pres. Grand Rapids Gas Light Co., Letter of Dec. 51, 1957. 2. Todd, Paul E., Chairman F.P.U.C., Letter of Jan. 6, 1938 90 cessful, however, in its effort to have the action withdrawn." In the first paragraph quoted from Chairman Todd's state- ment he refers to the present Commission. In this connection it should be kept in mind that the personnel of the Commission has been changed since the order was issued denying to the Grind Rapids Gas Light Company permission to serve lOO % natural gas. The order referred to was signed by four members of the Commission. The member from Grand Rapids did not sign. As stated by Chair- nmn Todd, the present Commission is not in sympathy with the Opinion and Order issued on June 24, 1936. As stated in the second paragraph quoted, the Commission made an effort to have the injunction withdrawn so that there would be no chance of a decision by the court which rould over- rule or set aside an order of the Commission. In other words, if the matter could have been withdrawn from court, a permit could have been granted----thc Commission would have "saved its face", and no precedent set. How, the Commission must either admit that as a Commission it has no authority to make such a ruling even though there was not a sufficient supply of gas, or else go to the Supreme Court asking for a reversal of Judge Hayden's decision in order to retain its authority in such matters. 91 CHAPTER VII EFrECT OF KATURAL GAS PRODUCTION CK iUdLIC REVERUES It is the purpose of this chapter to show how the produc- tion of natural gas increases the tax revenue of the political units. The Severance Tax The present severance tax law was enacted in 1929 and has not been amended or altered. It places a specific tax of two per cent on the gross cash market value of the total production of a gas or oil well, computed as of the time and place where produced. This tax is in lieu of any or all other taxes, state or local, which might be imposed upon property rights inherent in any gas or oil well, leases, production contracts, royalty agreements or any value thereby created. This law is designated as Act No. 35 of the Public Acts of 1929, or as Sections 3604 to 3613 of the Com- piled Laws of 1929. The provisions of this act may be summarized as follows: 1. A tax to be known as a specific tax is levied on each corporation, association or person engaged in the business or severing from the soil oil or gas, and that the firm or corporation on whom the tax is levied is required to make a report to the hichigan Tax Com- mission on the first of each month, on blanks provided therefor, showing the total amount of gas or oil pro- duced by each well and the actual market value thereof. 2. 5. 7. 8. Any person, etc., who shall receive, purchase.or trans- port any such oil or gas shall likewise report showing the amount of oil or gas received, transported, etc. The tax is to be two per cent of the gross cash market value of total product during the preceding month, to be valued at place and time of severance. The producer is to pay the tax except that if received by a pipe line company, the receiver takes the oil or gas with a tax lien thereon, and the pipe line company is to withhold from the price paid the tax due from separate producers and to pay the same to the state. Production records must be kept open to inspection by the Commission, under a penalty of $500 to $1500 for each and every twenty days of failure. The reports must show in detail the disposition made of such oil and gas, to whom sold and location of person receiving. The Commission is given the additional power to require other information or to correct reports if unlawfully made, or if incorrect, and shall certify additions to or penalties to the State Treasurer for collection. The Commission is empowered to examine the books of a firm not making a report, to compute the tax, add the cost of the examination, plus ten per cent of tax as a penalty. The State of hichigan is to have a lien for severance tax and penalties, etc., on the leasehold interest of the person or firm owing the tax. The Attorney General is given the right to secure an injunction in Ingham county against the person or firm failing to comply with the provisions of the act. The Tax Commission has designed and furnishes forms for Inaking reports. A c0py of each of the following roms may be found in Appendix C: l. 2. Producer's Production Report Pipe Line or Common Purchaser Monthly Statement (working Interest—-—Gas) 93 3. Pipe Line or Common Purchaser honthly Statement (Royalty lnterest---Cas) 4. Royalty Owner's Production Report. Distribution of the Tax The producer or pipe line common purchaser, when making the required report to the Tax Commission for the preceding month, sends with the statement the remittance made payable to the State Treasurer for the amount of the tax. Under Provisions of Section 3617, Compiled Laws of 1929, amounts so collected into the State Treasury are credited: two- fifths to the state general fund, one-fifth to the county where the well was located, and two fifths to the township in which the oil or gas was produced. The State Treasurer sends the funds belonging to the counties and to the townships to the treasurers of those units. Income of the County Government in the Form of Fees and Taxes The county benefits directly in two ways; receipts from the Severance tax and from fees collected by the register of deeds for recording oil and gas leases, discharge of leases, assignment of leases, extension of leases, forfeiture of leases, and mineral deeds. An examination of the duplicate vouchers in the register of deeds office for Mecosta county disclosed that filing of leases to Emmy extent began in September, 1928, in which month $1,665.75 "\-- 4» C.’ -, ~'; ~ 7‘ u...‘ . -“-'v., ...‘,__I; -;_.;‘ '5 A. . i.v : a “...... ‘ ...- q ,1 H...‘ ..f; the] 94 was collected from this source. The primary purpose of leasing prior to 1933 was the hOpe of finding oil or of disposing of the lease at a profit. Since the discovery of gas, the primary purpose on the part of many of those securing leases has been the hOpe of locating natural gas. Since purpose is largely subjective or a matter of circumstantial evidence, no effort has been made to deter- mine which of the leases was taken from the hope of finding gas, and which hoped to find oil. Table X shows the receipts from fees over a ten year period. TABLE x FEES COLLECTED FOR FILING OIL AND GAS LEASRS, DISCUARGES, AsSIthsst, MILLRAL DEEDS, ETC. IN NECOSTA COUNTY Source: Vouchers in Register of Deeds Office Year Amount 1928 $2,651.25 1929 1,500.20 1930 860.40 1931 762.00 1932 229.55 1933 981.40 1934 3,403.75 1935 1,602.20 1936 2,341.90 1937 1,914.15 Total $16,246.80 ‘While about as much of the county is under lease now as inn: years ago (December, 1937), indicating opportunity to file assignments and discharges, it would take a discovery in 'the'western or northwestern part of the county, where but a small portion is under lease, to renew leasing activities com- parative to 1934 or 1936. Likewise the recording of mineral deeds will not continue as in the past unless a new discovery is made. The Severance tax has produced as follows: $79.67 in x 1954, $249.90 in 1935, $580.54 in 1936, and $784.38 in 1957.(1’ This course of revenue should show an increase for 1938 and per- haps over the two or three years following until the marketing areas reach a fairly stable rate of consumption. The revenue will cease when the present fields are exhausted, unless new areas are discovered. Income to the Townships from Natural Gas The value of natural gas at the well has been fixed by agreement with the Public Utilities Commission at fifteen cents per thousand cubic feet. Since the Severance tax, under the provisions of the law, is two per cent of the gross cash value at time and place of severance, a simple arithmetical calculation shows that the tax is three—tenths of a cent for each thousand feet of gas taken from a well. The township where the well is located receives two fifths of the tax, or twelve hundredths of a cent for each thousand cubic feet. Taking the figures for the Austin field, as released by the State Tax Commission, showing withdrawals from the time the first gas was marketed up to Octo- ber 1, 1937, (Table VI, Chapter III) as 2,958,819,000 and mdlti- 1. McCormick, Lora, County Treasurer, data as of Dec. 30, 1937 96 plying by .12 of a cent, the revenue accrued to the township would be $3,550.58. Checking with the township treasurer of Austin (1) township, the amount which had been received from the State Treasurer up to December 31, 1937, was $3,361.43, the last payment having been received in September. The receipts of Severance tax by Austin township to January 1, 1938 are shown in Table XI. TABLE XI SEVERANCE TAX RECEIPTS FOR AUSTIN TOHNSHIP Year Honth Received Amount Year's total 1934 August 9 55.74 3 55.74 1935 February 159.32 August 499.83 659.15 1936 March 427.39 September 782.31 1209.70 1937 March 618.23 September 618.61 1436.84 Total' 33361.43 If the field is from one—third to one-fourth exhausted, bases upon the estimate of the Bureau of Mines or that of H. D. Crider, geologist, then the total expected revenue of the township based on expected revenue over the entire life of the field is likely to be between $10,650 and 814,200. When the Severance tax was first received by Austin township, it was voted at the 1935 township election to apply the funds by proration to the various school districts in the township. Later on it was felt that this method was unfair, due to inequalities in the valuations of the various school districts, and it was voted to apply the Severance tax money toward reduction of the county tax assessed 1. Tutt, Charles E., Personal communication. Dec. 31, 1937 against the township. It has been so applied in 1936 and 1937. For the year 1937 the county tax for the township amounted to seven and a half mills and the township paid four and a half mills of this assessment with the Severance tax money. But a small part of the tri-township field lies in Hinton township, most of the wells in this township being in sections 23 and 25. The open flow capacity of these wells is much less than the average shown by the wells in the broader portion of the field to the southeast. Since this field has had access to markets for but a short time, the tax receipts are probably not yet at their peak. The township treasurer(1) reports having had but one check during 1937. The check was received in hay, and amounted to $93.38. The withdrawals of gas from Hinton township are as follows:(2) For 1936 143,724,660 cubic feet For 1937 218,683,450 cubic feet Hillbrook township, which has a large number of wells, may expect considerable revenue for the next seven or eight years, or possibly longer. There is so much dispute over the amount of the reserves that any estimate of the future revenue of this township is likely to be inaccurate. Since Grand Rapids and Lansing used natural gas for the first time during the winter of 1936—7, it is highly probable that there will be a large increase in the quan— tity of gas consumed during the winter of 1937-8, and a further in- crease a year later. The record consumption from the field for a month, according to a report issued January 8, 1938, was 607,000,000 l. Beardslee, Roy. Personal communication. Jan. 3, 1938 2. Mich. Historical Commission. Personal communication. Jan. 28, 1938 98 cubic feet for December, 1937. This is an increase of about 125,000,000 cubic feet over that used in the corresponding month of the previous year. The figures for withdrawals from hill- brook township are as follows: For 1936 675,485,430 cubic feet For 1937 1,000,176,600 cubic feet On August 10, 1937, the township of Millbrook received $607.26 from the state, as a distribution of Severance tax collections. This was the only remittance received during the year, according to the township treasurer.(l) He stated that this amount was about sufficient to take care of the township's "contingent expenses", and that there had been no township tax levied for the past two years. Assessment on Pipe Lines, Peter Stations, Oil hells An assessment is placed on pipe lines, meter stations, and the casings in oil and gas wells. Supervisors who were con- sulted stated that the assessment was based on the diameter of the pipe line and the number of feet of line in the township. Their response to the question, "How do you know how much to assess per foot," was that they discussed the matter with the pipe line officials, arrived at the best valuation possible in their own judgment keeping in mind that the valuation must be acceptable to the pipe line company. If they placed a valuation on the line which would be regarded by the company as excessive, legal compli- cations might result. The casing (pipe) in a gas well appears 1. Sheets, Bert. Township treasurer. Personal communication, January 3, 1938 to be treated by the various supervisors as personal property. The assessments on various wells might differ due to the diameter of the casing, but the supervisors indicated that they would con- sider $1000 a well as being the usual assessment. figures were secured as representing assessments covering pipe lines, meter stations, and well casings for the year 1937: Killbrook township Colfax township Austin township Aetna township Big Rapids township (5) Total $129,280 2,010 34,325 (x) 37,012 1,500 9204,127 (x) Figures for Austin township are for pipe lines only. The following 99 1. 2. 3. 4. 