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Pittsburgh gas project could benefit cargo

By Hpanchal on July 8, 2013

By John W. McCurry

Sometime in late 2014, if all goes according to plan, Consol Energy will begin shale gas drilling on 9,000 acres owned by Pittsburgh International Airport. The deal figures to be lucrative for the airport over the 20-year lease and could eventually offer benefits to air cargo in the region.

The airport, which sits in the middle of the Marcellus Shale field, received a US$45.3 million payment from Consol within an hour of the deal being approved in February. It will also receive 18 percent royalties based on production, which could turn into US$500 million over 20 years.

When drilling begins, Pittsburgh International will join a growing list of airports leasing land for shale gas drilling. This includes Dallas/Fort Worth International Airport, where drilling began in 2007, and Denver International Airport.

The Consol Energy project in Pittsburgh is now in the midst of an environmental review process. Consol’s plan calls for development of six to eight well pads, which are 5-acre-square areas. Eight to 12 wells will be drilled on each pad, which will be on airport property but several hundred feet off to the side of the airport itself.

Brad Penrod, president and chief strategy officer for the Allegheny County Airport Authority, which operates the Pittsburgh Airport, says the drilling project could have some long-term benefits for air cargo operations. He says the oil and gas money will provide two benefits to air cargo: operating costs for carriers will be reduced, and the funds will allow the airport to improve its infrastructure and build new facilities. Infrastructure improvements could eventually include new taxiway connections to new cargo aprons.

“We know that carriers look closely at operating costs and as we lower their costs, it will help us,” Penrod says. “We will give 54 percent of the proceeds back to the airlines in the form of rate reduction. If a flight is on the bubble financially, we envision that will help that.”

The remainder of the money will go toward capital improvements or economic development projects at the airport. As the drilling ramps up, there is also likely to be demand for just-in-time, via airfreight, delivery of equipment and critical supplies.

Penrod says the Pittsburgh airport has potential for increased cargo traffic in the coming years.

“We know we can get products to market a lot quicker,” he says. “We can provide both an air and ground relief valve to the Northeast and will become attractive for cargo.”

Consol will use hydraulic fracturing, or “fracking,” to extract the gas. Fracking is the process of mixing water with sand and chemicals and injecting the mixture at high pressure into a drilled hole to create fractures. This process has been controversial due to perceived environmental issues, but Penrod says everyone involved is proceeding with the environment in mind.

“Consol is based in Western Pennsylvania, and their corporate headquarters is just a 15-minute drive from the airport,” he says. “We share the same backyard, and they are environmentally sensitive about this as are we.”