After 70 years without a bill, ‘free gas’ under threat for some in West Michigan

ALLEGAN COUNTY, MI – In the middle of the cornfield, ringed by highway guardrails, metal tubing covered in valves and gauges protrudes from the earth.

As a kid helping out on his grandparents’ West Michigan farm, Todd Zoerhof took it for granted. The equipment was everywhere. Riding around on bikes, he and his friends would shoot the squat metal structures with BB guns.

Today, the pipes aren’t for target practice. They’re the reason he’s at odds with one of the state’s largest utilities.

That company, Consumers Energy, is no stranger to friction with customers over frequent power outages, criticism when it seeks raise energy rates or skirmishes on the path of big infrastructure projects, like gas pipelines.

But quietly in West Michigan, a unique energy conflict is brewing. There, in sprawling geologic formations deep underground, Consumers pools natural gas for the winter before piping it to homes and businesses across the state when it’s needed most.

In exchange, some residents living above the deep gas storage fields have been grandfathered into an arrangement that provides them gas free of charge from dozens of metal wellheads that dot their farmland, like the one on Zoerhof’s property near Holland.

It’s unclear exactly how many Michiganders have so-called “farm taps,” the private gas hookups that connect directly to pipelines or storage fields, rather than traditional gas mains, but it’s likely only in the hundreds.

It’s a set-up Zoerhof’s family and his neighbors counted on since the 1950s, but it could all be coming to an end. For some, Consumers is wriggling out of the deal, citing safety and reliability issues forcing the decommissioning of old gas wells.

But residents say it’s another example of a big utility getting its way, while leaving them to stomach costly alternatives. And the conflict may rear its head across other parts of Michigan, a state with more subterranean gas stockpile space than any other in the nation.

“It’s the big guy pushing the little people around, that’s what we feel it is,” said Zoerhof, now in his 50s and still living on his family’s centennial farm in Allegan County.

But Consumers says it is merely assessing gas wells as required under federal safety regulations which were instituted after a massive California methane leak in 2015 caused thousands near Los Angeles to evacuate their homes. After inspection, some wells are plugged, and the “free gas” service goes with it, Consumers maintains.

“Consumers Energy is committed to the safety of the customers we serve, our co-workers and the public,” said spokesperson Brian Wheeler in a statement.

West Michigan residents push back on loss of ‘contract gas’

The letter arrived via UPS in March, with another soon behind.

Dennis Kroeze had until May 1 to find another source of gas, it said.

Kroeze lives above Consumers’ 11,000-acre Overisel storage field, less than 10 miles from Holland and near Zoerhof. As Consumers decommissioned a gas well serving his home, he stood to lose what the utility referred to as “free gas.”

He and his neighbors have another name for it. “Contract gas.”

It’s a nod to the fact that they or their predecessors granted Consumers subsurface rights on their property and the ability for employees to lay pipelines and access the land to maintain their equipment. Zoerhof’s grandparents inked his current contract in 1957.

Access roads crisscross their farmland, and they’re accustomed to seeing company trucks and workers. Zoerhof can remember Consumers employees handing out candy when he was a boy. But today, he says, they don’t even wave.

Residents at Overisel and the neighboring Salem field are surrounded by pipelines and gas equipment. And mishaps have happened, like a 2007 explosion that scorched entire trees, leaving behind a crater but no injuries.

“You’re living on a minefield here, literally,” said Zoerhof.

The free gas service to their homes is a fair bargain, residents say, and some paid more for their homes as a result.

An electrician and farmer by trade, Kroeze said he doesn’t have to be a lawyer to find problems with the impending shutoff letter, reading over his own decades-old contract running with his land.

“They’re basically bullying us out of the gas, but they still want to use our property,” he said.

He looked into his options.

Service from SEMCO Energy, an alternate provider, would run more than $5,500 for installation on top of $200 gas bills he’d never factored into his budget, he said. Consumers only offered $2,500 in “courtesy assistance.”

In a letter that summer, a Consumers attorney pushed back on his position that the company was still obligated to provide him gas, even if it shut down his well. Under modern regulations connecting to another well could run $450,000 to $500,000, the lawyer wrote.

“That was kind of a kick in the face,” Kroeze said.

Gas reservoirs play key role in Michigan heating

For the utility, Michigan’s largest energy provider, gas storage fields are a key part of its business. They offer the “secret” to reliability and affordability, Consumers boasts on its website.

