Big Trove for Frackers at Pittsburgh International Airport
(NY Times) By MATTHEW L. WALD
PITTSBURGH — Where 600 flights used to take off and land every day here at Pittsburgh International Airport, there are now about 300. Partway down Terminal B, the moving sidewalk that used to lead to a dozen gates now stops abruptly at a plain gray wall.
Pittsburgh’s airport is struggling financially and mired in debt, with sharply lower traffic ever since US Airways began phasing it out as a bustling hub in 2004. Long gone are the days when British Airways flew 747s to London, and TWA flew to Frankfurt.
For salvation, airport officials are looking down — about 6,000 feet. The quiet runways, it turns out, are sitting on enough natural gas to run the whole state of Pennsylvania for a year and a half, and this month, Consol Energy will drill its first well here to tap the gas, which county officials say will bring them nearly half a billion dollars over the next 20 years.
The well is outside the airport fence but, with horizontal drilling, will extract the rich deposits that lie under the terminals and runways.
“It’s like finding money,” said Rich Fitzgerald, the county executive of Allegheny County, which owns the airport. “Suddenly you’ve got this valuable asset that nobody knew was there.”
The discovery could not have come at a better time for the airport, which devotes 42 percent of its annual budget to pay off its large debt, much of it incurred to build out the gates it no longer uses. The airport has 75 gates; 62 are still available, but many of those are actually vacant, marked with the airport logo and not an airline’s.
After the drilling, which uses hydraulic fracturing, or fracking, begins in earnest and the natural gas royalties kick in, the airport will receive about $20 million a year, a hefty portion of an operating budget currently below $91 million.
Pittsburgh is not the only airport with oil or gas exploration on its grounds. Dallas-Fort Worth has done it for years, and there were oil and gas wells at Denver International even before the airport was there.
But no other airport relies on oil and gas revenue the way Pittsburgh will. Dallas-Fort Worth, by comparison, earns $8 million from the 100 wells on its property, a fraction of its annual revenue of $6 billion. And Denver International brought in $6.2 million in 2012, about 1 percent of its revenue, from its 76 wells.
Mr. Fitzgerald and others have recognized for a while that their chunk of southwestern Pennsylvania lies atop the vast Marcellus Shale, a fracker’s paradise that is among the most productive in the world. But it wasn’t until the last few years that airport officials got serious about extracting the gas.
The airport offers conditions just about ideal for fracking. For example, the airport sits above four separate layers of shale, each containing natural gas and related liquids. All of it can be reached by a single set of drilling pads, delivering their gas to the same pipelines, using a single set of roads.
With a single well, drillers can bore down a few thousand feet, turn sideways and drill lateral wells up to two miles long. In other areas of Pennsylvania, that can mean having to secure permission from hundreds of property owners. The airport, though, is 9,000 acres with a single landlord.
The need for new revenue would not be so great had it not been for the relentless consolidation in the airline industry, something Allegheny County did not anticipate when the airport was expanded.
Kent George, head of the airport authority from 1998 to 2007, said that when US Airways, then known as USAir, told county officials that it wanted to build a hub in the 1980s, the reply was, “We’ll do whatever you need.” Mr. George said that the local government acted “without taking a look at what the long-term exposure was,” and soon, “the airport was fat, dumb and happy with 600 flights a day.”
But then came consolidation, leaving the surviving airlines with too many hubs. A wave of bankruptcies followed, allowing airlines like US Airways to break their long-term leases. The result was a decline in landing fees, gate rentals and passenger spending.
“A million passengers here, a million passengers there, and before you know it, we had dropped considerably,” said Jay Kruisselbrink, vice president of Airmall, which manages the airport’s retail space. The terminal was built for 30 million passengers a year. The peak was just under 21 million, in 1997. Last year, there were eight million.
In response, the airport, like others, has sought to increase revenue from sources that have nothing to do with aviation.
Just about anything will be considered, as other airports have found. “It could be warehouse development,” said Bob Hazel, a former vice president for US Airways and now a consultant. “It could be grazing.”
At Pittsburgh, one focus has been on retailing, which has suffered under the decline. Airmall pulled its stores into the busier center of the airport and brought in chains that had no presence in the Pittsburgh area. Bottega dei Sapori, an Italian specialty food store, does a lively business here. Desigual, a Spanish clothing store, and Furla, an Italian clothing and accessories shop, also draw traffic.
Mr. Kruisselbrink said the new strategy was showing promise; typical retail sales per departing passenger at an airport are $5 to $7, he said, but Pittsburgh’s were about $14.
And the retailers themselves are trying new things. Bar Symon, opened by the celebrity chef Michael Symon, put electric outlets at almost every seat so patrons can recharge their laptops and smartphones.
“Will it give us another two or three beer sales?” Mr. Kruisselbrink said. “Probably.”
There are also plans to develop the airport-owned land outside its boundaries, with tenants paying rent to the airport. Already, Dick’s Sporting Goods has a headquarters there as well as a hangar.
But the real action is about a mile south of Pittsburgh International’s parking lots, where bulldozers created a pancake-flat gravel pad of about eight acres nestled in the wooded rolling hills.
This month, a drilling rig will poke six holes more than a mile down and a second rig will drill horizontal offshoots that will extend 8,000 feet or more. Work proceeds normally as airliners soar past, although everyone looks up when an Air Force C-5 cargo plane roars overhead at low altitude.
Mark Stebbins, the district operations superintendent for Consol Energy, described it as a modest-size project for his company. All of the work, which faced minimum opposition, was approved by the airport and the Federal Aviation Administration, he said as he unfolded a map on the hood of his pickup.
“Not that we don’t know where we’re at,” he said. “We have a very comprehensive plan.”
