Pittsburgh Airport Leases Land to CONSOL

the fix is in We have to wonder, was the fix in at the Pittsburgh Airport? MDN told you two weeks ago about the opening for two bids to drill on and under property owned by the Allgheny County Airport Authority (see this MDN story). EQT offered more than twice the per-acre signing bonus of CONSOL Energy. EQT’s bid to drill on 9,263 acres was $44 million!

On Friday, the Airport Authority announced that after two weeks of “very, very careful review” it has accepted CONSOL’s bid of $20.8 million as the representing the “best value.” Huh?

The Allegheny County Airport Authority will negotiate with the lower of two bidders for the right to drill for natural gas at Pittsburgh International and Allegheny County airports.

Authority board members gave authorization today to finalize a lease agreement with CNX Gas Company LLC, an arm of Consol Energy Inc., with hopes of having a deal in place next month.

Earlier this month, Consol offered the authority a per-acre lease bonus of $2,250 for the drilling rights to 9,263 acres of land, most of it at Pittsburgh International. The lease bonus would generate $20.8 million for the authority, based on the 9,263 acres available.

However, the Consol bid was less than half of that offered by EQT Corp. It advanced a per-acre lease price of $4,750, which would have generated $44 million for the authority.

Authority executive director Bradley D. Penrod said after the vote that the Consol bid was deemed to be the “best value” after a “very, very careful review.”

In making its bid, EQT did not submit a check representing 10 percent of the total lease bonus payment, a deposit required by the authority.

But Mr. Penrod would not say whether that disqualified EQT, repeating that the authority reviewed all of the documents submitted by the two companies and decided that the Consol bid was the “best value.”

He would not elaborate on the specifics within the bid that made it a better value than EQT’s.

As part of any drilling contract, the authority also will receive ongoing royalties of 18 percent on all gas, oil or hydrocarbons produced by the activity.*

All things being equal—reputation, ability to drill, company financials, etc.—a bid that is twice as much as the other should be the clear winner. Announcing “we’ve done a thorough review but we’re not going to disclose the criteria or reasoning we used in awarding this contract” is, frankly, outrageous. The Airport Authority is a public agency—so their response is not good enough. It smacks of cronyism. If there’s nothing to hide, then don’t hide it! Tell us why you made the decision you made.

Hopefully someone on the state level will investigate and find out what’s going on in Pittsburgh.

*Pittsburgh Post-Gazette (Dec 14, 2012) – Airport authority accepts lower of 2 bids for Marcellus drilling