5. Hadlock, E. h., Supervisor. Lintemuth, H. R.,Supervisor. Osborne, Roy, Supervisor. Howarth, halter, Supervisor. Cramer, Alfred, Supervisor. Personal Personal Personal Personal Personal communication. communication. communication. communication. communication. Jan. Jan. Jan. Jan. Jan. 11, 11, 12, 1938 1938 1938 1938 1938 CHATTER VIII BELETITS TO LLKD OWNERS, BUSINESS, ARE LASER Income from Oil and Gas Leases Leasing on a large scale started in the fall of 1928, but the number of leases filed with the register of deeds for Kecosta county decreased until a low was reached in 1932. Evidence indi- cates that a great many of the leases were surrendered during this period. Activity increased during 1933, perhaps partly due to the discovery of gas in Broomfield, a short distance from the eastern boundary of the county; but in Larch, 1933, the Taggarts discovered gas in Austin township, which gave a decided impetus to leasing. Gas was discovered in the southeastern part of the county in 1934, and that year witnessed the highest point of activity in leasing and assignment of leases. An examination of the records of the hecosta county abstract office made in late December, 1935, showed that Austin township and the three townships in the southeastern part of the county were almost entirely under lease. The abstract office reports as of December 27, 1937, that while some leases have expired and have been discharged other leases have been recorded, so that there has been little change in acreage under lease during the past two years. Recent activity has been on the east half of hartiny township where any acreage not under lease is probably due to the fact that the owner cannot be found or will not lease. Very few leases are for as low a figure as fifty cents an acre per year. 101 a few leases reach a maximum of ,4 an acre. Nr. Long(1) expressed the opinion that 51.25 an acre would be a conservative estimate of an average price per acre for all the area_of the county under lease. The records were not checked either by sampling or in their entirety to determine the accuracy of his estimate; but others who were in close contact with leasing stated that his estimate agreed closely with their judgment. The percentage of land under lease as determined on an acreage basis for each township of the county is shown in Table XII as follows: TABLE XII LAND UNDER LEASE IN MECOSTA COUNTY Source: The Abstract Office As of Dec. 24, 1935 Township Per cent under lease Acreage Leased Aetna 58.5 13,478 Austin 87.1 20,067 Big Rapids (x) 15.5 3,575 Chippewa 66.2 15,252 Colfax 84.0 19,363 Deerfield 51.0 11,750 Fork 66.5 15,625 Grant 14.0 3,225 Green 12.3 2,834 Hinton 83.5 19,238 Nartiny 47.2 10,875 Mecosta 21.5 4,954 hillbrook 98.0 22,580 Morton 33.8 7,788 Sheridan 57.6 13,271 'Wheatland 98.0 22,580 Total 206,455 Acres x Includes acreage within city limits of Big Rapids 1. Long, Delbert. Necosta County Abstract Company 102 An estimate of the sum received by land owners under the terms of leases granted may be arrived at by considering that in a county consisting of 16 townships with about 206,455 acres under lease at an average of $1.25 an acre, the annual payment would be in the neighborhood of $257,800. Since there has been about the same acreage under lease for the past two years, the land owners must have received about half a million dollars during that time. A representative of a company holding considerable acreage stated that his company alone had paid more than $90,000, but he asked that the name of his company be treated as confidential. There is evidence to show that many of the land owners have used lease checks to pay delinquent taxes. Host of the money used to pay for leases comes from outside of the county. The following named companies hold the largest acreage under lease, though there are a number of smaller lease holders: Carter 011 Company (A Standard Subsidiary) Cities Service Daily Crude Oil Company Dokenva Oil & Gas Company (Tulsa, Okla.) Gordon Oil & Gas Company Gulf Refining Company Shell Petroleum Company Sun Oil Company Pure Oil Company Taggart Bros., Inc. (Big Rapids) Income From Mineral Deeds The Mineral Deed is a deed issued by the owner of land to a purchaser who secures rights to oil, gas, or other minerals to be found on the property. (See form for Eineral Deed, Appendix C) Such a deed may grant a 100 % interest or some fractional interest I' “E F .r l,- I III...“ 103 in the mineral rights pertaining to the property. When property is under lease and the land owner has retained a one-eighth royalty in production, he may sell this interest which he has retained, or some fraction thereof. The smallest fractional part found recorded to December, 1937, in Mecosta county was for a 1/640 interest in the mineral rights vested in a certain description of property. An examination of the records of the register of deeds office showed 190 such deeds recorded prior to December 31, 1935, and that 362 were recorded in 1936, and 64 in 1937. The address of the purchaser was not stated in all of the mineral deeds on record, but when so stated the address was, in most cases, outside of the county. The actual consideration was not usually shown, but many were stamped indicating the payment of the Federal stamp tax which is required whenever the consideration is more than @100. It did not seem feasible to attempt to estimate the dollar value of the total Consideration paid for such deeds. Income from.Royalties Under the terms of a lease a cash rental is not paid when a producing well is located on a property, but instead, the land owner receives a royalty, or share, in the production of the well. In Michigan the royalty is a one-eighth interest. In the Austin field most bf the wells are on Taggart-owned land. The wels not on their land are small producers, and for that reason the separation of production into royalty interest and producers' share is not so important as it is in the tri—township field. In the tri-township 104 field there are many producers and many land owners. According to figures for withdrawals from Hinton township the royalty interests would share as follows: 1936---143,724,660 cu. ft. at 15 ¢ 821,558.70 x 1/8 == $2,894.84 1937---218,683,450 cu. ft. at 15 ¢ 32,802.52 x 1/8 = 74,100.31 In Millbrook township, where there are more wells and much larger production, the royalty income is greater. An estimate of the royal- ties may be based on the following figures: l936--675,485,430 cu. ft. at 15 a $101,322.81 x 1/8 = $12,665.35 1937-1,000,176,600 cu.ft. at 15 a $150,026.49 x 1/8 : 18,753.31 In both Hinton and Hillbrook townships the returns under the royalty contracts are regarded as disappointing. The reason usually assigned for the small returns from each well is that so small a per- centage of the capacity of the well is utilized. Perhaps the true explanation is based on the question of estimating the amount of gas available in the field. An acre of land to which a one-eighth lease royalty applies is called a "royalty acre". Because of claims and statements as to the value of royalty acres in this field, the Michigan Public Utilities Commission had a study made to determine what revenue might be expected during the life of the field per royalty acre. These calculations estimate the amount of money that may be expected to be realized from the royalty from the start of production until the well is exhausted. A comparison was set up in relation to "flush" or "open-flow" production, since this is the way wells are usually compared. It should be kept in mind that the "open-flow" is 1. Amount of gas estimated to flow from the well in a 24-hour period if permitted to flow without restriction. 105 greater the farther the well is drilled into the "pay" sand. As a well is used the amount of gas in the reservoir decreases, the pressure expressed in pounds becomes less, and the capacity of the well measured in daily open flow declines. The estimates set up as a result of the study made by the Commission are shown in the following table: TABLE XIII TOTAL ESTIMATED RETURN FROM A dOYALTY ACRE (Tri-township Area) Open Flow of well On Basis of 35 On Basis of 50 In Cubic Feet Billions Reserves Billions Reserves 100,000,000 @328 8470 75,000,000 246 352 50,000,000 164 235 30,000,000 98 141 20,000,000 66 94 10,000,000 33 47 1,000,000 3 5 Explanation of table: If a well had been gauged at 50,000,000 cubic feet of Open flow, and will be used to take the gas from beneath a forty-acre tract of land, then the land owner may expect to receive as his royalty from the sale of gas from the well until such time as the well is exhausted $164 x 40 or 86560. If it is believed that the entire field contains 50 billion feet, then use a235 instead of $164 in determining total income. Stace and Thonn(1) state: "There are only two tri-township ‘wells in the 100,000,000 class; five between 75,000,000 and 100,000,000; 25 between 50,000,000 and 75,000,000; 36 between 30,000,000 and 50,000,- 000; 31 between 20,000,000 and 30,000,000; 30 between 10,000,000 and 20,000,000; 52 between 2,000,000 and 10,000,000; and 31 in the class of 2,000,000 and under." This means that there are only 7 wells in the entire field that may yield between $246 and $470 per acre as a 1. Stace & Thorn, Royalty Acre Prices higher Than Returns, 1937 royalty before the wells are exhausted; 25 wells may produce between $164 and $352 per acre; 36 may return to the land owner or other royalty interest between $98 and $235; 63 wells should yield some- where between 83 an acre and $47. When it is considered that this field has been over drilled, with wells on each forty acres until a recent ruling of the Department of Conservation fixed one well for each one hundred sixty acres for future drilling, the returns from forty acres may represent a rather modest sum. Income from Payments for Right of Way and Damages When pipe lines are laid it is the custom to pay twenty—five cents a rod for the right of way, and if any damage is caused to crops, etc., to pay a reasonable sum for damage done. Since there are several miles of pipe line within the county, it is evident that while each land owner received but a small sum, the total of all pay- ments made for right of way and damages amounted to a considerable sum. The American-hichigan Pipe Line Company paid about 89,000 for right of way and damages to land owners in Mecosta county.(l) Effect on Land Values The real estate agents in Big Rapids state that the fluctuation in value of city property is due in the main to general recovery rather than to discovery of natural gas within the county. Farm values for farms outside the gas fields show little change which may be attributed to natural gas discoveries. In some instances, land that could have been purchased at a low price a few years ago will not be on the market. 1. Gabel, Harry, Gas Engineer for American-hichigan Pipe Line Co., Personal communication. Dec. 21, 1937 —‘-._ 10” Effect on Local Business The introduction of natural gas for space heating in Big Rapids cut into the business of the coal dealers, and reduced the number of cars of coal brought in by the railroads. One coal dealer, the Big Rapids Gas Company, discontinued handling coal. In general merchants state that natural gas has brought them some business. It is difficult for them to make any accurate estimate of the amount of new business. They remember goods being sold to customers who paid with checks issued by oil and gas companies. In some instances customers paid old book accounts with such checks. Transients working on drilling operations have made purchases, and some supplies such as cement and lumber have been sold to operators. The natural gas business is such that it brings into the field or territory near field very few permanent employees. The trading centers for the peeple living in the tri-township field are outside the county. Much of the business connected with drilling centers at Mt. Pleasant which is often spoken of as the oil and gas capital of Michigan. Effect on Labor After wells are connected to the pipe lines very little labor is required. In the case of the American-Michigan Pipe Line Company, their engineer stated that five men could read the meters and patrol the line from the Austin field to Muskegon. It was their custom.to have a man walk along the right of way of the pipe line once each week to see that conditions were satisfactory. When the line was constructed during the depression, about 300 men, divided into 108 two crews working four days alternately for about a month, were employed in Recosta county. These men were nearly all residents of the county, as it was the policy of the company to employ local labor so far as practicable. It was stated that many of these awn would have been on relief without this employment. About fifty of those men were carried for two months while the work con- tinued in hewaygo and muskegon counties. These fifty men were truck drivers, blasters, straw bosses, etc., and had average earn- ings of 9270 to $500 each while employed outside Kecosta county. Taggart Bros., Inc., gave employment to a crew building their line from Austin to Big Rapids. Some of the mains in the city were left on top of the ground during the winter, and placed underground during the following spring and summer, so that employment in Big Rapids continued over several months. There does not appear to be any evidence of any one losing a job at a factory due to introduction of natural gas, or as janitor or other fireman in a commercial building. These employees devoted time saved to other work. There were three men permanently employed at the manufactured pas plant, and of course that plant closed. There was some loss of employment by men working in coal yards. 