Energy project at Pittsburgh airport will boost local economy

Consumer Energy Alliance Mid-Atlantic Director Mike Butler penned a blog for ShaleReporter about how an energy project at Pittsburgh’s airport will boost the local economy.

Pittsburgh International Airport (PIA) was once one of the biggest hubs in US Airways’ route network and in the 1990s the airport was remodeled to be a state-of-the-art facility built largely to accommodate US Airways’ needs.

Unfortunately, two bankruptcies in the early 2000s prompted the airline to close its hub, slash more than 500 daily flights, and gut a workforce that surpassed 12,000. So, what was once one of the nation’s busiest airports with more than 600 daily departures, now only has an average of 151 per day.

The closing of the US Airways hub has been a blow to the regional economy, but fortunately the airport’s property has great economic opportunity as it holds 9,000 acres of land suitable for energy production. In late February, Southpointe-based Consol Energy Inc. completed a deal to drill for natural gas and oil at PIA. Allegheny County Council approved the contract, with Consol paying a $46.3 million signing bonus to the Allegheny County Airport Authority on Feb. 22nd.

Last year, Consumer Energy Alliance (CEA) testified at a public hearing held by the Allegheny County Council in support of the proposal to allow safe, responsible energy production on the land surrounding the airport. By approving this plan, the County Council was in a better position to reduce costs and landing fees to bring in more carriers to PIA – translating into additional economic development and revitalization for the region.

Under the deal, Consol agreed to pay 18 percent royalties on future production, expected to total $450 million over two decades. The Federal Aviation Administration requires all revenues generated by production on airport property to be reinvested within the airport system.

The airport said it will use the money to lower airline costs in hopes of attracting more flights, and for capital improvements. The initial payment of $50M, which was paid by Consol Energy to Allegheny County upon the signing of the lease in March, will be used to lower bond rates that will enable the airport to reduce gate fees.

According to a story by ShaleReporter, Allegheny County Chief Executive Rich Fitzgerald said this project is perfect for the land around the airport and will be an economic generator for the facility and the region.

“The access to the airport is one of the reasons … It’s really in a great location and with the Shell cracker plant being built 10 miles down the road, it’s really creating synergies for that land to be really valuable.”

Effective January 2014, the cost per enplaned passenger at PIA will drop from $14.11 to $13.92, which is in addition to the $.55 reduction made in July 2013. This is the lowest rate for airlines flying into PIA since 2008. Reducing operating costs for airlines serving PIA will allow it to become more competitive and marketable to major airlines and can contribute to improving air service in Pittsburgh.

Consol has also announced it is adding to its workforce to support the significant projected growth of its Marcellus drilling program, which includes the airport project. The company anticipates hiring 50-75, with openings primarily for drilling and completions engineers. The multiplier for each of those hires is 4-6 contractor or support jobs for each full time job, so the total number and variety of job openings increases dramatically.

With the energy-based economy that is emerging in the Pittsburgh region fueled by the growth of the responsible production of the Marcellus Shale formation, Consol’s operations at PIA is another great example of the opportunity to generate jobs and bring much-needed financial stability to the region and specifically to the airports.