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Potential $500M Drilling Deal for Pittsburgh Airport Approved

In a split decision, the Allegheny County Council voted on Tuesday to accept a deal with Consol Energy Inc. for Marcellus Shale natural gas drilling rights at Pittsburgh International Airport.

The board voted 9-4, with one abstention, to allow the Allegheny County Airport Authority (ACAA) to lease 8,800 acres at the airport to Canonsburg, PA-based Consol Energy Inc., which includes a $50 million signing bonus and 18% royalties on all future production. The arrangement could be worth $500 million over the next 20 years.

County Executive Rich Fitzgerald still needs to sign the agreement, but he indicated Tuesday he would do so. He called the board's vote "exciting news" for the county.

"It isn't often that the county is able to announce a billion dollar investment, but that's exactly what [the] council's action allows us to do [Tuesday night]," Fitzgerald said. "While the revenues from this deal will go directly to the airport, Allegheny County taxpayers benefit too -- by reducing business costs for airlines and increasing our airport's competitiveness, creating a new source of revenue for the airport to make capital improvements and, perhaps most importantly, allowing additional investment in the economic development opportunities in the airport corridor."

According to reports, County Council President Charles Martoni (D-Swissvale) and Vice President Nicholas Futules (D-Oakmont) voted for the lease, as did council members John DeFazio (D-Shaler), Matt Drozd (R-North Hills), Jan Rea (R-McCandless), Michael Finnerty (D-Scott Twp.), John Palmiere (D-Baldwin Township.), Robert Macey (D-West Mifflin) and James Ellenbogen (D-Banksville). Four Democrats -- James Burn Jr. (Millvale), Barbara Daly Danko (Regent Square), Amanda Green Hawkins (Stanton Heights) and William Robinson (Hill District) -- voted against the lease agreement. Heather Heidelbaugh (R-Mount Lebanon) abstained, citing a potential conflict of interest.

The ACAA board earlier this month voted unanimously in favor of the Consol lease agreement (see Shale Daily, Feb. 12). ACAA Treasurer Dennis Davin, who also serves as economic development director for Allegheny County, told NGI's Shale Daily that Consol would probably drill between 45 and 50 horizontal wells, using six or seven well pad sites.

Consol's plans still have to meet the muster of the state Department of Environmental Protection. The Federal Aviation Administration reviewed Consol's plans in late 2012.

In December, the ACAA board accepted a bid by Consol of $2,250/acre ($20.8 million total), an amount less than half of a competing bid by rival EQT Corp., which had offered $4,750/acre ($44 million total) for the drilling rights (see Shale Daily, Dec. 18, 2012; Dec. 7, 2012). Officials insisted then that the Consol offer was a better deal for taxpayers.

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