Underground Natural Gas Storage

State ownership of underground storage rights signifies that the state owns storage space that may exist within/beneath the property, along with the right to utilize that space for storage of natural gas and other appropriate substances as provided by law.  A qualified party may apply to lease state-owned underground storage rights via direct (non-competitive) leasing.  A lease is not a transfer of ownership and if granted, will expire after its seven-year term if natural gas is not being stores and facilities are not maintained.

In Michigan, all underground natural gas storage exploration and development activity on state and private land is regulated by state and federal agencies including the Michigan Public Service Commission (MPSC) and the Michigan Department of Environment, Great Lakes, and Energy (EGLE).

Parcels nominated for leasing go through a classification review by resource specialists to determine the appropriate level of surface use that could be allowed (see related questions regarding lease classifications and stipulations for further information).

• Additional site-specific review by DNR resource specialists is completed with exploration and/or development plans are proposed.
• The lease is subject to all applicable existing or subsequent federal, state, or local laws and rules.
• The lease within itself is not an authorization to conduct storage operations.  Separate application(s) and approval(s) by DNR, federal, state, and local agencies are required prior to commencing certain storage activities.

Leasing of the state-owned oil and gas rights for exploration and development generates revenue in three ways:

• Lessees pay an application fee and per-acre fee.
• Lessees pay a "bonus" fee to acquire the lease rights.
• Lessees pay annual rent based on acreage leased.

Money received from a contract for the storage of gas in or upon state lands is used for the purposed of defraying the expenses incurred in the administration of the program and other purposed provided by law.