(NY Times) By MATTHEW L. WALD
PITTSBURGH — Where 600 flights used to take off and land every day here at Pittsburgh International Airport, there are now about 300. Partway down Terminal B, the moving sidewalk that used to lead to a dozen gates now stops abruptly at a plain gray wall.
Pittsburgh’s airport is struggling financially and mired in debt, with sharply lower traffic ever since US Airways began phasing it out as a bustling hub in 2004. Long gone are the days when British Airways flew 747s to London, and TWA flew to Frankfurt.
For salvation, airport officials are looking down — about 6,000 feet. The quiet runways, it turns out, are sitting on enough natural gas to run the whole state of Pennsylvania for a year and a half, and this month, Consol Energy will drill its first well here to tap the gas, which county officials say will bring them nearly half a billion dollars over the next 20 years.
The well is outside the airport fence but, with horizontal drilling, will extract the rich deposits that lie under the terminals and runways.
“It’s like finding money,” said Rich Fitzgerald, the county executive of Allegheny County, which owns the airport. “Suddenly you’ve got this valuable asset that nobody knew was there.”
The discovery could not have come at a better time for the airport, which devotes 42 percent of its annual budget to pay off its large debt, much of it incurred to build out the gates it no longer uses. The airport has 75 gates; 62 are still available, but many of those are actually vacant, marked with the airport logo and not an airline’s.
After the drilling, which uses hydraulic fracturing, or fracking, begins in earnest and the natural gas royalties kick in, the airport will receive about $20 million a year, a hefty portion of an operating budget currently below $91 million.
Pittsburgh is not the only airport with oil or gas exploration on its grounds. Dallas-Fort Worth has done it for years, and there were oil and gas wells at Denver International even before the airport was there.
But no other airport relies on oil and gas revenue the way Pittsburgh will. Dallas-Fort Worth, by comparison, earns $8 million from the 100 wells on its property, a fraction of its annual revenue of $6 billion. And Denver International brought in $6.2 million in 2012, about 1 percent of its revenue, from its 76 wells.
Mr. Fitzgerald and others have recognized for a while that their chunk of southwestern Pennsylvania lies atop the vast Marcellus Shale, a fracker’s paradise that is among the most productive in the world. But it wasn’t until the last few years that airport officials got serious about extracting the gas.
The airport offers conditions just about ideal for fracking. For example, the airport sits above four separate layers of shale, each containing natural gas and related liquids. All of it can be reached by a single set of drilling pads, delivering their gas to the same pipelines, using a single set of roads.
With a single well, drillers can bore down a few thousand feet, turn sideways and drill lateral wells up to two miles long. In other areas of Pennsylvania, that can mean having to secure permission from hundreds of property owners. The airport, though, is 9,000 acres with a single landlord.
The need for new revenue would not be so great had it not been for the relentless consolidation in the airline industry, something Allegheny County did not anticipate when the airport was expanded.
Kent George, head of the airport authority from 1998 to 2007, said that when US Airways, then known as USAir, told county officials that it wanted to build a hub in the 1980s, the reply was, “We’ll do whatever you need.” Mr. George said that the local government acted “without taking a look at what the long-term exposure was,” and soon, “the airport was fat, dumb and happy with 600 flights a day.”
But then came consolidation, leaving the surviving airlines with too many hubs. A wave of bankruptcies followed, allowing airlines like US Airways to break their long-term leases. The result was a decline in landing fees, gate rentals and passenger spending.
“A million passengers here, a million passengers there, and before you know it, we had dropped considerably,” said Jay Kruisselbrink, vice president of Airmall, which manages the airport’s retail space. The terminal was built for 30 million passengers a year. The peak was just under 21 million, in 1997. Last year, there were eight million.
In response, the airport, like others, has sought to increase revenue from sources that have nothing to do with aviation.
Just about anything will be considered, as other airports have found. “It could be warehouse development,” said Bob Hazel, a former vice president for US Airways and now a consultant. “It could be grazing.”
At Pittsburgh, one focus has been on retailing, which has suffered under the decline. Airmall pulled its stores into the busier center of the airport and brought in chains that had no presence in the Pittsburgh area. Bottega dei Sapori, an Italian specialty food store, does a lively business here. Desigual, a Spanish clothing store, and Furla, an Italian clothing and accessories shop, also draw traffic.
Mr. Kruisselbrink said the new strategy was showing promise; typical retail sales per departing passenger at an airport are $5 to $7, he said, but Pittsburgh’s were about $14.
And the retailers themselves are trying new things. Bar Symon, opened by the celebrity chef Michael Symon, put electric outlets at almost every seat so patrons can recharge their laptops and smartphones.
“Will it give us another two or three beer sales?” Mr. Kruisselbrink said. “Probably.”
There are also plans to develop the airport-owned land outside its boundaries, with tenants paying rent to the airport. Already, Dick’s Sporting Goods has a headquarters there as well as a hangar.
But the real action is about a mile south of Pittsburgh International’s parking lots, where bulldozers created a pancake-flat gravel pad of about eight acres nestled in the wooded rolling hills.
This month, a drilling rig will poke six holes more than a mile down and a second rig will drill horizontal offshoots that will extend 8,000 feet or more. Work proceeds normally as airliners soar past, although everyone looks up when an Air Force C-5 cargo plane roars overhead at low altitude.
Mark Stebbins, the district operations superintendent for Consol Energy, described it as a modest-size project for his company. All of the work, which faced minimum opposition, was approved by the airport and the Federal Aviation Administration, he said as he unfolded a map on the hood of his pickup.
“Not that we don’t know where we’re at,” he said. “We have a very comprehensive plan.”
