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Consol’s Focus Shifting to Gas Drilling Industry

October 29, 2013
By IAN HICKS Staff Writer , The Intelligencer / Wheeling News-Register

By IAN HICKS

Staff Writer

WHEELING - Citing a lack of growth opportunities in the market for coal to feed domestic power plants, Consol Energy will increase its focus on developing the region's vast natural gas reserves after selling five of its West Virginia mines to Murray Energy.

Worldwide demand for metallurgic coal - a key component in steel production - continues to grow in markets such as Europe, Asia and Brazil, Consol Energy President Nicholas DeIuliis said Monday.

But the mines Consol is selling - including the McElroy and Shoemaker mines in Marshall County, the Robinson Run and Loveridge mines in Marion County and the Blacksville No. 2 Mine that straddles the Monongalia County-Greene County, Pa., line - produce steam coal, which serves traditional power generating stations.

Those power plants face an uncertain future due to ever-tightening Environmental Protection Agency regulations on carbon emissions. Some, including American Electric Power's Kammer Plant south of Moundsville, already have announced plans to close.

While DeIuliis said the market for steam coal remains "profitable" and "stable," selling those assets will allow the company to expand its presence in the region's burgeoning natural gas industry.

He said steam coal "is not a growth segment ... Strategically, that led us to the transaction that we announced."

DeIuliis said Consol plans to invest about $14 billion in West Virginia and another $10 billion in Pennsylvania over the next decade, much of it driven by the vast opportunity provided by the Marcellus Shale natural gas formation.

He said the company hopes to see annual growth of about 30 percent in its natural gas production over the next three years.

"That is no easy task. ... That is going to take substantial investment," DeIuliis said.

Consol's Pennsylvania operations, including the Bailey, Enlow Fork and soon-to-be-completed BMX mines are better positioned to meet worldwide export demand, DeIuliis added.

Regarding future employment levels at the five West Virginia mines, DeIuliis said he could not speak to Murray Energy's plans. However, he noted they are not "rebuilding projects," as his company has invested more than $1 billion in those mines over the last several years.

He believes the mines are in "great shape" in terms of infrastructure, staffing levels and training.

Consol CEO J. Brett Harvey said the decision to sell the mines was a "very difficult" one.

"The employees at these mines are among the safest and most productive miners anywhere in the world," he said. "In the end, we concluded that the time had come to sell these mature assets to ownership whose strategic direction is more aligned with those mines."

 
 

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