News From Terre Haute, Indiana

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October 17, 2013

Sisters of Providence OKs oil exploration

CountryMark to begin seismic testing this month

ST. MARY-OF-THE-WOODS — The Sisters of Providence of St. Mary-of-the-Woods have agreed to allow an Indiana energy company to explore for oil on congregation-owned property.

That decision, made by the Sisters’ leadership, came after months of vetting the issue, one that some may view as being at odds with the congregation’s environmental priorities.

Under a “seismic option agreement” with Country

Mark, seismic testing, commonly known as “thumping,” is set to begin this month.

That process, expected to take place beginning Friday through Monday, uses vibrations sent into the earth to determine the shape of underground formations, giving geologists a hint as to whether pockets of oil might exist.

Even if those results are promising, it could be a year or more before drilling would begin, said Charlie Smith, CEO of CountryMark in a Wednesday telephone interview with the Tribune-Star.

“We’re still early in the process,” Smith said. When people shop for a new home, they first might just drive around and see whether there are good prospects on the market. That’s where CountryMark, an Indianapolis-based oil and gas producer, is now with this project, he said.

“We’re kind of still driving around,” Smith said.

The seismic testing will be confined to 875 of the congregation’s approximately 1,200 acres of land in northwestern Vigo County. The area of interest to CountryMark is on the north portion of the congregation’s property in a farming area. The drilling, if it takes place, would be vertical into the earth and would not, by contract, involve hydraulic fracturing, a process sometimes used in oil and natural gas production that often is frowned upon by environmentalists.

CountryMark uses a subcontractor, Bay Geophysical Inc. of Traverse City, Mich., for its seismic testing, Smith said. Bay is under contract to follow the terms agreed to between CountryMark and the Sisters of Providence, he said. “They know the drill.”

‘No Money, no mission’

The Sisters’ leadership has been in talks with CountryMark, which approached the congregation, for a year, said Sister Denise Wilkinson, general superior of the Sisters of Providence of St. Mary-of-the-Woods. Since then, the congregation’s leadership has wrestled with the idea, often hoping to find a good reason to say no, she said.

“It would have been easier” to say no, Wilkinson told the Tribune-Star in an interview earlier this month. “It is really a real-life dilemma that everybody is facing.”

Support for the oil agreement is not unanimous among the more-than 300 Sisters making up the local congregation, Wilkinson said. Even those Sisters who strongly oppose it, however, acknowledge the financial context in which the decision was made, she said.

“It comes down to ‘no money, no mission,’” Wilkinson said. “If someone wanted to parachute down $50 million, we’d be happier with that.”

The Sisters of Providence sponsor or support several ministries locally and around the world, including the White Violet Center for Eco-Justice and Providence Food Pantry in West Terre Haute.

Of the approximately 337 sisters in the local congregation, the median age is 78, Wilkinson said. “It’s not like we have a lot of wage earners,” she said.

Open process

Some individuals and organizations, when faced with potentially controversial problems, grow quiet, close ranks and wait out the storm. That has not been the Sisters’ approach.

Their leadership team has been communicating with members of the congregation for months, detailing their talks with CountryMark through slide presentations and providing a timeline on their decision-making process.

“We’ve tried to be as transparent as possible,” said Sister Lisa Stallings, general officer with the Sisters of Providence, in a recent interview. In a May 2013 letter to the Sisters, the leaders stated they felt “a responsibility to consider” CountryMark’s proposal in light of the congregation’s finances and “given what we understand as the congregation’s desire to continue living the mission through lives of ministerial service. …”

That same message was personally delivered to Sisters of Providence staff and the congregation’s neighbors on Wednesday.

Dave Fuhs, a member of the Sisters of Providence advisory board and master plan committee, helped the Sisters reach their decision to move forward with CountryMark. He believes oil income could make an important difference in the sustainability of the ministry.

The recession of 2007 and 2008 was a “great wake-up call for the congregation,” Fuhs said, adding that the Sisters of Providence saw their investment asset values drop dramatically.

The ministry “is at risk,” Fuhs said. “Is it going to go away? It’s not going to go away. I don’t see them going broke, but they certainly could if they weren’t thoughtful about what they do.”

Fuhs advised the Sisters to go ahead with the project as long as they were comfortable with CountryMark.

“It’s a very specific question concerning the vendor,” Fuhs told the Tribune-Star in a telephone interview from his Jasper office. “They’ve researched CountryMark extensively, just gaining a level of comfort with them that goes beyond what an average company or institution would do. No question about it.”

Drilling revisited

If no oil is found under the acreage owned by the Sisters, the congregation still stands to gain about $65,000 under the terms of its agreement with CountryMark. If drilling moves forward, the amount of oil tapped would determine monetary gain. The Sisters chose not to disclose for publication the amount of the royalty agreed to with CountryMark. Royalties pay property owners per barrel of oil produced and sold from a well.

This is not the first time the Sisters of Providence have approved oil exploration on their property.

