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Allegheny County wants Consol to sweeten bid to drill on airport property

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By Timothy Puko
Thursday, Jan. 17, 2013, 1:46 p.m.
 

Allegheny County is asking Consol Energy to sweeten the bid that won the right to drill for natural gas on airport property, two county leaders said on Thursday.

County Executive Rich Fitzgerald said Cecil-based Consol could pay $10 million to $15 million more than its initial bid — $20.8 million — in upfront money before the sides finalize a deal in coming months. The county has leverage because it has a second bid from EQT, and it could throw out current offers and rebid, said Fitzgerald and Dennis Davin, director of county economic development and the Airport Authority's board treasurer.

Consol agreed the offer could change.

“Since the airport authority selected our bid last month, we have made significant progress in our negotiations,” said Lynn Seay, Consol spokeswoman. “Our conforming bid contemplated an ability to increase the bonus payment as part of those negotiations should we get clarity and comfort in certain aspects of the bid package.”

Some were skeptical on Thursday. County Council Vice President Nicholas Futules said the county probably won't be able to get Consol to boost its offer. EQT met few of the county's requirements with its bid, he said, meaning the county probably has only one qualified bid.

“I would probably consider their (EQT) bid pathetic. They gave us six sheets of paper when we gave them a whole booklet,” Futules, D-Oakmont, said by phone after Fitzgerald spoke to reporters Thursday.

When asked how much leverage the county had, Futules said, “Probably none. I mean, they struck a deal, they have a contract, and that's what we're going to get.”

Other Allegheny County Airport Authority leaders, who put out the bid request and are collaborating with county officials on negotiations, could not be reached for comment.

At stake is about 9,000 acres for drilling on land at Pittsburgh International Airport in Findlay. The Consol deal could net about $200 million to $250 million in a signing bonus and royalties.

Because of federal airport rules, that money probably will have to go to lower gate fees and to build roads and infrastructure to help industrial and office redevelopment on county-owned airport land, Fitzgerald and Davin said.

The Allegheny County Airport in West Mifflin ultimately could see drilling, too, but it's not part of the first phase, officials said.

The airport authority required bidders to offer 18 percent in royalties. EQT's bid offered $44 million in upfront cash, double what Consol offered, but had no deposit check as Consol's bid did.

Airport and county officials chose Consol because its bid was more detailed and contained provisions that made its payout competitive with EQT's over the long-term, Fitzgerald said. He declined to say whether EQT failed to meet the county's bid requirements.

“I don't want to get into that,” he said. “I feel we're fortunate that two good companies, local companies ... are bidding, trying to negotiate with us to develop that land.”

Fitzgerald's comments occurred on Thursday after he submitted legislation to County Council asking members to approve drilling on the land.

Futules said he expects council to pass it with little opposition.

Councilman Matt Drozd, a Ross Republican who represents the airport area, said he supports the effort and Fitzgerald's attempt to get more money from Consol.

Council will host a public hearing near the airport and could authorize drilling by February or March, said Davin and Fitzgerald. The airport authority could give its approval of the Consol deal in the meantime — pending county approval, Davin said.

Drilling is unlikely to start before the summer of 2014, with production opening in 2016, Fitzgerald said.

Davin said he expects six to eight well pads, each with several wells, all outside the fence line around the terminal and runways.

Timothy Puko is a staff writer forTrib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

 

 
 


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