109 CHAPTER IX 'r‘-1\~ '\ A BENEFITS TO CCLSLLU The purpose of this chapter is to ShOW'the manner and the nature of the benefits received by consumers of natural gas. The factual material used has been secured mainly from local sources; hence the conclusions shown apply to local consumers, and will hold true elsewhere when conditions are similar. hethods for Comparing Natural Gas with Other Fuels Natural gas from the Austin and tri—township fields contains about 1050 B.t.u. per cubic foot as compared with 550 B.t.u. for manufactured gas. Fuel oil, 25.7 Baume, weighs about 7 1/2 pounds per gallon and rates approximately l44,200 B.t.u. per gallonfl) .A short formula for comparing cost of oil and coal is to double the price in cents per gallon of oil and express the result as dollars per ton for coal of equinlent heat value; e. g., oil at four cents a gallon equals $8 coal. Coal varies in heat content from less than 11,000 B.t.u. per pound to a maximum of close to 15,000 B.t.u. Since coal varies so much in heat units, any short formula for com- parative values is inaccurate. Another factor entering into a comparison is the efficiency of equipment. The Committee of Ten- Coal and heating Industries(2) in a discussion of comparative fuel costs makes this statement: "Except in individual instances where tests have been prOperly conducted under actual operating conditions, 1. Kansas City Laboratories, Bulletin ho. 15 2. (kxmnittee of Ten-Coal and Heating Industries, Bulletin ho. 6, .Chicago, 1932 LO p4 comparison of fuel costs can be no more than estimates based on some known factors and some assumed factors presumed to represent average conditions. Therefore, cost comparisons are meaningless and without value unless accompanied by full information as to the known and the assumed factors used in arriving at the conclusions." The Committee suggested the following formula for use in determining the number of cubic feet of gas equivalent to a given quantity of coal: (Ch or Cs) x 2000 x Ho x no _ When X Cs Ch Hc Hg Ec Ea Mg x equals equals equals equals equals equals equals Ea Quantity of fuel to be ascertained Coal Stoker Fired Coal Hand Fired B.t.u. per pound of coal B.t.u. per cubic foot of gas Efficiency of Coal Equipment Efficiency of Gas Equipment Efficiency of equipment represents the average of plants in reasonably good condition and intelligently operated. SOLID FUEL: Hand-firing (residences and small commercial 50 % Hand-firing (large industrial 55 Stoker-firing (residences and small com'l 65 Stoker-firing (large industrial) 7O Pulverized coal (medium and large plants) 75 GAS: Conversion burner (warm-air heating) 60 5 Conversion burner (steam or hot water) 65 Special gas furnace (warm air) 70 Special gas furnace (steam or hot water) 75 Coal is priced by the ton, but gas is quoted by the utilities drawing their supply from Austin or the tri-township field not on a flat unit Basis but instead on a graduated schedule in accordance with the quantity used. (Se e rate sheets in Appendix B) lll Benefits to Residential User Since natural gas is relatively twice as hot as manufactured gas, and sells at a lower price per thousand cubic feet, at lease in the upper brackets, it is popularly regarded as a cheap fuel. In the home it generally serves one or more of four purposes; as fuel for cooking, for refrigeration, for heating water, and for house heating. The first three purposes can be performed econom- ically by manufactured gas, but rates are usually prohibitive for house heating, as was the case in Big Rapids. When natural gas is used for cooking or for cooking and refrigeration, a saving in cost can be expected as compared with using manufactured gas. Since natural gas is cheaper than the manufactured gas, there is a tendency to use a larger quantity under similar conditions. In order to determine how costs were comparing in Big Rapids, it was necessary to select a method for securing sufficient data for the purpose. A sampling plan was selected. It was decided that if 5 % of the customers of the Big Rapids Gas Company were used in the sampling process, and names selected at random, enough data would be secured. The Gas Company's records were examined. The charges for gas for use in cooking for a month when manufactured gas was used were taken from the records, and in comparison was set down the charges for the same month one year later when natural gas was used. In each and every case the record showed that the gas bill was lower 'when natural gas was used. The smFIlest saving in favor of the natural gas was three cents (94.17 for manufactured gas and {4.14 itn‘Jaatural gas). The largest difference in favor of natural gas was a decrease from g4.08 to 91.36; probably some other factor was responsible for this large drop in amount of a bill. The percentage saved on the total bills included in the sampling was 29.48 %. When the Big Rapids Gas Company was conducting its campaign to induce home owners to install gas equipment in furnaces, it “ms stated that the cost of gas would be about the same as the cost of coal, and an appeal was made to other buying motives. This seems to have been the procedure adopted by the other utilities serving gas from Mecosta county. In the New Year's edition of the Grand Rapids Press, January 1, 1958, an advertisement by the Grand Rapids Gas Light Company stated, "And it is heating over 5000 homes auto- matically for just about what other fuels cost." At the office of the Big Rapids Gas Company it was stated that most houses would use between 50,000 and 80,000 cubic feet of gas a month during the coldest weather. 0n the basis of 52,600 cubic feet of gas for a month, using the rates charged in Big Rapids, the customer's bill would amount to {21.45 with the sales tax included. If coal costing $8.25 a ton (current price for a popular soft coal, January, 1958) with 14,250 B.t.u. per pound rating were burned in a converted hot air furnace the equivalent cost would be $19.96 calculated under the formula suggested by the Committee of Ten: Ch x 2000 x 14,250 x 50% 1050 X 60 % = 52,800 cubic feet gas Solving for Ch gives 2.525 tons of coal. 2.525 tons of coal at 88.25 costs $19.38 plus .58 tax or a total of 819.96. 115 Lote 1. If Pocahontas coal containing 14,850 B.t.u. at 80.25 were used instead, the formula shows 2.251 tons needed at a cost of $20.64 plus .62 tax, totaling $21.16 Note 2. Comparison for Lansing: 52,600 cu. ft. gas using "Objective rate" costs $28.50 2.525 tons of 58 coal would cost 818.60 plus .56 tax. Note 5. Comparison for Grand Rapids: 52,600 cu. ft. gas, domestic space-heating rate 525.42 Note 4. Comparison for huskegon: 52,600 cu. ft. gas, general heating rate $28.52 N. B. In Notes 2, 5 and 4 the tax not added to cost for gas. A number of householders were visited in Big Rapids, but as expected few had kept any record of costs over any period of years when using coal; in fact, only three were found who had an adequate record. (This feature of the survey was discontinued.) The three who had kept records, stated that the cost of gas for cooking and heating for the two winters used, compared favorably with the cost of coal averaged for a period of years. The motives which lead to the use of natural gas for house heating may be stated as: l. COhVENIENCE: Automatic heat, the pilot is turned on in the early fall, and the only attention thereafter is to adjust the thermostat at the temperature desired. When a family wishes to be gone a few days, the house can be left without attention, and will be warm on their return. 2. CLEANLIRBSS: No dirt in the basement from coal and ashes, nor tracking or otherwise bringing into other parts of the house coal dust. Where so many use gas for heating, the atmosphere carries less smoke and soot with the result that the snow does not become discolored and yards and streets have a cleaner appearance. 114 5. PROFIT: Less expense for painting and other exterior and interior decorating and cleaning. 4. PRIDE: The satisfaction which comes from the realization that one owns the type of heating system that furnishes conveniences not possessed by those using other fuels. The home owner who puts in natural gas heating equipment has joined an exclusive group. 5. DESIRE FOR CONFORT: FfiNILY AFFECTION: By taking out the coal bin additional Space may be available for refinish- ing the basement into a play room, recreation room, study, or general purpose room. Benefits to the Commercial User The store, office building, apartment house, hotel, garage, office building, or public building may be changed over for natural gas heating with certain resulting advantages. It is easier to maintain uniform temperature. There will be little if any loss from frozen pipes and radiators when there is a sudden change and the out-door temperature drops below zero in the night. There may be a saving in labor due to less attention given the heating system. The annoyance which comes from the inconvenience caused by putting in coal is eliminated. There will be less dirt and dust. Where there are many users of gas the smoke nuisance is reduced. The survey brought out considerable data which substantiated the advantages stated in the paragraph above. The following is interesting and typical: 1. The JUDSON BLOCK is three stories in height, with two stores on the first floor and offices and apartments on second and third floor. 'Mr. Judson reported a nine-year average cost of coal as $576.06, with a two year averaje with gas as $542.18, plus a saving in janitor service permitting the janitor to spend more time doing other work. The FAIRNAN BLOCK has four stores on the first floor, "and offices and apartments on the two floors above. The manager did not give figures showing average heating cost, but stated that his figures showed an average saving amounting to approximately $90 a year in favor of natural gas. The WESTERN HOTEL reported that natural gas was costing about $127 a year less than oil cost when they were paying 5 5/@ cents a gallon for oil. The management was well satisfied with gas. The FORD GARAGE reported coal as a fuel cost @255.50 more for the winter of 1955—4 than gas cost for the winter of Two department stores each stated that there was a slightly lower cost for gas based on comparable figures, but that the main advantage was from labor saved firing and cleaning, and from being relieved from responsibility for giving attention to heating. The manager of one store stated that he credited natural gas with the fact that the employees lost less time due to illness in the winter, which he felt was due to more even heat and the air carrying a smaller quantity of impurities. The Big Rapids public schools operate three grade school buildings and a central plant for the junior and senior high school. Records were examined for a period of eleven years. During that time no new buildings have been erected. The central plant was erected in 1925. During the eleven years fuel costs have varied from a low of 52556 to a peak of :5702 per year. Causes of variations were assigned as different fuels used, different men in charge, colder winters, change in costs per unit of fuel, etc. So far gas costs were about the same as the average yearly cost. There was a reported saving in janitors' time equivalent to about one half day for one man daily at the central plant, which left him free for other work. PHELPS FREE LIBRARY records ShOW'a somewhat higher cost for gas, but a more even heat is secured with the same equipment (converted furnace), the janitor has more time for other work, and no radiators or pipes have frozen since gas has been used, the thermostat taking care of changes in temperature at night. FBRRIS INSTITUTE has had an experience very similar to that of the public schools, having used coal, oil, and gas. Gas has proven to be the most satisfactory fuel. 9. ST. M} Y'S CA HOLIC CHURCH. The priest stated that gas was used to heat the church, the school and two houses. In his judgment, the chief advantage was in the saving in cleaning and decorating, and in the maintaining of an even temperature so that a 5 a. m. Mass could be attended in coldest weather without discomfort. It had not been practicable to have the buildings warm so early when coal was used. Benefits to the Industrial User 1. The HAhChETT HAKUFACTURING COMEANY uses gas in manufactur- ing processes as well as for heat. The chief advantage obtained by use of natural gas is in the labor saved un— loading cars. When coal was used, it was bought by the car load and it took considerable labor to unload the cars. 2. The FAREERS' COOPERATIVE CREAIERY uses gas for heat and power and find it highly satisfactory. In a space of twelve consecutive months this concern used 17,681,000 cubic feet of gas. Big Rapids has experienced a public benefit since natural gas has been so widely used. This benefit comes from the elimination of the smoke nuisance which was experienced when coal was used. In the winter time the city has a much cleaner appearance. This in turn acts as a benefit to prOperty owners as individuals since they do not need to wash the outside walls of buildings nor paint so frequently as was necessary when soft coal was used. Because Big Rapids is located so nesr the Austin field, it has the advantage of lower rates th... _- - - :‘__4l_ - l .. . | .Tiotes--Strike__o.-_t.r.er_crsrh below that d9§§..99:_aLe-.lir> Whereas. the above bounden principal is about to connence and prosecute the drilling o? a well to prospect for oil, gas or brine under State 0? Michigan Permit No. to be known as the ___ well We. on the following described land: Or Whereas, the above boundcn principal is carryinq on operations tor the developing and producing of oil, gas or brine in the State of Michigan. Now, There’ore, the condition of this oblication is such that if the above bounden principal shall, during the term of this bond, and renewal or renewals, comply with the laws 0’ the State of Michigan and the rules and regulations prescribed by the Supervisor of Wells of the State of Michigan in the drilling of wells up to and including the final plugging and abandonment ot the well or wells, the hove obliga- tions are void and of no ePPect; otherwise, it shall remain in force and effect. The term of +his bond shall be one year from date hereof, and shall be renewed if necessary in order to remain in Force and etfect until the well or wells shall be properly plugged and abandoned. In T-"itness ”hereof, the Principal and Surety have hereunto set their hands and seals this day of 19 witnesses. Principal. By AthEE: Powereof—Attorney or evidence 0” authority 0’ person executing on behalf of Surety must be attached. 158 A P P E N D I 7 B COPIES 0" UTILITY RAMP. S’,'F.E":I-'L'FIS The Pig Rapids Gas Company The Muskegon Gas Company The Grand Fapids Gas Light Company Consumers Power Company a. Iansinq and Airs Divisions b. Saginaw, Bay City and Essexville c. Saginaw and Bay City Divisions outside the corporate limits of the cities of Saginaw, Bay City and Fssexville. 139 M. P. U. 0. No., 1 City of BIG RAPIDS, BIG RAPIDS GAS CO. SCHEDULE OF RATES, ETC., GOVERNING THE SALE OF NATURAL GAS, APPLYING TO THE FOLLOWING TERRITORY CITY OF BIG RAPIDS, MICHIGAN ISSUED JANUARY 181:, 1934 EFFECTIVE JANUARY 131:, 1934 Issued by W. C. TAGGART, Treas. BIG RAPIDS, MICHIGAN ms GAS C0. - ‘30.“ Lm . {mug -:-~ fire 0! ”x .... . . ._.a' 'r' (- 59.1}; but : . , . [mumm- ,'_ ‘. ... 1 Hun: DC “A l 7 ' ' A I "- an: Jo “kn:- . ,. u- r 5.3.21.5 '5'1 12" ‘ 'H': C “1‘ ‘0‘ .4 ‘,u it a Hutu-v: l L -.--<- ' {\v- “. l \. . r, ’ O u . . .5 ... ,' fin. v. :J‘.r wv—F .“r‘ I uni... arr... 'A‘ M" .r"v .AC Mnéltht" wv- .. .-~. L.....k. T9": 1.: . . , W _ "¢~‘I :0 “n.- ‘rv"-'! 1 a“. done-Uri z: n: “w ,‘ “'1‘ I“ [t .‘Jxrt .L“ ~9‘ 'V'fi‘ - ..- .. ...? TX! WM" '1 9‘ L03...“|L 3;; --o'. 7,; ‘ A Ir“ y .. ,l ‘.L are n to such GX’ 220: ';;).;n ; Service Pi] 3', :39 6X31 to: of 1.21:: 'P ’v~‘;-,. , 0. run/IF? P'- ace: not i: l v M??- sen p.,_ . ..rc'jff ?r leaning in 1‘- Consumer 50:19.8 m t‘ Kit". by 1 Lfngumep Eatifactox Company b3' the Co 9? in the 32d dsnre DTC'Z‘TEV ( 731’? ther “1‘ or m: Wise: b1 5- Insnectim 30 the in: lation an 9“" Such nor am 1 +2.11 mg) 3” Wav ' Rlzht of Cfimnanv :h‘ Woe ‘UTmShjnl mm, or Vin: of ¢ IEasonabl ... gnu“? lsti ‘53: n W, C. T, p- ¢_.4 \. r 6“ V. t BIG RAPIDS GAS CO. 140 CITY OF BIG RAPIDS M. P. U. C. No. 1 Original Sheet NO. 1 RULES AND REGULATIONS. Z. 7. l. SERVICE AND LIMITATIONS. Existing Lines—Service will be rendered to the consumer from the Company’s nearest pipe line, of sufficient capacity to furnish adequate service and the consumer snail accept the serv1ce thus available for his use. ExtensionS.