http://www.wboy.com/story/26406768/consol-expansion-will-spread-to-...
While its corporate focus is squarely on Western Pennsylvania's natural gas reserves for now, Consol Energy President and CEO Nick Deluliis says the company expects to spend billions in the Mountain State over the next decade.
Though he didn't discuss specifics, Deluliis said the company looks to invest about $28 billion in West Virginia, Pennsylvania and Ohio over the next 10 years, about half of that in the Mountain State.
“West Virginia is a big part of our plans,” he said during an Aug. 25 ceremony marking the official kickoff for a massive drilling operation at Pittsburgh International Airport, a 9,000-acre parcel leased from the Allegheny County (Pennsylvania) Airport Authority.
Plans for the airport property call for a total of 45 wells on six well pads, with a total capital investment in the $500 million range. Up-front bonuses and royalty payments over the life of the project should top $500 million, officials said.
Best position
“Nine-thousand (contiguous) acres in a wet gas region puts us in the best position in the best natural gas field in the U.S.,” Deluliis said, adding that Consol is looking at opportunities in shale formations both above and below the Marcellus reserves the company is currently targeting.
“Right now, our focus is on the 45 wells driving our $500 million investment,” he said. “But we think there will be other opportunities in the Devonian shale above and Utica below.
“Technology is advancing, and we think we'll be able to access them from one single well bore.”
Deluliis said the airport project is “a vast economic opportunity for the entire region,” though the hilly terrain poses significant challenges.
“There's an awful lot of work and an awful lot of resources needed to prepare sites that are here and make them ready for development,” Allegheny County Chief Executive Rich Fitzgerald told the dignitaries assembled for the celebration. “Shale money is going to help; it means we won't have to go to taxpayers for the money.”
Fitzgerald said the county wanted to put the property “to its best use for taxpayers and the region,” adding that officials used the $50 million the airport received in up-front money to reduce airport costs.
“A lower-cost airport makes us more competitive,” he said. “Lower costs make us much more competitive with airlines, to bring more flights in.”
Consol's project adds to shale-driven development opportunities in Western Pennsylvania, including Shell's proposed $5 billion-plus ethane cracker less than 20 miles away in Monaca.
“It's going to allow us to be energy leaders, not just in this country, but in the world,” Pennsylvania Gov. Tom Corbett noted. “It gives us a path to energy independence with Pennsylvania leading the way.”
Regional benefits
In West Virginia, officials said the Consol project has regional implications, adding to shale-driven development opportunities in Western Pennsylvania that can help feed gas-related growth in the Mountain State.
“We continue to be optimistic about new opportunities for West Virginia associated with the continued development of the Marcellus and Utica Shales,” West Virginia Gov. Earl Ray Tomblin said, adding, “This industry has the potential to create good-paying jobs and rejuvenate our manufacturing sector.
“We appreciate the continued investments Consol is making in our region and look forward to capitalizing on the abundant supply of natural gas in Appalachia, which we anticipate will provide promising opportunities for future generations.”
Pat Ford, executive director of the Business Development Corporation of the Northern Panhandle, said the Consol project is “important news for Hancock County.”
“Drilling has just started in Hancock County,” he said. “Ergon has expanded its subsidiary refining facility at Newell ... enabling the refinery to handle growing regional crude oil production as drilling activities continue to increase throughout the Marcellus and Utica Shale areas.
Service company growth
“As part of this effort, Ergon has invested upwards of $78 million to add capacity in its refinery processing units and supporting infrastructure.”
He said Centerpoint Terminal in Weirton also invested about $5.5 million in renovations to its property in Half-Moon Industrial Park to support crude oil gathering operations, and another $1 million spent to purchase adjacent land so they can expand the operation. With those changes, Centerpoint secured a five-year contract with a major oil company.
“We have also seen almost $15 million of investment in specialty services companies in Brooke County in the specific areas of trucking, drilling, production and pipeline installation,” he said. “Collectively, this is almost $100 million of investment in the shale gas related industries in Newell, Weirton, Colliers, Follansbee and Beech Bottom.”
He said continued investments by companies such as Consol and Ergon are great for West Virginia.
“They diversify our economy, grow our tax base, add jobs, leverage infrastructure improvements and secure our future,” Ford said.