According to records from the Indiana Department of Natural Resources, the Sisters signed oil leases decades ago for two separate drilling operations. One well was drilled on the south edge of the Saint Mary-of-the-Woods College campus in the 1970s. Another more centrally located well was drilled in the 1950s. Both attempts produced “dry holes,” but neither went especially deep by oil drilling standards, said Herschel McDivitt, director of the division of oil and gas for the Indiana Department of Natural Resources.

“That doesn’t mean there wouldn’t be something at a deeper depth,” McDivitt said. “There could be deeper stuff there.”

One well was only about 1,000 feet in depth, the other about 1,900 feet, according to state records. According to U.S. Department of Energy data, the average depth of oil wells in the past 10 years has been closer to 5,000 feet.

Also, McDivitt noted, it’s possible that a productive well could be drilled just a quarter of a mile from a dry well.

Thoughtful decision

Among the many people consulted by the Sisters in reaching their decision to drill was Robert Jean, an assistant professor of ecology at SMWC. Jean, a past board member of Our Green Valley Alliance and an environmentalist, might have been expected to advise against the drilling operation. To the Sisters surprise, he didn’t.

Jean, speaking to the Tribune-Star on Tuesday in his office, said the decision was a classic case of weighing competing values and reaching the best possible conclusion.

“There’s a lot of thoughtful decision-making [by the Sisters] behind this,” Jean said, noting that he also contemplated it for a couple of days before reaching his advisory determination.

In the end, this was a decision in the context of a difficult financial situation for the Sisters. Potential revenue from a productive well could help maintain their mission, he said. “We need them around here,” Jean said, to continue their good work.

In addition, Jean urged the Sisters to view this as an opportunity to show how oil exploration and production can be done in the best possible manner. At his urging, they included in their contract with CountryMark extra provisions calling for the use of the greenest-possible technology and minimal invasiveness to the environment, negligible odors and pollution, he said.

Jean also studied CountryMark as a company and said he was impressed that they were a “cooperative” owned by “local” farmers and not “big oil.” He also believes the company has a good record of avoiding spills and environmental violations.

Lou Britton, the congregation’s attorney, helped negotiate the lease with CountryMark and agreed it included many more stipulations than a typical lease.

“A typical lease leaves a great deal more discretion for the oil company,” Britton said. “They were probably very much more inquisitive of CountryMark than is typical of property owners.”

Britton often helps CountryMark and property owners receive proper zoning approvals in Vigo County. He said that fact was thoroughly discussed with the Sisters and all parties involved in these negotiations. He has been the congregation’s attorney for more than 30 years, he said.

Strict guidelines

If drilling takes place, it would be on a site no larger than one acre, likely on the far north edge of the Sister’s property near Bolton Road and Indiana 150, according to documents provided by the Sisters of Providence.

Furthermore, the lease with CountryMark states — if oil is discovered — the company will use “vapor recovery technology to reduce odor” and remove hydrogen sulfide (rotten egg) smell if present. The lease also states trees will not be removed or damaged without prior written consent, CountryMark will avoid any oil pooling and will remain in “strict compliance with all applicable laws.”

The property is also to be restored to its original condition after production is completed, the agreement states. And farmers who rent land from the Sisters must be compensated for any damaged crops.

“The Sisters recognized they were pushing CountryMark, and CountryMark basically signed off on their restrictions,” Britton said.

As part of their vetting of CountryMark, the Sisters visited the company’s highly successful well on Hulman family-owned property east of Terre Haute.

“You could have a picnic there,” said Sister Stallings, speaking of the Hulman site, which started operations in 2011. In a letter to the congregation, the Sisters of Providence leadership stated they noted that “deer and other wildlife had not abandoned the habitat and were apparently unaffected by the exploration and drilling process.”

A delicate balance

The Sisters of Providence have a written “Land Ethic” — a document drafted just a few months before CountryMark approached the Sisters — that established guidelines on treatment of the environment. Based on that pre-existing code, the Sisters have proposed that any revenue generated by oil drilling be used to reduce their own dependence on fossil fuels, through upgrading their facilities and vehicles and helping to educate the public about conservation, Jean said.

The congregation operates more than 200 motor vehicles, Stallings noted.

“We have also considered the possibility that, if there is substantial financial gain, we would share it in such a way as to contribute to the common good,” the Sisters leadership stated in a recent document titled “Land Ethic and Oil Exploration,” which was provided to the Tribune-Star.

Still, it is clear the leadership of the Sisters of Providence did not come to this decision lightly. Wilkinson notes a “dry hole” would be welcome by some Sisters because it would at least end the “full-blown” ethical dilemma they are facing.

However, the congregation, founded in 1840 by Saint Mother Theodore Guerin, must have the financial wherewithal to sustain its ministries. Even if oil is found, “we’re not going to be rich. We’re going to be less poor,” Stallings said.  

“They took a vow of poverty, remember that,” Fuhs said. They really just want to be able to keep the congregation and their mission going, he said. “They’re talking about a delicate balance” between their ecological values and their sustainability as a congregation, he said.

“They have an aging population that requires considerable health care and things like that,” Fuhs said. “But they also believe in something called Providence.”

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@tribstar.com

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