-—The Company shall supply gas at the rates which shall from time to time be in force hereunder, to all applicants for gas not in arrears for prior bills own- ing or occupying premises on streets wnere gas mains or conductors are laid. When ex- tensions of mains snail be necessary in order to serve any such applicant or appli- cants, the Company shall make such exnensions free of charge to the applicant or ap- plicants if the estimated annual revenue from such applicant or applicants shall be equal to one-half of the estimated cost. of such extension; but when the estimated cost of such extension shall be in excess of twice the estimated annual revenue from such applicant or applicants, he or they may be required to make a deposit equal to the difference between the estimated cost of such extension and twice such estimated annual revenue. After the actual revenue derived from such extension for which a. de- posit. so made shall have equalled the actual construction cost of such extension the full amount of all monthly bills to the depositor or depositors shall be refunded to him or them until the entire deposit shall have been so refunded; Provided, the amount of such refund so earned Shall. Within four years from the date of the installation 01' the extension, equal the amount of such deposit. any portion of such deposit re- maining after four years from the date of such installation to become and be the property of the Company. The cost of such extension shall include all cost of installing the same to the curb line. No deposit shall in any wav effect the title of the Company to such extension. The Company shall not be reouired to install any service or connec- tion upon any premises without the written consent of the owner thereof. Service Pipes—Service Pipes from the curb to the meter will be laid by the Company at the expense of the property owner and will at all times remain subject to the con- trol of the Company. Any alterations made necessary. such as changing of location, or enlargement of service. must be done at the consumer’s expense. The Company does not. in any case hold itself responsible for a stoppage from frost or other cause. of the service pipes or house pipes. The Company will employ all reasonable means of clearing the pipes to the meter, when stopped from any cause. All pipes beyond or leading, from the meter must be cleared at the consumer’s expense. APPARATUS— EASEMENTS. Consumer's Pipes—All pipes and equipxment except the Company's meters and acces- sories in the consumer’s side at the po t of delivery, necessary to utilize service furn- ished by the Company. must be installed and maintained by and at the eXpense of the consumer. The Consumer’s pipes shall terminate at the point of delivery, in a manner satisfactory to the Company, for connection with the Company’s pipes or apparatus. Company Property—All pipes, apparatus, instruments, meters and materials supplied by the Company shall remain its property, and shall be returned to it by the consum- er in the same condition as when received by the consumer except for ordinary wear and depreciation, and the Company may at any time examine, change or repair its property on the premises of the consumer and may remove all such property at, or any time thereafter. the termination of service. All damages or injuries to pipes, appara- tus. or materials of the Company on the consumers’ premises, caused by any act or neglect by the consumer, shall be made good by the consumer. Inspection by Company.—The Company is willing to assist the consumer by advise as to the installation of the consumer’s apparatus and to examine the consumer’s instal- lation and may refuse to make connection or to commence or continue service when- ever such installation is not in proper condition, but no inspection by the Company nor any failure by it, to obiect to the consumer's installation, nor the fact that it shall make connections with the consum er‘s installation, shall render the Company in any wav liable for any damage or injury resulting from any defective installation of the consumer. Right of Way-The consumer shall make or procure satisfactory conveyance to the Company of right of way for the Company’s pipes and apparatus across and upon the property owned and controlled bv the consumer, necessary or incidental to the furnishing of service. and shall also furnish shelter satisfactory to the Company for meters or other apparatus of the Company. installed on the consumer’s side of the point of delivery, and shall permit access thereto by the Company’s employees at all reasonable hours. Issued January lst. 1934. Issued by W. C. TAGGART, Treas., Big Rapids, Mich. Effective January lst, 1934. j Ml . :3‘. K“ a 141 BIG RAPIDS GAS CO. CITY 0!" BIG RAPIDS M. P. U. C. No. I Original Sheet No. 2 BULBS AND REGULATIONS—(Continued) METERS. 8. Installation—The Company will install and maintain at its own expense standard me- {grab measure the gas used by the consumer, and will inspect such meters from time e. 9. Notice to Discontinuc.—Notice to discontinue the supply of gas must be given in writ- ing or in person at the office of the Company at least 24 hours in advance. The con- sumer will be held responsible for all gas consumed until such notice is given and a reasonable time allowed to take the final reading of the meter. Notice of discontinu~ ance of service should not be given to employees of the Compan away from the of- gge, as such notice will not be accepted as a binding and forms notification to the mpany. 10. When the as meter has been removed for non-payment of a gas bill, a reset charge of $1.00 wi be made. TESTS AND ADJUSTMENTS. 11. The Company at any time upon written request of the consumer will test the meter of such consumer within five days after receipt of such request, provided the consumer will accept the result of such test as a basis for the settlement of the consumer’s ac- count; if any such test shall show the average error of the meter to be less than 2 per cent the consumer shall pay the expenses of the test except that where the meter has not been tested at the request of the consumer within a three-years’ period immedi- ately preceding such request, the test will be made without charge to the consumer. The Company may at any time at its own expense test any of its meters. An average error of more than 2 per cent will be considered in determining the consumer’s use Of 838 service, during the period covered by the special rule governing the particular class 0f service, the Company refunding where the meter is fast, and the consumer paying the difference when the meter is slow. The place for setting the meter will be determined by the Company. 12. Failure to Regimen—If the Company’s meter shall fall to register at any time the gas delivered, or consumed, during such failure, in the absence of a more accurate basis, may be determined on the basis of the nearest corresponding equal period of use, when there was no such failure, subject to corresponding credit to the consumer for non-use during such failure. If any appliance or piping connection shall be found on the consumers’premises which prevent the meters from accurately recording the total amount of gas on the premises, the Company may at once remove any such piping or appliances at the consumer’s expense. and may estimate the amount of gas so con— sumed and not registered. as accurately as possible, and the consumer will immedi- ately pay for such gas. The Company shall at all proner times have the right of access to the premises into which gas has been introduced. for the purpose of examining the general service or the removal or inspection of the meter or for such other purpose as may be necessary for the protection of the Company. In case of any wilful. intention- al or unnecessary inlurv to. or interference with. the meter or any connection, made to the house pipes or service. the meter at the option of the Company, may be removed and the service pipe cut off. BELB—PAYMENTS—NON‘PAYMENTS—SECURITIES. 13. am: Are Due on the date of bill and will normally be rendered at monthly intervals, for all gas furnished during the preceding month, but the Company may at its option render bills at more frequent intervals. The amount of gas passing through the meter as shown by the register on the index will be accepted by the consumer as the correct amount, except as heretofore ovided for, under rule No. 11, Tests and Adjustments, and rule No. 12, Failure to Reg ster, and Rule 14, Estimated Bills. 14. Estimated Bills—Where it is irnpractica ble for the Company to obtain a reading of any consumer’s meter during the regular period the Company will estimate a reading based on an average of previous bills for a corresponding equal period of use. In case of no previous use of gas the Company will estimate a bill on the basis of like service. antiidiggrepancy in estimating a gas bill will be corrected when actual reading is n . Issued January lst. 1934. Effective January let, 1934. Issued by W. C. TAGGAR’I‘, Treas., Big Rapids, Mich. -V.’---> ‘.'~. 9 he”. : ‘ a--. ..a- ..IP ii; ...-if ...lhIq. \- .l..Jo In... .. I—an, .1." . v .. .. m ... . a .. . a. s - . o . . . . l s . v. I .a . '0 re , .. .9: or 1» a . c. v ... . i. . A v . 7, v I .v ‘4 . Levitt-.52“. . . .3, .. .A . 2.. . . . A. I . . C a A. u . u. . Q. . . \ ... . w ‘ n . 1 I. , . . . .‘I u 4 hr 7 lag/ii... .43 ..u v i..- a» J 3 ‘ b C h «r " -——-‘—-—_— -. ,_, BIG RAPIDS GAS CO. 142 CITY 0]" BIG RAPIDS 15. 16. 17. 18. 21. 22. 23. 19. M. P. U. C. No. 1 Original Sheet No. 3 RULES AND REGULATIONS—(Continued) RULES AND REGULATIONS—(Continued) Prompt Payment Net Rates are allowed on monthly bills, only when bill is paid in full at the Company’s office within fifteen days from date of bill, and when no previous bill remains unpaid. Failure to receive bills will not excuse failure to pay, so as to en- title the consumer to net rate. When the last date for net rate falls on a legal holiday, or Sunday, net rate will be allowed on the next business day. Where remittances are made by mail, the bills shall be deemed paid under date of mailing, as shown by post mark. Failure to receive the gas bill does not entitle the consumer to net rate. Checks mailed in payment of the gas bill must bear post-mark of not later than the last day of net rate as noted on the gas bill to entitle consumer to net rate. Delinquent Bills—Interesta—Bills not paid in the net rate period are delinquent, and thereafter shall bear interest at 6 per cent per annum. Deposits—The Company may require a deposit from the consumer to secure payment of bills as they mature; such required deposit shall not exceed the amount of an esti- mated 90 days’ bill, with a minimum of $3.00. No interest will be paid upon deposits where service is discontinued within six months from the beginning of service. Upon final settlement of consumer's accounts any unused balance of the deposit with ac- crued interest, if any, will be returned to the consumer. In computing interest no con- sideratlon will be given to fractional parts of months and dollars. Application of Deposit—If the consumer shall fall to pay any bill within the net rate period the Company may upon notice discontinue service and apply any deposit made by the consumer in liquidation of such bill. MISCELLANEOUS. Company’s Obligations—The Company shall use reasonable diligence to provide con. tinual service, and having used reasonable diligence shall not be liable to the consum- er for failure or interruption of service. Strikes, Accidents, Eta—Neither the Company nor the consumer shall be liable to the other for any act or omission caused directly or indirectly by strikes, labor trou- bles, accident, litigation, Federal, State or Municipal interference, or other causes not due to neglect, but the cause producing such act or omission shall be removed with all reasonable diligence. Indemnity to Company.—The consumer will indemnify, save harmless, and defend the Company against all claims, demands, cost or expense for loss, damage, or injury to persons or prOperty in any manner directly or indirectly connected with or growing out of the serving or use of gas service by the consumer, at or on the consumer’s side of the point of delivery. Company’s Re‘medies.—The Company in addition to all other legal remedies may ter- minate or suspend delivery of service for any default or breach of contract in use of gas by the consumer. No such termination or suspension will be made by the Company without forty-eight hours’ written notice to the consumer, stating in what particular the contract has been violated, except in cases of theft of gas by the consumer, or dangerous leakage, ‘on the consumer’s side of point of delivery, or in case of utiliza- tion by the consumer of service in such a manner as to cause danger to persons or property. Failure of the Company at any time to suspend or terminate delivery of sen vice or to resort to any legal remedy or its adoption of either one or the other of such alternatives shall not affect the Company’s right to resort to any of such remedies for the same or any future default or breach by the consumer. Issued January lst, 1934. Issued by W. C. TAGGAR’I', Treas., Big Rapids, Mich. Effective January 1st, 1934. ..-. _._... .. m , o 143 BIG RAPIDS GAS CO. CITY OF BIG RAPIDS M. P. U. C. No. 1 ' Original Sheet No. 4 RULES AND REGULATIONS—(Continued) 25. Applications for Gas Service are to be in the following form: APPLICATION FOR METER AND GAS. No ............ ... 193 ............ THE BIG RAPIDS GAS CO. is hereby requested to supply gas to the undersigned, to be used for illuminating or fuel purposes, or both, and to furnish the meters that are now or may hereafter be required, in the premises known as STREET—FLOOR N0. AVE.-—ROOM ............................ FLAT N O. ............................ owned by one of the undersigned, and occupied by one of the undersigned, and the undersigned hereby agrees to pay for all gas used promptly, at the regular price and according to the mics of the company; also to hold the undersigned responsible for all gas used on said premises, from the date hereof until forty-eight hours after not- ice has been duly given at the office of the Company to discontinue the supply under the terms of the aforesaid rules and regulations. We further agree to all of the rules and regulations of the Company as set forth in its schedule of rates, etc., governing the sale of gas in the City of Big Rapids, which schedule is duly filed with the Michigan Public Utilities Commission and a mm of which may be inspected at the Company’s office. WITNESS PROPERTY OWNER WITNESS CONSUMER DEFINITIONS—EXPLA NATION S—REMARKS 1. Gas Service.