Consol Energy eyes more from airport drilling




The focus Monday was clearly on the Marcellus Shale drilling, but there could be other opportunities at Pittsburgh International airport.

Gov. Tom Corbett, Allegheny County Executive Rich Fitzgerald, executives from Consol Energy and a cavalcade of elected officials gathered on county-owned land near the airport to officially kick off what is expected to be a $1 billion natural gas development project.

The celebration — complete with music and gift bags — took place near what Consol calls Well Pad No. 2, a 5-acre site with a vertical rig at its center, where drilling began Aug. 15.

Another well pad, No. 1, also has been completed, and eventually Consol expects to have a total of six well pads over 9,000 acres of county land, supporting 45 wells that will tap into the valuable natural gas held within the Marcellus Shale formation.

“Ideally, our view, our goal, is to get beyond the 45 Marcellus wells,” said Consol president and CEO Nick DeIuliis.

The long-term goal for Consol is to be able to access two other layers of shale, the Utica and the Upper Devonian, a possibility that is “starting to look more and more feasible,” Mr. DeIuliis said.

 

He said technology also is reaching the point where Consol will be able to reach the layers from a single well bore, an approach that he said would reduce the surface impact of a drilling project while increasing efforts toward energy independence, as well as royalties from gas proceeds.

A spokeswoman for Consol said the company had no estimates for royalties the county could receive should the company access Upper Devonian or Utica from its airport drill sites.

Marcellus is a formation that is well-known in Western Pennsylvania, as energy companies have sought to access the natural gas held within the shale plays.

That formation is about 5,000 to 8,000 feet underground, said Jim Ladlee, associate director for the Penn State Marcellus Center for Outreach and Research.

Less attention has been given in the greater Pittsburgh region to the Upper Devonian and Utica formations. The Upper Devonian is a younger formation located just above the Marcellus, while the Utica, about 100 million years older than the Marcellus, is located 2,000 to 6,000 feet below the Marcellus, Mr. Ladlee said.

There is a “pretty good feeling” that the Upper Devonian has “significant potential” in southwestern Pennsylvania, Mr. Ladlee said. The Utica, however, is still in an “exploratory phase“ in the region near the airport.

“I would say, if they prove out Utica in that particular area, that would be a big story,” he said.

That’s a long-term goal, Mr. DeIuliis said. On Monday, a $1 billion investment in the Pittsburgh region was a big enough story to draw several shuttles worth of people to the well pad site. The investment includes a nearly $50 million bonus payment to the Allegheny County Airport Authority, an expected $500 million worth of capital investments by Consol and another $450 million expected in royalties to the airport.

“This is an exciting day, and a great day, for Allegheny County,” said Mr. Fitzgerald, who thanked the partners that had contributed to the project reaching its starting point, including members of Allegheny County Council, five of whom attended the ceremony.

The project already has benefited the airport, Mr. Fitzgerald said, pointing to decreases in costs assessed to airlines thanks to the bonus payment.

In early 2013, Consol gave a bonus of more than $46 million to the airport authority. Of that, $4 million was allocated in 2013 to reduce landing, terminal and ramp fees charged to airlines, said authority spokeswoman JoAnn Jenny. This year, $4.8 million has been allocated for that purpose. By 2018, a total of $24 million of the bonus payment will be used to reduce rates to airlines, she said.

The authority also created an economic development fund that will support the recently announced Pittsburgh International Airport World Trade Center, as well as other capital projects, Ms. Jenny said. In addition, it will go towards building a cash reserve for the authority, which Ms. Jenny said could result in improvements from credit ratings agencies.

“Hopefully, what you’re going to see is more flights,” Mr. Fitzgerald said.

Beyond the airport, Mr. Corbett said natural gas development is turning Pennsylvania into an energy leader.

“It’s the future,” Mr. Corbett said of natural gas development. “It really is the future.”

Other energy potential exists in nearby Beaver County, where Mr. Corbett hopes to attract an ethane cracker plant. Final decisions will be made after the first of the year, he said, but he continues to be “very bullish” on the project.

His attention Monday, however, was on the Consol project near the airport. In Findlay, the township whose residents are closest to the drilling operations, things are going smoothly, said Janet Craig, one of the township supervisors.

“We are pleased with their efforts so far, and hope they can continue in that vein in the years ahead,” Ms. Craig said.

Since drilling started Aug. 15, she said only one person had been called into the complaint line set up by Consol.

“We do expect there to be more,” she said, but she expects the trees, the hills and the space between the drill site and the nearest neighborhood to be a buffer.

Kaitlynn Riely: kriely@post-gazette.com or 412-263-1707.

First Published August 25, 2014 12:58 PM

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