The Allegheny County Airport Authority (ACAA), which runs Pittsburgh International Airport and Allegheny County Airport, has accepted the lower of two bids it received to drill Marcellus Shale natural gas wells on airport property.
Spokeswoman JoAnn Jenny confirmed to NGI’s Shale Daily on Monday that the ACAA’s board on Friday had accepted a bid of $2,250/acre ($20.8 million total) submitted by Consol Energy Inc. (see Shale Daily, Dec. 7). But Consol’s bid was less than half of one proposed by EQT Corp., which had offered $4,750/acre ($44 million total).
“We really have nothing more to say, [other] than after very careful review of both submissions that we accepted the best value to the authority,” Jenny told NGI’s Shale Daily on Monday. ACAA Executive Director Bradley Penrod made the same “best value” comment to the Pittsburgh Post-Gazette on Friday, but he did not elaborate.
EQT had not included a 10% deposit with its bid, one of the requirements in the ACAA bid process. Jenny had told NGI’s Shale Daily earlier this month that EQT’s exclusion of a deposit did not disqualify the company from the bidding process. Jenny confirmed that Consol had submitted a check with its bid.
“There is much greater benefit to the taxpayers in the way the Consol bid was structured,” Allegheny County Executive Rich Fitzgerald told NGI’s Shale Daily on Monday. “On its face, Consol put in the low bid of $2,250/acre, but they submitted a more complete and detailed bid. They put some options in there that, if they are able to do them, would benefit the taxpayers much more than the $4,750/bid [by EQT].”
The ACAA said bidders had to agree to an 18% landowner’s royalty on all oil, liquid hydrocarbons and natural gas produced by the leasehold. The request for bids also required bidders to operate at least 25 horizontal wells, have pipeline access or a plan to provide access and have at least 5,000 net mineral acres under lease.
Canonsburg, PA-based Consol drilled and completed 12 wells in the Marcellus and placed 22 into production during 3Q2012 (see Shale Daily, Oct. 17). The company also drilled four wells in the Utica, completed two of them and placed one into production.
Pittsburgh-based EQT plans to spend about $820 million in 2013 to drill 153 wells targeting the Marcellus, $40 million to drill eight wells in the Utica, and $55 million to drill 11 wells into the Upper Devonian formation (see Shale Daily, Dec. 6).
“The good news for us in Allegheny County is that we got two good bids from two really good companies,” Fitzgerald said. “They are western Pennsylvania companies that have been here for years, are invested in the community and are part of our fabric of our community.”
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