—Is the furnishing of natural gas at a standard pressure and quality for illuminating, fuel, and power purposes. 2. Point of Delivery—Is the outlet of the Company’s meter installed for the consumer. 3. Service Pipes—Is that portion of the piping from the Company’s main in the street to the point of delivery. ' 4. Consumer-'8 Pipes—Is that portion of the piping from the point of delivery on the consumer’s side to the consumer’s appliances. 5. Quality and Pressure of Gas is governed by franchise granted to the Company by the City of Big Rapids, October 6th, 1932. 6. Franchises—All Rates are governed by franchise granted to the Company by the City of Big Rapids, October 6th, 1932. Issued January lst, 1934- Effective January lst, 1934. Issued by W. C. TAGGART, Treas., Big Rapids, Mich. .‘ ___-“__g ...... 144 BIG RAPIDS GAS CO. CITY 0!" BIG RAPIDS M. P. U. C. No. 1 Original Sheet No. 5 GENERAL GAS RATE Character of Service Who May Take the Service: Any person who complies with the rules and regulations hereinbefore set forth. Hours of Service: Twenty-four hours. Rate: Rate for Natural Gas Service: First 300 cubic feet, 75c net. Next 1,700 cubic feet at $1.90 per M cubic feet net Next 28,000 cubic feet at 40¢ per M cubic feet net. All over 30,000 cubic feet 25¢ per M cubic feet net. Minimum bill 75c net. Sales Tax to be added to all gas bills. Net rate applies to bills paid on or before last discount day. Bill not paid on or before last discount date will be subject to a delayed payment charge of 10%. Minimum Charge: Seventy-five cents net per month for meter regardless of whether or not the consumer makes use of the service during the month. Contract Form: Rates are not subject to contract by consumers. Reference to Rules: Service governed by Rules and Regulations set forth at Sheets 1, 2 3 and 4 hereof. (Rates governed by franchise granted the Company by the City of Big Rapids on October 6th, 1932) Issued January lst, 1934. Effective January lst, 1934. Issued by W. C. TAGGART, Treas., Big Rapids, Mich. 145 Muskegcn Gas Company GENERAL GAS RATE Who May Take the Service: Any gas customer RATES First 300 cu.ft. or less per month 90.75 Next 1°00 " per month 3.145 Per 100 cu.ft. Next 3000 ” ” " .13 " " " 1 Next 5000 ” " " .12 ” " " 7 Next 10000 ,, .. r . 11 " n r 3 Next 30000 " " .10 " " " . All over 50000 ” " .075 " ” " . or customer may at his option take service under A Industrial Rate. ”W” Minimum Charge: $.75 net or 91.00 gross per meter per month. GEJFRAL HEATING RATE Who May Take the Service: Any customer using gas for any purpose provided gas is used as the principal fuel for building heating. RATE First 2000 cu. ft. or less per month 93.22 All over 2000 cu. ft. per month $0.05 Per 100 cu. ft. Minimum Charge: 93.22 net or 93.47 gross per meter per month. OPTIONAL HEATING RATE Who May Take the Service: Any customer using gas for building heating only, who will contract to use or pay for a minimum of 100,000 cu. ft. per month during eight months of the heating season. RATE: All gas used per month, 3.035 per 100 cu. ft. Minimum Charge: $35.00 net or $40.00 gross per meter per month, for eight months. Contract: One year on standard form. Muskegon Gas INFUS"RIAL GAS RAmF Who May Take the Service: Any gas customer. RATE First 50,000 cu. ft. per month at General Gas Rate Next 50,000 cu. ft. " " $.05 Per 100 cu. ft. Next 100,000 cu. ft, " " .04 n n n All over 200,000 cu. ft. " " .035 " N w Minimum charge: 950.00 net per meter per month. Contract: One year on standard form. 146 Company Discounts: Above rates are net and apply if monthly bill is paid within ten days of rendition. Otherwise the follow— ing applies to the General Gas Rate and to the General Heating Rate: After such period 9.01 per 100 cu.ft. will be added, provided that amount added shall be not less than 9.25 nor more than $5.00 per hill. 14'7 GRAND RAPIDS GAS LIGHT COMPANY RATE SCHEDULES SFRVICE: Natural Gas--l,O5O B.t.u. These rates apply to the Cities of Grand Rapids, East Grand Papids, Grandville and Fockford, Village of Sparta, and ”ownships of Alpine, Byron, Gaines, Grand Rapids, Paris, Plainfield, Sparta, Walker and Wyomins. all in Kent County. General Service RATE ---Per meter per month: First 300 cubic feet or less .. ................ .¢.v5 ._e Next 1,700 cubic feet.........l4.5 c per 100 cubic feet Next 3,000 cubic feet.........10.0 0 per 100 cubic feet Next 45,000 cutie feet......... 8.5 0 per 100 cubic feet A11 additional ................... 7.5 0 per 100 cubic Peet Payment: Above rates are net. If bill is not paid on or before last discount day, lc per 100 cubic feet will be added; provided, however, that the anount to be added shall not be less than 9.25 per b111, nor more than 05.00 per bill. Monthly minimum bill-—-—9l.00 gross; 9.°5 net per meter. 92:19pal,£ha§atipi_Eshszali§sa9§,;95tinsi Xplune Water Heating; Pope; RATE --—Per meter per month: . First 300 cubic feet or less ..................3.°5 Next 1,700 cubic feet ......14.5 e per 100 cubic feet All additional ................. 5.0 0 per 100 cubic feet Payment: Same as for General Service lhdastrial_39rvi s -'~ ”-9 Rate ”A" Available to any customer agreeing to use not less than 200,000 cu.ft. per month. RATE --—Per meter per month: First 200,000 cubic feet or less ... .............t145.00 Next 600,000 cubic feet 5.5 0 per 100 cubic feet Next 500,000 cubic feet 5.0 0 per 100 cubic feet All additional .. ...... ....... 4.5 0 per 100 cubic feet iPayrent: The above rates are net. If bill is not paid on or before last discount day, a charge of 2 4 will be added; provided, Vanna-ova” +Inn+ nun-1n n'hnsnna n1r‘n1'l nn+ 'hn 1nnn +hnn 9:: nnr‘ more than 550. net per meter. Term of Contract: ....A Tfiininuuh 147a Henthiy 3111....9150 gross; 3145 least six months. -- 'w-m' "—.-—-- Available to any customer agreeing +o use not less than 1,000,F00 cu. ft. per month. RATE ---Per meter per month: t’irst 1,000,000 cubic feet or less .. . 0.00.00.500 5 0.0.00.04. 4 Next 1,000,000 cubic feet Yext 1,000,000 cubic feet All-additional ............ Minin‘um nonthly Bill....... Term Of Contract‘oooooooooo .5510 gross; é500 net ..............?500 er 100 cubic feet er 100 cubic feet r100 cubic feet per meter. .At least six mon+ he. Industrial Service "C” Pate Ava ilatle to any customer agreeing to use not less than 8 200, 000 cu. ft. pc r month. RATE ---°er meter per'month: First 2,200,000c Next 1,000,000 cubic feet Newt 1,000,000 cubic Peet All additional ............ Minimum Monthly Bill....... Tern of Contract........... ' 9 ubic feet or less .....................*l,000 0000.00.0400 C per 100 00510 fSEt ......... c per 100 cubic feet 0.5 .........3.0 c per 100 cubic feet 1 020g gross; 51,000 .At least six months. net per meter. BAY SITV SUBURBAN, SAI'TINAw SUBURBAN 148 M.Ifl U. C. No. 4 - Gas Consumers Power Company (hdginal Sheet No. 5 Natural Gas DOMESTIC RATES Who May Take the Service: Any domestic gas customer including gas used for all purposes, mm_commercial custmmers for space heating only. Rates: Immediate Rate: $ .75 per month, net - first 500 cu. ft. or less 1.25 net or $1.55 gross per M cu. ft. - next 1,700 cu. ft. per month, 1.00 net or 1.10 gross per M cu. ft. - next 3,000 cu. ft. per month, .85 net or .95 gross per M cu. ft. - over 5,000 cu. ft. per month. Objective Rate: $ .75 per month, net - first 500 cu. ft. or less 1.00 net or $1.10 gross per M cu. ft. - next 1,200 cu. ft. per month, .75 net or .85 gross per M.cu. ft. - next 5,500 cu. ft. per month, .50 net or .55 gross per M cu. ft. - over 5,000 cu. ft. per month. Procedure in Applying Immediate and Objective Rates: A base bill will be established for each customer eligible for service under this rate as follows: (a) For existing customers the base bill will be the cubic feet used for the same month of the year preceding the effective date of the above Immediate and Objective Rates computed under the Immediate Rate. (b) For new customers and for those customers taken on during the 12 months preceding the effective date of the Objective and Immediate Rates, the base bills will be their first 12 months' use of service computed under the Immediate Rate. Whenever the customer's bill under the Immediate Rate is equal to or less than hiS°base bill, the Immediate Rate will apply. Whenever the customer's bill under the Objective Rate is greater than his base bill, the Objective Rate will apply. Whenever the customer's bill under the Immediate Rate will be greater than his base bill, but under the Objective Rate will be less than his base bill, customer will be billed the amount of the base bill. No ,bill under the Objective Rate will be for less than customer's base bill and no bill under the Immediate Rate will be for an amount greater than the base bill. No customer's base bill will be in excess of $5.00 net. Discount: The difference between the net and gross rates above specified. \ u-vq ”I. 149 Minimum Charge: 75 Cents net per month per customer. Contract: Standard Application Form. No time limit given. Rules: Service governed by Company's Standard Rules and Regulations. Jurisdiction: Rates governed by contracts in Bay City, Essexville and Saginaw. All other territory under jurisdiction of Michigan Public Utilities Commission. Special Taxes: In municipalities which levy special taxes, license fees, or street rentals against the company, and. which levy has been successfully maintained, the standard of rates shall be increased within the limits of such municipalities so as to offset such special charges and. thereby pre- vent the customers in other localities from being compelled to share any portion of such local increase. Issued: March 19, 1956 Effective: On all bills issued on and after April 1, 1936. D. E. Kern, Vice-Pres. 8: Gen‘l Manager Issued under Authority of Order No. Jackson, Michigan D-2916 of the Michigan Public Utilities Commission, dated March 5, 1936 . i "n, 7’.- m. c. No. 4 - Gal Signal Sheet No. SA. ME] Take the Servi My domestic iicmercial customs: 2:95: mediate Rate: 3 -75 Per month 1.80 net or $1. 1.00 net or 1 .35 net or ObJective Rate: “5 per menu 1-00 net or $1 -75tmt or .50 net or 3mm“ in 599131 A base ‘01 1NACe under this (a) E01' 8113+ feet of Precedi ObJecti (t) For new MOD tbs Rates, compute Period fEet us ing the rel MienBVe] ALMA, HAS'T‘IK'GS, A‘TD LA’ISI’IG DIVISIONS 150 M. P. U. Co NC. 4 " Gas Consumers Power Company Original Sheet No. 5A Natural Gas DOMESTIC GAS RATES Who thy Take the Service: . Any domestic gas customer including gas used for all purposes, and camercial customers for space heating only. Rates: Immediate Rate: $ .75 per month net - first 300 cu. ft. or less, 1.50 net or $1.60 gross per M cu. ft. — next 1,700 cu. ft. per month, 1.00 net or 1.10 gross per M cu. ft. - next 5,000 cu. ft. per month, .85 net or .95 gross per M cu. ft. - over 5,000 cu. ft. per month. Objective Rate: $ .75 per month net - firet 500 cu. ft. or less 1.00 net or $1.10 gross per M cu. ft. - next 1,200 cu. ft. per month, .75 net or .85 gross per M cu. ft. - next 3,500 cu. ft. per month, .50 net or .55 gross per M cu. ft. - over 5,000 cu. ft. per month. Procedure in Applying Immediate and Objective Rates: A base bill will be established for each customer eligible for service under this rate as follows: (a) For existing customers the base bill will be one-half the cubic feet of manufactured gas used for the same month of the year preceding the effective date of the above Immediate and Objective Rates computed under the Immediate Rate. (b) For new customers and for those customers taken on during the 12 months preceding the effective date of the Objective and Immediate Rates, the base bills will be their first 12 months' use of service computed under the Immediate Rate. For those months of the base period during which the customer used manufactured gas, the cubic feet used during such months shall be divided by two in determin- ing the base bill. Whenever the customer's bill under the Imediate Rate is equal to °r less than his base bill, the Immediate Rate will apply. ’61: Whenever the customer's bill under the Objective Rate is greater an his base bill the Objective Rate will apply. Whenever the customer's bill under the Immediate Rate will be 5:83?” than his base bill, but under the Objective Rate will be less than bill “38 bill, customer will be billed the amount of the base bill. No no biunder the Objective Rate will be for less than customer's base bill and 1 under the Innnediate Rate will be for an amount greater than the base No customer's base bill will be in excess of $5.00 net. mat: Standard Appli Service govel' infliction: Rates under finial Taxes: In mmicipa] rest rentals againsi mined, the stand: tzhnmicipalities s Snatchers in othe inch local increas 13am: March 19, 1 ~- 1. Earn, Vice-Pre Jackson, N 151 Discount: The difference between the net and gross rates above specified. Minimum Charge: 75 Cts. net per month per customer. Contract: Standard Application Form. No time limit given. Rules: . Service governed by Company's standard rules and regulations. Jurisdiction: Rates under jurisdiction of Michigan Public Utilities Commission. Special Taxes: In municipalities which levy special taxes, license fees, or street rentals against the Company, and which levy has been successfully maintained, the standard of rates shall be increased within the limits of such municipalities so as to offset such special charges and thereby prevent the customers in other localities from being compelled to share any portion of such local increase. Issued: March 19, 1956. Effective: On all bills rendered on and after April 1, 1956. D. E. Kern, Vice-Pres. 8: Gen'l Manager Issued under Authority of Order No. Jackson, Michigan. D~2916 of the Michigan Public Utilities Commission, dated March 5, 1936. iP'J. C. No. i - Ce; Criginal Sheet ho. ‘7 CIT IE5 CF T: ‘iv lake the Serv’. Any domest‘. ncmercial custom: rate applies within ti Bay City and Essexvil The charge 0&3 Charge 500 Cu f Bob Cu f 700 on f 830 Cu 1 900 Cu 1 1,000 cu : Next 2,093 cu . .111 War 5’0“: cu >131:an Charge: 75 C18 . r Sitcom; customs r: the afference beta :c‘nt 1f bills are is” and Form of (2 written SerVice J JurisiictiOn: Rates ar med OCtobcrl 3,. , 1th,) Vice” Jacks OL/ i ‘ 152 M. P. U. C. No. 4 - Gas Consumers Power Company . Natural Gas Original Sheet No. 5—M DOMESTIC GAS RARE CITIES OF SAGINAW - BAY CITY - ESSEXVILLE Who May Take the Service: Any domestic gas customer using gas for any purpose; any commercial customer using gas for space heating only. This rate applies within the corporate limits of the cities of Saginaw, Bay City and Essexville. Rate: The charge per customer per month shall be: Gas Charge: 500 cu ft or less $ .75 net or $ .85 gross. 