Pittsburgh International Airport already serves as a bustling gateway for the busy tri-state area. Now, its subsurface will be equally lively. Earlier this year, Consol Energy leased 8,807 acres of mineral rights beneath the airport from Allegheny County and the Allegheny County Airport Authority, and Consol plans to aggressively develop those rights.
“Early indications are the airport offers stacked-play opportunity,” said Nicholas DeIuliis, president, Consol Energy Inc., speaking at Hart Energy's DUG East Conference & Exhibition in Pittsburgh in November. “We will drill 40 to 45 Marcellus wells on that property.” Upper Devonian potential also exists; that would be additive to the already hefty Marcellus resource base.
Consol figures that the lease bonus, capital expenditures for drilling, and taxes and royalties will amount to a $1 billion project for the county. The operator's plans call for six well pads, and drilling will begin in mid-2014.
This deal is just one of the strategic thrusts that are reshaping Consol. The venerable firm has been in business since Abraham Lincoln was president, and its longevity is a testament to its willingness to reinvent itself and grasp new opportunities.
Just 10 years ago, Consol was a traditional coal producer. Natural gas was an afterthought, said DeIuliis. Eight years ago, Consol formed CNX Gas to grow its gas business, and three years ago it acquired Dominion Resources' Appalachian E&P assets. This past October, Consol announced the sale of five of its West Virginia coal mines.
“Today we are an E&P business with a best-in-class legacy coal position,” he said. “There's no doubt that the change we are seeing is sweeping through our region as well.”
Energy from shale represents a once-in-a-generation opportunity to breathe yet new life into the region's manufacturing sector. “The Marcellus and Utica gas fields are impacting everything from electric generation to fueling the American manufacturing renaissance to future export opportunities,” he said.
In the Marcellus, Consol currently runs eight rigs with its partner Noble Energy, and it plans to operate at least that many in 2014. Five rigs are at work in West Virginia, and the company expects to have 75 wells drilled by year-end 2013 in the Mountain State.
Meanwhile, the Utica is fast transitioning from an exploration to a production play. Consol has completed a nine-well 2013 Utica program with its partner Hess Corp. Also, Consol recently struck a deal with Blue Racer Midstream that will allow its Utica production to flow sooner, and this will be particularly impactful in the wet-gas area.
Two highlights of its 2013 drilling program were a well drilled in 14 days to nearly 19,000 feet true vertical depth (featuring a lateral length of nearly 11,000 feet), and a 10,360-foot Utica lateral in Noble County, Ohio, drilled with rotary steerable technology. “New technology is pushing the state-of-the-art, and we are getting economics of scale across the board,” said DeIuliis.
Consol's assets also include 300,000 acres that are potentially commercial for the Upper Devonian. It announced a discovery in the Burkett shale that was turned in line in June 2013 at 3 million cubic feet per day, and has exhibited remarkably flat declines in its initial production. Consol also continues to seek bolt-on acreage opportunities that are synergistic, an example of which is the farm-in it recently took on 80,000 Marcellus acres in West Virginia from Dominion Transmission.
The transition to a natural gas producer from a coal producer has been dramatic for Consol. It produced 50 billion cubic feet in 2005 and it doubled that to 100 Bcf in 2010. This year, Consol will produce 170 Bcf, and it expects to grow those volumes some 30% year-on-year in 2014 and the two years following.
Largely untold is the capital investment that goes with this growth. “If you look at Consol Energy in the next 10 years, nearly $7 billion in capital spend will be dedicated to the Utica and Marcellus plays in Ohio, $7.5 billion to the Marcellus in Pennsylvania and $14 billion in the Marcellus in West Virginia,” said DeIuliis. “That's nearly $30 billion pumped into the regional economy in 10 years.”
That's remarkable vitality for a firm that was founded in 1864 in the depths of the American Civil War.
—Peggy Williams
Recommended Reading
Analyst Questions Kimmeridge’s Character, Ben Dell Responds
2024-05-02 - The analyst said that “they don’t seem to be particularly good actors.” Ben Dell, Kimmeridge Energy Partners managing partner, told Hart Energy that “our reputation is unparalleled.”
Tellurian Reports Driftwood LNG Progress Amid Low NatGas Production
2024-05-02 - Tellurian’s Driftwood LNG received an extension through 2029 with authorization from the Federal Energy Regulatory Commission and the U.S. Army Corps of Engineers.
Zeta Energy Appoints Michael Everett as COO
2024-05-02 - Prior to joining Zeta Energy, a lithium-sulfur battery developer, Michael Everett previously served as president and COO at Advanced Battery Concepts.
Shell Launches $3.5 Billion Share Buyback Program
2024-05-02 - Shell, which posted first-quarter adjusted earnings of $7.7 billion, will cancel all of the shares it buys.
Supply Disruptions Ahead as Canadian Rail Workers Vote for Strike
2024-05-01 - The union, representing more than 9,000 employees at Canadian National Railway and Canadian Pacific Kansas City, announced that 95% of its members approved of a strike, which could happen as early as May 22.