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Pittsburgh airport OK's $500M gas drilling deal

Published on NewsOK Modified: February 8, 2013 at 5:03 pm •  Published: February 8, 2013

PITTSBURGH (AP) — The Allegheny County Airport Authority approved a deal Friday with Consol Energy that could be worth $500 million for rights to drill for natural gas and oil at Pittsburgh International Airport.

Under the deal, Consol will pay a signing bonus of $50 million and then pay 18 percent royalties on future production. Officials expect the royalties to total $450 million over the next 20 years, though that figure isn't guaranteed.

Officials think the first wells will be drilled in late 2014 or early 2015, after lengthy reviews from both the state Department of Environmental Protection and the Federal Aviation Administration.

Airport authority treasurer Dennis Davin said the FAA has detailed rules on setbacks and how the drilling can be done.

"First and foremost, we're running an airport. The airport can't have any disruption of service from the drilling," Davin said.

Consol, which is based in Pittsburgh, is planning six to seven well pads on airport property and 45 to 50 wells. The closest drilling will be several thousand feet from runways.

The airport, located about 10 miles outside the city, intends to use the money from drilling to lower costs to airlines in hopes of attracting more flights, and for capital improvements. It served 20.8 million passengers at its peak in 1997 but saw that plummet after US Airways dropped it as a hub. Last year it served 8 million passengers.

At a public hearing on Thursday, county executive Rich Fitzgerald said Consol is also projected to invest $500 million in infrastructure such as roads and utilities. Fitzgerald said that work will generate local jobs, too.

But experts said the current low wholesale price of natural gas hurt the county's ability to strike a better deal.

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