600 cu ft - - - .85 net or .97 gross 700 cu ft - - .95 net or 1.09 gross 800 cu ft - - 1.05 net or 1.21 gross 900 cu ft - - 1.15 net or 1.33 gross 1,000 cu ft - - 1.25 net or 1.45 gross 1.20 net or 1.40 gross per M cu ft .50 net or .70 gross per M cu ft Next 2,000 cu ft - All over 3,000 cu ft - Minimum Charge: 75 Cts. net or 85 Cts. gross. Discount: Customers will be billed at the above net and gross rates, and the difference between the gross and net amounts will constitute a dis- count if bills are paid in full on or before the due date shown thereon. Term and Form of Contract: Written application. No time limit. Rules and Regulations: Service governed by Company's Standard Rules and Regulations. Jurisdiction: Rates are governed by franchise ordinance or contract. Special,Taxes: . In.municipalities which levy special taxes, license feels, or street rentals against the Company, and which levy has been successfully :mainteined, the standard of rates shall be increased within the limits Eg E:>. : : - . : : :: 5.4 : 2+9 = i ' co : : Ii E 33 o s—4 :4) :5 : : on <15 ‘ ‘l O H 0 0 :CD :52. ' : H on i 1' U ‘1’ . :Q :91) : : i 1’ ° (1) f 54 : : IQ : : ' q : : m 5-4 . - -<+-4 i : : C“ : : m :4 if: : 50 E : : Q 0:. i 3 ~~~a o a: 5 5a 5 5 m - i 5 i 3 ‘H 2'“ = =3 5 2 M E : : : 5?) :"g E Em : : ; - : g ;,_4 : : :.,.. . 3 E D 53‘ a 2 as: as g :33” g 3 5 5g 5 i i w a -“ <15 5m 5 a _I E E o 5 g 5 66 :2 60 :| 5 5 O Q ,q 0 : ; : 53 3 :63 3,3: : : < pd E-*. (1.2 : : ! _,_, : Q4 . :si : : Ln 9 ' a a E e ' .8 2.5.13 2 3 g g . a a a gag gag i: : 2 z E ' 5 i ii i? U 'm 1"" (1)3 : ' : - : 4—> "c5 “ :‘g :G was : m - - r0 0 :H :5 s4 - . E 1 it; :*" :o 05 5 l "a :s—« :0 Us m :0 '. (0+) ) 5 E x <0 i m“) ) _——u .—.—_— Producers 88—Revised—Mich1'gan Form Central Printers, 127 N. Main Street, Mt. Pleasant, Mich. OIL AND GAS LEASE AGREEMENT, Made and entered into the ____________ day of , 19 ...... by and between of hereinafter called lessor (whether one or more), and ________________ hereinafter called lessee: WITNESSETH: That the said lessor, for and in consideration of . Dol-lar.___ cash in hand paid, the receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of lessee to be paid. kept and perform-ed, ha ________ granted, demised, leased and let, and by these presents do ........ grant, lease and let unto the said lessee for the sole and only purpose of mining and operating for oil and gas and of laying pipe lines and of building tanks, power stationsland structures thereon to produce, save and take care of said products, all that certain tract of land situated in the County of , State of Michigan, described as follows, to-wit: ................................................ and containing .................. acres, more or less. It is agreed that this lease shall remain in force for a term of years from this date, said term being hereinafter called “Primary Term,” and as long thereafter as oil or gas, or either of them is produced from said land by the lessee. In consideration of the premises, the said lessee covenants and agrees: lst. To deliver to the credit of lessor, free of cost, in the pipe line to which lessee may connect its wells, the equal one— eighth (1/8) part of all oil produced and saved from the leased premises. 2nd.' To pay to lesser, as royalty for gas from each well where gas only is found, while the same is being sold or used off the premises, one-eighth (1A3) of the market price at the wells of the amount so sold or used, the lessor to have gas free of charge from any gas well on the leased premises for all stoves and inside lights in the principal dwelling house on said land during the time by making lessor’s own connections with the well at lessor’s own risk and expense. 3rd. To pay to lessor as royalty for gas produced from any oil well and used by lessee for the manufacture of gasoline, one-eighth (1A;) of the market value of such gas. If such gas is sold by lessee, then lessee agrees to pay lessor, as royalty, one-eighth ~(1/8) of the net proceeds derived from the sale of said casinghead gas at the wells. If no well be commenced on said land on or before the--- day of 19 ........ , this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lesser, or to the lessor’s credit in the .. Bank at - - - or its successors, which shall continue as the depository, regardless of changes in the ownership of said land, the sum of __-_Dollars, which shall operate as rental and cover the privilege of deferring the commencement of a well for .................................... .. .......... months from said date. In like manner and upon "like payments or tenders the commencement of a well may be further deferred for like periods of the same number of months successively. And it is understood and agreed that the consideration first recited herein, the down payment, covers not only the privilege granted to the date when said first rental is payable as aforesaid, but also the lessee’s option of ex- tending that period as aforesaid, and any and all other rights conferred. Should the first well drilled on the above described land be a dry hole, then and in that event, if a second well is not commenced on said land Within ..... months thereafter, this lease shall terminate as to both parties, unless the lessee on or before the eXpiration of said . .......... months shall resume the payment of rentals in the same amount and in the «same manner as hereinbefore provided. And it is agreed that upon the resumption of the pay- ment of rentals, as before provided, that the last preceding paragraph hereof shall continue in force just as though there had been no interruption in the rental payments. If, at the expiration of the primary term of this lease, oil or gas is not being produced on the leased premises but lessee is then engaged in drilling for oil or gas, then this lease shall Continue in force so long as drilling operations are being con- tinuously prosecuted on the leased premises; and drilling operations shall be considered to be continuously prosecuted if.not - more than sixty (60) days shall 8131388 between the completion or abandonment of one well and the beginning of operations .for the drilling of a subsequent well. If oil or gas shall be discovered and produced in paying quantities from any such well I or wells drilled or being drilled at or after the expiration of the primary term of this lease, this lease shall continue in force so long as oil or gas shall be produced from the leased premises. If said lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided for shall be paid the said lessor only in proportion which lessor’s interest bears to the whole and undivided fee. 7 -l l ' Lessee shall have the right to use, free of cost, gas, oil and Water produced on said land for all operations thereon, ex- cept from water wells of lesser. When requested by lessor, lessee shall bury pipe below plow depth. No well shall be drilled nearer than 200 feet to the house or barn now on said premises without the written consent of the lessor. Lessee shall pay for damages caused by all operations to growing cr0ps on said land. Lessee shall have the right at any time to remove all machinery and fixtures placed on said premises, including the right to draw and remove casing. If the estate of either party hereto is assigned—and the privilege of assigning in whole or in part is expressly allowed ——the covenants hereof shall extend to their heirs, executors, administrators, successors, or assigns, but no change in the ownership of the land or assignment of rentals or royalties shall be binding on the lessee until after the lessee has been fur- nished with a written transfer or assignment, or a certified copy thereof; and it is hereby agreed that in the event this lease shall be assigned as to a part or as to parts of the above described lands and the assignee or assignees of such part or parts shall fail or make default in the payment of the proportionate part of the rents due from him or them, such default shall not operate to defeat or affect this lease in so far as it covers a part or parts of said lands upon which the said lessee or any assignees thereof shall make due payment of said rental. _ Lessee shall have the exclusive right to build, operate and maintain pits, reservoirs, pickup stations and plants for the purpose of picking up and conserving the waste oil that flows down the creeks, ravines and across the land embraced in this lease, whether said oil is produced from lands covered by this lease or other lands, and lessor shall be entitled to receive the royaltyhereinbefore reserved on all such oil so saved. Title to the minerals vested in grantee under this grant shall not end or revert to grantor until there is a complete, ab- solute and intentional abandonment by grantee of each and all of the purposes, express-ed, or implied, of this grant and ' every part and parcel of the premises described in this grant. . Lessor hereby warrants and agrees to defend the title to the lands herein described and agrees that lessee shall have the right at any time to redeem for lessor, by payment, any mortgages, taxes, or other liens on the above described lands, in the event of default of payment by lessor, and be subrogated to the rights of the holder thereof. IN TESTIMONY VVHEREOF WE SIGN, This the day 01 193-...._~...-.. \‘VITNESS (SEAL) (SEAL) (SEAL) (SEAL) ' (SEAL) . (SEAL) - (SEAL) STATE OF .......................................... ' COUNTY OF ....................... ..... i SS' ACKNOWLEDGMENT On this _ . ................ day of - , A- D. 193---., before me, the undersigned, a Notary Public in and for said County, in the State aforesaid, personally appeared ...... I _, to me known as the p-erson._-._..__. described in and who executed the foregoing instrument and acknowledged that ___-he” had executed the same as free act and deed, ‘ i i ‘ Notary Public in and for ...... County My Commission Expires 19 (Acting in .......................... ................ County, Michigan)“ STATE OF .......................................... a . ~ . _ gs ACKNOWLEDGMENT~ COUNTY OF ........... _. .......................... \ _ . On this ................ day of -. . . ., . ., A. D.-193 ........ ,. before me, the undersigned, a Notary .Public,; in and for said county, in the State aforesaid, personally appeared to me known as the person.....-..-- described in and who executed the foregoing instrument and acknowledged that '.-..-he had“: executed the same as t _ free act and deed. Notary Public in and for .............................................. County.” fay Cbnnniggion Expires .............................................. 19 ~ (Aeting lll ------------------------------------------- countyf MiChigan) ' DTATE 01“ ' B35, ACKNOWLEDGMENT FOR CORPORATION- COUNTY OF . =4: On this day of A. D. 193« ..... - , before me, the undersigned, a Notary Public in and for said county, in the State aforesaid, personally appeared ........................................................................... ................................ to me personally known, who, being.' by me duly sworn, did say that he is the ----------------- , ------ President Of """""""""""""""""""""""""""" I - , and that the seal affixed to said ............................. ....................................................... .......................... mistrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corpor- ation by authority of its board of directors, and said .i .............. . ................................................. acknowledged said Instrument to be the free act and deed of said corporation. Notary Public in and for .......... , County My Commission Expires ........ . ...................................... 19,- (Acting in ______________________________________________ County, Michigan) on C ' / a: "s O. ‘2‘ (“l U? ‘23 z is 3 ‘< r‘ 9. ii _a O “1 .o 8 a 9 :3 F ‘ 7,3 o 31 CI 3’ :t. (a S J ' O O .... F. P), > 9 Q. I = " - a '“ w A a n ~ 0 7o : 5 :- a: t '1 g 8 o 3 7} J O a i F" l . N . . - 8 g 5 O .3 i _ r. ’1 : g Q- i :3 3 Q -d ”I1 . . a. E: ('3 i-‘- > ‘ .' :v- 0, z ‘33 e 2 ' “‘ i— U l a. :3) :0 Q1 3 a 5‘ "C a '21 9h ~< o. Q g Q ’1 ”h gr 9 9* , > 2 f 8 3 0‘3 a 5' 8 8 ' {11' a m a S E. is 3 9“ g3 '2. 1“ 03 > i O 2': 77 "V ('0 ' z (b w m i "“ ‘“ ‘ i i u a" , a {11 -7 -h— ¢_— ‘5- -.a,,, b -—'__ In Stock and for Sale by Central Printers, Mt. Pleasant, Mich. ASSIGNMENT OF OIL AND GAS LEASE MIHZYBEIE, 0n the .................... day of , .................. , 19 ......... , a certain oil and gas mining lease was made and entered into by and between Lessor.... and ...................... Lessee covering the following described land in the county of and State of to Wit; Said lease being recorded in the office of the Register of Deeds of said County, in Liber .................................... Page and WHEREAS, The said lease ........ and all rights thereunder or incident thereto are now owned by NOW, THEREFORE, For and in consideration of One Dollar ( and other good and valuable considerations ), the receipt of which is hereby acknowledged the undersigned, the present owner of the said lease. . and all rights thereunder or incident thereto do ........ hereby bargain, sell, transfer, assign and convey of the right, title and interest of the original lessee and present owner . in and to said lease“..- and rights thereunder insofar as it covers the together with all personal property used or obtained in connection therewith unto and ______________________ heirs, successors and assigns. And for the same consideration, the undersigned for and heirs, successors and representatives do.--. covenant with the said assignee, heirs, successors or assigns that the lawful owner.___ of the said lease-_-- and rights and interests thereunder and of the personal property thereon or used in connection therewith; that the undersigned ha____ good right and authority to sell and convey the same, and that said rights, interest and property are free and clear from all liens and encumbrances, and that all rentals and royalties due and pay- able thereunder have been duly paid. IN WITNESS WHEREOF, the undersigned owner-.-_ and assignor._-- ha--.- signed and sealed this instrument this - - day of ............ 193"“ WITNESS (SEAL) (SEAL) (SEAL) (SEAL) (SEAL) (SEAL) (SEAL) I"' 11 rr~rr\ rTF-Ur:rT (3‘1, . STATE OF ............ COUNTY OF ______________________________________ iss. ACKNOWLEDGMENT On this day of A. D. 19 ........ , before me, the undersigned, a. Notary Public in and for the County and State aforesaid, personally appeared to me known to be the Person ............. described in and who executed the foregoing instrument and acknowledged that ........ .. he ................ executed the same as .................. free act and deed. ' Notary Public in and for ......... County My Commission Expires .......................................... . Acting in .......................................... County, Michigan STATE OF .......................................... SS. ACKNOWLEDGMENT FOR CORPORATION COUNTY OF - . p . . On this day of ............................ , A. D. 193.-.-, before me, the undersigned, a. Notary Public in and for said County, in the State aforesaid, personally appeared _____ to me personally known, who, being ___________ , and that the seal affixed to said instrument is the corporate seal of said corporation and that said instrument was signed and sealed in behalf of said corpor- ation by authority of its board of directors, and said , acknowledged said instrument to be the free act and deed of said corporation. Notary Public in and for County My commission expires: (Acting in County, Michigan) : c ' l ' m a». i 3 o, = g, i E 3 ,§ ”8 g ' t : : o g e s g a s a “3 e 3 : ... l : .H ...—I g; S 2- ' .54 LE 0 c: a "’ ° +3 «n as “ I: ‘5 ° 33 '0 a: 3' . ° : m 'H a, 0 5: (I) 13 2 O 'F‘ i 53 (I) iu 6‘9 .5 m M _U i 8 AA 8 2 'c ”c 52 - 5-4 5 s 8 5‘5 8 ; H H Q) m I o o H : o — Z ' H Q) Q "' o O .9 8 H '5 O m 9‘ J: a 3' [L W Z :3 18 :1 <1 3 r5 0 E U a? '5 i ' 54 H 4.» i: : : E :11 g d 5 1 'E i ' 9 g r a 3 ' : U 2 h :3 2 E I : , O H i : o . l E P *-’ g g o . :' = l l E i .9 >4 E : ,: . 5 5‘5 *‘ s m I: O a .E" I I“ I Ito-4 l' a II: -- ‘ i A. ‘4 E L ‘* r“ ': ~' -- "s . g 7 fl' t“. “‘ .... 1 L _ : NOTE ROYALTY OWNER’S PRODUCTION REPORT 1. . Royalty owners must report under the heading “Gross Royalty . ' . . . Received” the total quantity of royalty oil and gas received during STATEMENT to the Michigan State Tax Commissmn showing, as required by law, the total received by each monthly period. NAME _________________________________________________________ ADDRESS .................... , _______________________________________________________________________________________________ 2. Remittance should be made only in cases Where tax is not paid by ommo P ' xh ’ ' . . . . . . This it»{filiguiieigrfifigfieOll‘l‘tnilfioiifififéd to STATE TAX COM- as royalty on the production of (0.1 G ) .......... for the monthly period beginning ........................................ , 19 ........ , and endlng .................................... , 19 ........ l 01‘ as MISSION e r 1 1 ' A ° ' \ (“n t iough remittance ls DOt required. the name of the producer; the name and location of each lease and the total royalty received therefrom, and the amount of gross production tax due thereon. y ¥ PRODUCER OR LESSEE LEASE GROSS ROYALTY RECEIVED (Note 1) Name Address Name of Lease Qr. Sec. TWP R County ‘70 Quantity Unit Price Actual Cash Value \\ _— \* __ q “to mogfihglgl): G’ N BBLS. OR M. FT.- AMOUNT OF TAX (2 per cent of the Gross Cash Market Value) $_ ...... . ........... ne ive ame BBLS. OB M. FT (See Note 2 above). of each Purchaser BBLS. OB. M. FT- ~. ~._. '~. ~ ..... ....... 111g: ICE‘“Make Remittance payable to State Treasurer of Michigan sending same with this state- to State Tax Commission at Lansing. (See Note 2 above.) INSTRUCTIONS (READ CAREFULLY) .This statement must be filed with the State Tax Commission on or before the twentieth day of each month for the month preceding. and must cover the full amount received for the production during that preceding mont 1. In preparing the statement it is necessary that all information required on the form be given in full. The proper officer must execute the affidavit as prescribed before some person authorized by law to administer oaths. The actual producer of oil or natural gas is required to report the entire gross production from all leases, both commercial and restricted (departmental) including any royalties or interest that any other person may have in same. Oil and gas must be reported on separate sheets. The severance tax is to be computed. at two per cent of the gross cash market value of the total production. For the purpose of preparing this statement the term “Gross Production" is to be construed as meaning all products produced during the monthly period, preceding. Tax on gross production of oil and.gas_ becomes delinquent twenty days after the expiration of each monthly period, and a penalty of ten per cent per annum will be charged together with the costs of examination by the State Tax Commission. Additional information and forms for making up this report may be had by applying to the State Tax Commission, Lansing, Michigan. Michigan State Tax Commission. z 3 e 9 D: E" a o U 8 a A g ,0, gm D U a '5' FIG} a 00 2 (f, if; a: .. o a 5%: a .. a a; g» E) is: ‘5 ”Si 0 :5 3:5 w L- 7“ a W ’3‘” 2 3:09.. 2 Fe?” E a a: £353 ‘7’ ix ° QE- 3 3 DE" a ‘5 =... <1 El :1 z a. «s: v >.. ,_: g, 8 Q < go g v a: >4 .. o é “ .5 o a Z a: 8 i=1 2 d ‘5 I81 Fla '[IGM sefi .10 HO eiemdes qoee 01 GOUOJGJBJ qiim uoiioas siqi qiim Kldmoo 01 amps; 30 sKep Kinemi qoee .10} eniooe neqs Rifeued qons pun ‘imfiiqoiw JO 91918 em 01 aneKed smuop poipunq 11991513 new, 3.10111 1011 pue perpunq exg ueqi ssel 1011 go figured e 01 ioel‘qns eq Heqs quemennbei siqi qiim Kidmoo 01 Same} uosaed .IO uoiieioosse ‘uoiieiodioo Kuv 'uoissiumiog xel ueSrqorw em 30 uonoadsm em 01 setup [[8 in uedo eq neqs piooei pies pun ‘uoiionpom 85)! in pefiefiue os sum 9in finimp 9113213 siqi ui peonpmd [i0 qons he :10 pJOOQJ eiaidmoo pm; 1an a eAJason pun dean ‘exem 118118 109 siqi JO 01m pue auo suoiioas in pepnpui pun penoriueuu uosaed .Io uoiieioosse ‘uoiieiodioo qoeg ‘17 uoiioes 'uoissiumiog eqq Kq pennbei eq item as noiiemiogui Jeqio qons pus ‘peiiodsueii .io poiois ‘peseqomd ‘peAteoeJ SI :11 sum em is 30319111 onren 1911mm [anion aqi pue ‘qiuow Surpeoeid eqi Buimp peiiodsueii .Io p9101S ‘peseqomd ‘poAieoei seS pun [[0 qons 30‘ innofne [8163 am Suimoqs ‘uoissimuiog xel 91mg aqi Kq pennbai Jeuuew pue 111.10} eqi ii; 1.10in Kiqiuom e qons exam asinxexq [[eqs ‘seS .16 [IO qons Kira iiodsuen .io asaqomd .10 animal [[aqs oqm ‘Jaseqomd uoumioo .io Ruedmoo euii edid ‘ieiimo uounnoo ‘uosred ‘uoiieioosse' ‘uoiieiodioo KieAH 'g uouoeg 'uoiionpmd JO emii oqo, is 30919111 SRIBA iexmm [anion oqi pue Burpeoaid qiuom 9in Bmmp ‘esm -J9t{10 .10 non qoea 1110.1; uosxed .Io uoiieioosse ‘uoiieiodioo qons Kq paonpord 898 .10 no JO qunoum {9101 am Buimoqs uorssruimog qons Kq pequose'id JQUUBUI pun 111.103 am Hi uoissruimog xeL eieig uafiiqoiw out; 01 qiodei a ‘meK qoee Jo qiuom qoae JO Rep isrg am no ‘rmiudm exam “this ‘91913 '81in m ‘11qu am (1101} iii Suixei Kq 888 .10 [i0 Rue ‘Jeuuem 19q10 Rue ui seonpOJd oqm uosaed .Io uoiieioosse ‘UOIClBlOdJOO qons fine .10 ‘[[9M sefi .Io ment [to fine ‘e'mis siqi ui ‘z‘uisnel .10 Buiieiedo ‘fiuifiauaui ‘Suiuonuoo ‘Buiumo uosaed .IO ‘uoiieioosse ‘uoiieiodioo q'oeg 'xei BOUBJQAQS 9in se umomi sq in xei ogioads e ‘sefi .10 no nos aqi (no.1; Bananas J0 sseuian eqi U! pofiefiue nosiad .io ‘noiieioosse ‘uoiieiodioo qoae uodn peiAeI quieq 5! 9.19111, '[ uomoeg '686I .EIO SLOV OI'IEIflcI—‘SS 'ON LDV JO 17 (INV Z ‘I SNOILDEIS 'Oiiqnd WON .......... 6I . sendxe uoissitmnoo KW ....... 61 30 Rap 3‘qu 9m exogeq 01 moms pus paqiiosqns 'ioanoo pun emi S109d88J [in at St iiodai pies Joilaq pue onalmonq Km 30 isaq em 01 'ieqi ‘ ‘ _ . _ . pUB .plos qoiqM 103 snuoq .io sumimeid [In pun Kira sapnloui paims @0in .io 00in qiun oqi 2min pun pagioeds so poiiod 91p .10} RiinKOJ ssoni .10 [8101 am 30 iuemeieis oieldmoo pun "n3 B 9903.1me sums eqi qeqi : 309.191“ Jenna! 1091‘an am 0'; so pounding Run} um pun iiodai niimm eqi peoa axaq I min : pained uiqiim out; 30 exp, um I 3,an fies pun esodep op qieo uodn ‘ponSismpun em ‘1 JO ALNHOD 'SS 'NV‘DIHDIW .110 ELLVLS .LIAVClILtLtIV i In“; l~22-37—3 M NOTE PRODUCER’S PRODUCTION REPORT File N o. _ 1. PRODUCERS must report the total quantity of oil and gas produced dur- mg each monthly period. 2. Remittance should be made only in cases where tax is not paid by Common PUrchaser or Pipe Line Company. Oil or Gas This form must be filled out and returned to STATE TAX COMMISSION even though remittance is not required. NAME ADDRESS STATEMENT to the Michigan State Tax Commission, showing as required by law. the gross production of by during the monthly period beginning (1 U , 19 , an ending , l9 ; the name and location of each lease and the production therefrom; the ROYALTY INTEREST of production and to whom payable; and the WORKING INTEREST of production, together with the actual cash thereof and the amount of gross production tax due thereon. LFASE PRODUCTION \ ' GROSS on TOTAL TO WHOM SOLD WORKING INTEREST ROYALTY INTEREST PRODUCTION NAME AND LOCATION OF ACTUAL CASH VALUE NAME Qr. Sec. R. Twp. COUNTY BBLS. OR M. FT. PLACE OF DELIVERY. Unit TO WHOM PAYABLE _ z % BBLS. OR M. FT. Price a \k 1 l % BBLS. or M. FT. (Name and Address) ¥ X ‘ giOTICE:—Make Remittance payable to State Treasurer of Michigan sending same with this statement to state Tax Commission, Lansing. (See Note 2 above.) AMOUNT OF TAX (2 per cent of THE GROSS CASH MARKET VALUE) 3 SEE NOTE 2 ABOVE.) INSTRUCTION S (READ CAREFULLY) This statement. must be filed with the State Tax Commission on or before the twentieth day of each month for the month preceding. and must cover the full amount received for the production during that preceding month. In preparing the statement it is necessary that all information required on the form be given in full. The proper officer must execute the affidavit as prescribed before some person authorized by law to administer oaths. t the entire gross production from all leases, both commercial and restricted (departmental) including any The actual producer of oil or natural gas is required to repor Oil and gas must be reported on separate sheets. royalties or interest that any other person may have 1n same. The severance tax is to be computed at two per cent of the gross cash market value of the total production. For the purpose of preparing this statement the term “Gross Production" is to be construed as meaning all products produced during the monthly period, preceding. Tax on gross production of oil and gas becomes delinquent twenty days after the expiration of each monthly period, and a penalty of ten per cent per annum will be charged together with the costs of examinat10n by the State Tax Commission. Additional information and forms for making up this report may be had by applying to the State Tax Commission, Lansing, Michigan. Michigan State Tax Commission. S} [-4 Z i D: Q E” O H E A 9-1 E4 ‘9 g m U 8 55} g m D figs :13 a *3 CD 1‘: o E; Q <1? 0433 e E: e ‘3 a . s». s ta. Q .. "" 83 E o 23 ~ -— 8:: 5‘ "co 0 E-da ca : 'c 0 c2 0: e a "o a: _ a“ z o "O ‘i .2: m (45 < m 5 Q :g E <1 3“ ’ .... J) g: u : 28% a? s 5.; D g3 é 5’: E a Q o .5. 3 e E g a: S =35 s H a < .= 9- L’ E g E O :53 1 5 1:. 3 ho '[lOM sefi .10 [go ewmdes 11090 0'; eeueae e1 mm 11011098 SI 1 311.1 A (11110:) 0' em re 0 sk’e ) R u M 3 emcee [[eqs .(cueued qons pus ‘uefiiqoiw o ems em 01. GIqBABd smfiop peipunq den 31;; ueqe, e10u1 'ibquue pimplmq aim} deti’i‘isse] qdu 310 21113339813: aeefqns eq [[eqs quemeimbei sup, 1111M RI 11100 01 Buying nos1ed .10 uonereossa ‘uogmodioe KuV °u01ss1u1wog xe L uafiiqerw em 30 uouoedsur e111 0:; setup, "a as uedo eq [[eqs p.100e1 pres pus ‘uonenpmd S3; 111 pefiefiue os amp, 9113, Burmp eqeig sup u1 'pe'enpom' [roLqens fie jo p100e1 eiefduroe {3119 I n e eAJeseJd pue deex ‘eqem usqs 2108 S1111 Jo om pus euo suonees ur pepnpur pus peuonuem uos1ed'10 uonrereos'se ‘uoneJodioe 110123 “~17 uoneeg I J 'uorssruuuog eqq .(q pennbei eq Kern se uoneuuqur Jeqqo qons pus ‘peuodsuem, .10 {39.1018 ‘peseqemd ‘pOAIGOOJ SI 11 emu em as JOBJOQ") QIIIBA impel-u [811108 e111 pm; ‘q1uou1 BugpeeeJd e111 Burmp peuodsuen so pe101s ‘peseqemd ‘pemeeei s83 pus [10 qens Jo. gunotue' [e169, eqq Suraoqs uogssgmwog xeL ezezg e111 Kq pennbeJ Jeuuem pus 11110} em, 11; nodes AILHIIOUI e qens exam esmexq “nus ‘sefi .10 [10 none Rue Qiodsuen .10 eseqemd .10 9A19091 [[eqs qu ‘Jeseqemd 11011111100 .10 Ruedmoo eun edgd ‘.1e1.uee uomuroo ‘nos1ed ‘uoneieosse .‘UOI’IBJOdJOO AiGAH '3 nonoeg 'uononpmd 30 earn e111 112 can 1 en BA e mm en 09 e1 ue Bur ‘ -.reqqo .10 [[em qoae 1110.1} uos1ed .10 uoneroosse monemdwe qons Kq peonpOJd sJeEf .loquo 510 1u1ndlwe [rims am $13qu ugisoscidfuildgorlgrislitg[35211102333 .‘IOIIIIBILI pus 111.10} e111 I11 uorssnnmog xeL estrus uafigqogw em. 01 110(191 e ‘JeeK qeee Jo q1uou1 qoee JO Rep 7181!} end no ‘Kqu'uour exam [[eqs ‘eieqs'sI 1 111 ‘qqme em 1110.1} :11 Sumac; Kq s93 .10 [10 Rue ‘Jeuusul 1eq1o Rue 111 seenp01d OIIM uosmd .10 uonereosse ‘uoueiodmo qons fine .10 ‘[[9M s92} 10 em {éqrué . 91313 sgq? u; Burseel .10 Bunmedo ‘fiurfieueur ‘Bumonuoo ‘Surumo uosmd .10 ‘uonereosse ‘Iiorielodmo qbeq 'xm eeussexes 0111 se uxxoun e [b xe ogreeds a sea .10 110 [10s em {1101} SupeAes J0 ssengan eqi 111 pei‘o‘efiue uosmd .10 ‘uorierdosse ‘uonieiodioo qoee Luodn pemel quieq sr ekJeq L :1 ugtqebg 1 '6Z6I JO SLDV DI’IEIfld—‘SE 'ON LOV 30 i" CINV Z ‘l SNOILDHS 'onqnd AJBQON 6I ‘ sendxe uorssgmuioe Kw .......... 6I ( K JO up sup em esogeq 01 moms pus peqposqng ”palm" pawn mm! Jo 99339;: 53:3: giedgz; nadir! 81 node; pres Jegleq pun GEPQIMOUII Km J0 iseq err; 01 zeq: pun :plos qerqm .103 snuoq .10 smmmeid [[8 pm; Rue . . . . gee s 88 page em .10} AQI‘BAOJ 89.0.18 J0 18101 e 1 o unemeims e 9 (111100 . ‘ 101mm qoet'qns em 01 so peunogu; £1an um pus node: urth eqz pee: exeq I 18m : ll 1 1 I PUB ll“! B 8908.1qu 9am: 9111 19‘“ 409-‘9‘11 I. umu ugqum em J0 at” me I '1qu £138 pm: esodep op q'mo uodn ‘peufirsuepun eq'; ‘1 '93{ so xLNnoo ‘NveIHom so sums ___—cr PIPE LINE OR COMMON PURCHASER (ROYALTY INTEREST—GAS) MONTHLY STATEMENT of Location of Principal Office To the MICHIGAN STA TE TAX COMMISSION, Lansing, Michigan. Total amount of gas received, purchased, stored, or transported during the month period beginning _________________________________________________________________ _ ....... 19 ________ and ending .......... . .................................... 19 ........ , both dates included. The following prices which represent the actual market value at the time of receiving, purchasing, storing, or transporting, were paid for gas over this period. (NOTE: Read instructions printed on reverse side of this blank before filling out columns below.) NAME OF ROYALTY OWNER LOCATION TOTAL AMOUNT PRICE (AnaggeDRNétngogggggggggiizcauy) POST OFFICE ADDRESS ___QR. __RsEC. __TWP. PflRggAlsED ALERT AM 0'13???le ROYALTY OWNER " i PRODUCER '”“”“ ’ ROYALTY(NNN R “i”"’”_“”’ "‘_"___‘“‘ L__ - #4**——— A — PRODUCER ‘”“"“‘““* ROYALTY(HNNER w”"""_m“‘”"“ ‘ ‘ " ___L, — -~ ~————7 77-~ PRODUCER ““‘_ ““ ROYALTY(NNNER '""H ”“ "‘"“‘““"”“"““’~““‘“-" ~ -¥~ -——-77 -m,_w_-., —7 -~ "— PRODUCER "“”“m“' ROYMEYOWNER ‘“““””” “"“’“”‘”‘“"*“”' r- ~~-~ —~_~~—»~Lw~_M*~-~ - ~7«—~— PRODUCER ROYALTY OWNER " ”P ,__ — u _._ __ __ c- _ PRODUCER " ROYALTY(HVNER ‘ ‘ "" ‘"'——““r~ ~~“—r~—-— ~ --- _— - PRODUCER " ROYALTYCHNNER. —' " “—“*—-~—- ,E_ -—"—-—~* ~~- — m _ ’ PRODUCER ” F" ROYALTY(NVNER “ ‘ ‘ ‘**“-r~* -“ -_A_ ‘———-- ___. - - .JAM_~ -_ -L L PRODUCER ROYAUPYOWNER " " ““ r -“—-r ->— ~~-~~——n«~— — ~ - - a _s- - ___A “ PRODUCER leMEYOWNMt “W“‘”" ”"““”“'-“—~w <- — — ~——-—-P~- -*_-fl__.mA__e_-E_LH_- _ PRODUCER IKWuLTYOWNER ”“"“”““”“”“ ‘P’““”“YD—_~r~~-~~v——~Ar—-—wu~——_~—_—an__ad. _Lfi_ ,_L ...... __ PRODUCER __"""“‘“‘ T'ImYMEYOWNmr‘_ ‘_“ ' '—‘W‘—rrfl— ~_—#__~__WL____UH_L_L__U1_H___ PRODUCER “““‘ ‘““" ROYALTYWJWTUMt"_ ‘“‘”““*‘ '“P-"*-~——-—~"« Eqn_v_ __LLL_____M_MLL___H,_W,_,__”_ PRODUCER "_“"”‘" """ _TRWALTYOWNER—m’ —‘ —— __L,____ ——~—~-——~——_~_~__n__-_L -.mu__,______A ,_ _ _ _M_ “"PRODUCER “’ “‘ T’ImYMEYOWNMiW’W_”““‘””“’ D ““——*—* ~'-—v~w~~—h—~—~n~se__--kw_a_m_e ,_ __ " PRODUCER "“”““““““ " ROYAUDYOWNER ' "” “”“'“" _- «wnwrw—fi_——~--.---EMW_WW c -.."W»LM_- 'PRODUCER NOTICE: Make remittance payable to State Treasurer of Michigan sending same with this statement to State Tax Commission at l .ansing. w AFFIDAVIT I,.the undersigned, upon oath do depose and say that I am the ______________________________________________________________________________________ %§]:llelv;:;h;n;g:énf}de foregoing and within statement and schedules; that I am fully informed of the statements therein contained and that the same are to my knowledge true and correct. ....................................................................... STATE OF COUNTY OF BE IT REMEMBERED THAT ON THIS day of , 192 ........ , before me, the undersigned a Notary ° ° . abo e-named State and County, personally appeared . 5321;301:2012? iiiidtbging duly sworn stated that he had read the within and foregomg schedule and statement and has full knowledge of the contents contained therein and in my presence subscribed his name thereto. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official sea] at ..... on the day and date last written. (SEAL) Notary Public My commission expires 5 2'33 - o '2 '5 cs 83 r-l 00 +9 4;..5 A A a 08 a? EB Q) wk 3 E ‘0 E ~8. e m 1:1 8w ‘” a: G) an .2 :14 m 4') om r5 5E“ ‘5 ...E .. a 4—7 a 0 Q) C .... Z in o «a E h .. m "" CD 0 gun as — '6 <0 .53 >3 id'— 4 E a E" l "US +9 “IF-l be "do a 5 4 .5 "E “g o c >4 49 13 138 ' :1 Z 7.: 0 Cl L3 5; 8 v 2 e 7:515 o “13% 2 age La s 5:5»? h 22:: INSTRUCTIONS This statement must be filled out and filed with the State Tax Commission on or before the twentieth day of each month, respectively, of each year, and must cover the month period preceding, respectively, of each year. In preparing the statement, it is essential that all the information required on the blank be given. The proper officer must execute the affidavit as prescribed before some person authorized by law to administer oaths. Only Gas purchased from royalty owners is required to be shown on this statement, but the NAME AND ADDRESS of the PRODUCER of such royalty must be shown in line designated for that purpose. Use this form for reporting “royalty interest” only. Separate form is furnished for reporting “working interest.” The State Tax Commission in accepting this statement reserves the right to require any additional information they may deem necessary. Blanks for making this statement may be had by applying to the State Tax Commission, Lansing, Michigan. Michigan State Tax C (IIII.iESl 1 SECTIONS 1, 2 AND 4 OF ACT NO. 35—PUBLIC ACTS OF 1929. Section 1. There is hereby levied upon each corporation, association, or person engaged in the business of severing from the soil oil or gas, a specific tax to be known as the severance tax. Each corporation, association, or person owning. controlling, managing, operating or leasing, in this State, any oil well or gas well, or any such corporation, association or person who produces in any other manner, any oil or gas by taking it from the earth, in this State, shall make monthly, on the first day of each month of each year. a report to the Michigan State Tax Commission in the form and manner prescribed by such Commission showing the total amount of oil or gas produced by such corporation, association or person from each well or other- wise, during the month preceding and the actual market value thereof at the time of production. Section 2. Every corporation, association, person, common carrier, pipe line company or common purchaser, who shall receive or purchase or transport any such oil or gas, shall likewise make such a monthly report in the form and manner required by the State Tax Commission, showing the total _amount of such oil and gas received, purchased, stored or tranSported during the preceding month, and the actual market value thereof at th time it IS recelved, purchased, stored or transported, and such other information as may be required by the Commission. Section 4. Each corporation, association or person mentioned and included in sections one and two of this act shall make, keep and preserve a full and complete record of all such oil produced in this State during the time so engaged in its production, and said record shall be open at all times to the inspection of the Michigan Tax Commission. Any cor oration, association or person failing to com ly with this requirement shall be subject to a penalty of not less than five hundred and not more than 1fteen hundred dollars payable to the State 0 Michigan, and such penalty shall accrue for each twenty days of failure to comply with this section with reference to each separate oil or gas well. ‘ PIPE LINE OR COMMON PURCHASER (WORKING INTEREST—GAS) MONTHLY STATEMENT of Location of Principal Office To the MICHIGAN STATE TAX COMMISSION, Lansing, Michigan. Total amount of gas received, purchased, stored, or transported during the month period beginning.._._- "19 ________ and ending ' . 1.9 ........ , both_dates included. The following prices which represent the actual market value at the time of receiving, purchasmg, storing, or transporting, were pa1d for gas over this period. (NOTE: Read instructions printed on reverse side of this blank before filling out columns below.) TOTAL AMOUNT r NAME OF PRODUCER ADDRESS LOCATION PURCHASED “ESL TOTAL AMOUNT (Arrange Alphabet1cally) Qr- S80- TWP- R. M. Cu. Ft. M. Feet PAID l 1 1 l J l NOTICE: Make remittance payable to State Treasurer of Michigan sending same with this statement to State Tax Commission at Lansing “(A " it"I—gmfi 3 " - . I, the undersigned, upon oatE ac aepose 8113 5:1 “I”! m f the Within-named. ..... _ _________ . ‘ . . . p ’ T hat I have read the foregoing and within statement and schedules; that I am fully informed of the statements tliereln contained and that the same are to my knowledge true and correct. STATE OF __________ COUNTY OF BE IT REMEMBERED THAT ON THIS ____________________ day of .- , 19 .......... , before me, the undersigned. a Notary Public in and for the above-named State and County, personally appeared . to me known, and being duly sworn stated that he had read the within and foregomg schedule and statement and has full knowledge of the contents contained therein and in my presence subscribed his name thereto. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal at ....................................... on the day and date last written. (SEAL) Notary Public My commission expires,“ ______________________________________ i 5'13 5 5.5 .3 as We ~ ea ,, o E E CD “S g as Ln E 33% 5‘ a 5i 3 iii“ .5 .. Z ‘F’ “54a ‘5’ ,2 a) .5 0 C5 3's: Z 5“ '5 :2 a 2 >= as < s +0 H '—‘ be ”Us .._, c3 = 0 Cl E 50 0 Z El E O i 098 B 2 *5 E515 0 “ing 2 was La €101: o EEO—5 Lu 223w INSTRUCTIONS This statement must be filled out and filed with the State Tax Commission on the first day of each month, respectively, of each year, and must cover the month period preceding, respectively, of each year. In preparing the statement, it is essential that all the information required on the blank be given. The proper officer must execute the affidavit as prescribed before some person authorized by law to administer oaths. Only that part of the gas purchased from the original producer is required to be shown on this ”statement. The'joas purchased from distributors or other purchasers, who bought the same from the original producer, is not required to be shown. Use this form for reporting “working interest” only. Separate form is furnished for reporting “royalty interest.” The State Tax Commission in accepting this statement reserves the right to require any additional information they may deem necessary. Blanks for making this statement may be had by applying to the State Tax Commission, Lansing, Michigan. Michigan State Tax Commission. SECTIONS 1, 2 AND 4 OF ACT NO. 35—PUBLIC ACTS OF 1929. Section 1. There is hereby levied upon each corporation, association, or person engaged in the business of severing from the soil oil or gas, a Specific tax to be known as the severance tax. Each corporation, association, or person owning, controlling, managing, operating or leasing, in this State, any oil well or gas well, or any such corporation, association or person who produces in any other manner, any Oil or gas by taking it from the earth, in this State, shall make monthly, on the first day of each month of each year, a report to the Michigan State Tax Commission in the form and manner prescribed by such Commission showing the total amount of oil or gas produced by such corporation, association or person from each well or other- wise, during the month preceding and the actual market value thereof at the time of production. Section 2. Every corporation,association, person, common carrier, pipe line company or common purchaser. who shall receive or purchase or transport any such Oll or gas, shall llkemse make such a monthly report in the form and manner required by the State Tax Commission, showing the total amount of such 011 and gas received, purchased, stored or transported during the preceding month, and the actual market value thereof at the time it is received, purchased, stored or transported, and such other information as may be required by the Commission. Section 4. Each corporation, association or person mentioned and included in sections one and two of this act shall make, keep and preserve a full and complete record of all such oil produced in this State during the time so engaged in its production. and said record shall be open at all times to the inspection of the Michigan Tax Commission. Any corporation, association or person failing to comply with this requirement shall be subject to a penalty of not less than five hundred and not more than fifteen hundred dollars payable to the State of Michigan, and such penalty shall accrue for each twenty days of failure to comply with this section with reference to each separate oil or gas well. 175 B I B L I O G R A P H Y Austin Well Blasts State Gas Record. Michigan Oil and Gas News. p. l (8). January 9, 1936. Brown, Robert Wesley. valuation of Oil and Gas Lands. McCraw-Hill Book Company, 1924. 214 p. Conndttee of Ten-Coal and Heating Industries. Comparative Data on Solid, Liquid and Gaseous Enels. (Bulletin No. 6) Chicago, Ill. 1932. 20 p. (Mimeo.) : 2m 'L Craig, D. A. Pipe Line Projects Betore M.P.U.C. Monday, January 20. 5 Michigan Oil and Gas News. p.7—8. January 16, 1936. Cross, Roy. Handbook of Petroleum, Asphalt and Natural Gas. (Bulletin No. 25) Kansas City Laboratories. 1931. 832 p. Department of State. Public and Local Acts of the Legislature of the State of Michigan. (Laws Regulating Oil and Gas Operations) Act No. 9, Public Acts of 1929 Act No. 15, Public Acts of 1929 Act No.185 Public Acts of 1931 Act No.146 Public Acts of 1937 Act No.326 Public Acts of 1937 Dorau, Herbert B. Economic Principles and Problems. Farrar & Rinehart, Inc., New Yerk. 1936 Vol. II, pp.490-494 Fifty Years Ago. Big Rapids Pioneer. p.4. August 16, 193?. Meeosta County Album. p. 568. Chapman Bros. Chicago, Ill. 1883. Michigan Emergency Relief Administration. Menthly Bulletin of Relief Statistics. January, 1933 and November, 1935. Michigan Gas Lines. The Michigan Oil and Gas Monthly. p.5. March, 1936. Michigan Public Utilities Connnssion. Rules and Regulations Cover- ing the Production, Transmission and Distribution of Natural Gas. Order No. 2883. November 20, 1954. p 57;. Also-- Opinion and Order n.1549, ELSOOO, June, 1935. (Mimeo.) Newconbe, Robert B. Oil and Gas Fields of Michigan. Michigan Geo- logical Series 32. (Publication 38) pp. 136,148,155,235-6. 1933. Our Right to Gas. (Editorial) Grand Rapids Press. June 8, 1936. 176 Pyper, William F. Ousts P.U.C. Aide Over Gas Estimate. Grand Rapids Press. December 4, 1937. Scott, I. D. Inland Lakes of Michigan. (Geological Bulletin No. 30) Michigan Geological and Biological Survey. Geological Series 25. p. 338. 1920. Stace, Arthur, and Willis W. Thorn. Oil and Natural Gas in Michigan. (A series of articles) Booth Newspapers, Inc. July 20 to 25, 1937 Supervisors' Journal. Liber A, B, D, and E. County Clerk's Office, i Mecosta County. (The original journal kept in manuscript forng bound copies) Tarr, W. A. Introductory Economic Geology. McCraw—Bill Book Company. New Yerk. 1930. Chapter VIII pp. 383-464. Thompson Lease, Inc. vs. Consumers Power Company et al. The Bill of Complaint; Answer by Consumers Power Company; Answer by Michigan Public Utilities Commission; Petitions to Intervene. Docket No. 3357. Circuit Court for Mecosta County. Thrun, F. M. A Handbook of Michigan Tax Laws. Bulletin No. 153) Agricultural Experimental Station, Michigan State College. 1934. pp.67—68. Veach, J. 0. Agricultural Land Classification and Land Types. - Special Bulletin No. 231) Muchigan Agricultural EXperi- mental Station. Michigan State College. 1933. Weber, Alfred. The Theory of the location of Industries. University of Chicago Press. 1929. 256 p. Whitehead, R. A. Bottled Up Evidence Plentiful. Michigan Oil and Gas News. pp. 1 (7). January 14, 1938. Wildermuth, Robert, and J. F. Fender. Soil Survey of Mecosta County, Michigan. (Bulletin No. 18) U. S. Department of Agri- culture. Series 1927. 30 p. ‘ illu‘lullt l .. . .ll‘lJ. lulllmlifl .. ..n. .12.. . .‘ ,2v ‘ c I. .. c.. z.‘ 1.1 ...«v. .. , .m . J. 9‘ .\ . . .. m4 .1 1.1!.<.di I .aua-nill . . .4 u . . . . .‘NJII lllilllllal. .....III I.- .. . u . w t 2. I . .... QT?“ rd!!!)lSn“4.3.LWT. hwtfi... nuufiifl..-..I3I5I~.u1«gvlu.. . . o .\ . 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