The fields, many depleted underground oil or gas formations, let the utility purchase gas in the summer when costs are typically lowest, or squirrel it away to weather price fluctuations.

Half of customer gas deliveries in the colder months involved the stored fuel, according to the utility. It’s a big deal for a state where three-fourths of households rely on utility gas for heat.

Since 2017, Consumers has been working its way through a federally required “storage integrity management program,” involving baseline assessment of all its gas wells, Wheeler said.

While some landowners might erroneously feel targeted, the inspections apply across the board and don’t single out gas users, he said. The program has led to 218 wells being plugged across Michigan, with 60 “free gas” users transitioning to another fuel source as a result.

But Consumers’ position that shutting down a well on someone’s land means termination of their gas is under dispute.

In the Overisel and Salem fields, contracts include reference to right to gas from wells on homeowners’ land and property “pooled or unitized” together for the purposes of gas exploration.

The landowners believe as long as Consumers is operating a well on the storage fields, landowners there can’t be cut off from their gas, said Kyle Konwinski, an environmental lawyer representing Zoerhof, Kroeze and dozens of others.

The landowners teaming up is key to fighting the behemoth that is Consumers, he said.

The company has taken a scattershot approach, he claims.

Landowners have been offered varying amounts of money as Consumers threatens to shut off gas, according to Konwinski and residents. Wheeler disputed this, saying “monetary courtesy assistance” has been the same under the well integrity program begun in 2017.

Some have received the notices close to the winter heating season, sparking anxieties, Konwinski said, and others can’t afford the sudden expense of a switch.

“We definitely want consistency,” Konwinski said. “This piecemeal approach that Consumers is currently taking is causing huge amounts of fear and angst amongst that community.”

Farm taps pose safety risks, regulators say

From Konwinski’s perspective, it’s clear Consumers would prefer not to have landowners hooked up to its storage fields via farm taps dating back to the ‘50s.

“These utilities absolutely want to get rid of them,” he said. One reason might be because they involve “huge liability,” the attorney added.

In Pennsylvania, when a service line running from a gas well to a home failed, the resulting explosion destroyed the structure and severely burned one of the homeowners. Farm taps have stirred safety concerns as far away as Colorado.

In 2015, Michigan regulators opened an inquiry into the hookups, flagging a slew of safety issues.

In some cases, the gas provided isn’t pumped with additives providing the distinctive rotten egg smell that helps identify leaks, they said. In other cases, emergency valves are lacking, and the private lines can cross roads and other properties, leaving them vulnerable to damage.

As it stands, the Michigan Public Service Commission, which oversees gas safety in Michigan, doesn’t have any programs to incentivize abandonment of farm taps, but it encourages compliance with pipeline safety rules, according to spokesperson Matt Helms.

In 2018, the commission did ban future installation of the hookups unless they can be built, inspected and maintained in accordance with modern safety standards.

Asked how many farm taps exist in the state, Helms directed MLive to submit a Freedom of Information Act request for official documents, which is still pending.

In a 2016 regulatory filing, DTE Energy reported 57 homes connected to storage fields in Mid-Michigan and the Thumb, and Consumers now has about 230 landowners connected to wells on eight of its 15 storage fields, according to Wheeler.

Gas dispute continues unresolved

About 130 of those Consumers users received a letter this fall requesting a laundry list of documentation on individual homes’ farm taps and gas lines. Failure to respond could mean termination of gas service, it stated.

Zoerhof said a mechanical contractor he consulted estimated checking off the list could run $1,000, on top of more ongoing costs. Several years ago, he invested more than $2,000 to fix his gas line.

Konwinski sees the requirement as another attempt to push landowners. “I think they’re trying to use some leverage to get folks off this free gas,” he said.

The letters were prompted by “recent incidents” highlighting the fact that some gas users aren’t safely maintaining their privately-owned systems, according to Wheeler, who did not specify.

“Consumers Energy is committed to public safety and believes that it is not controversial to require gas users to demonstrate their compliance with their contractual and legal obligations that are in place to ensure the public’s safety,” he said.

In the meantime, residents in Allegan County say they won’t be deterred. Though they have a lawyer, they haven’t yet ended up in court with Consumers.

They aren’t against losing their “contract gas,” as long as they’re fairly compensated, Zoerhof said.

“We don’t feel it’s right for Consumers to have their cake and eat it too,” he said.