Can Marcellus Shale Turn Around PIT’s Fortunes?
The Allegheny County Airport Authority has received two bids to drill for natural gas in the Marcellus Shale formation. The two bids contained up-front payments of $20 million and $44 million along with royalties. The published estimate of the deal is more than $200 million for roughly 85 wells on a combined 9,263 acres of land on the two facilities. So will this deal help turn around Pittsburgh International Airport’s (PIT) fortunes?
As we have written on a few occasions, PIT’s passenger count is a fraction of, not only what it once was, but what the new terminal was designed to handle. The loss of the USAiways’ hub and that airline’s reduced role in the region really put PIT in a financial bind and struggling with debt. This has led to high airline fees which certainly has had an impact on the number of flights at PIT contributing to the low passenger counts. Thanks to money from the gaming law, the Authority has been able to bring that debt level down in the last couple of years.
If the reports are true and the Airport Authority can reap this kind of reward from drilling on its land, it will certainly go a long way into further reducing its debt load and perhaps bring down airline fees to entice new carriers or existing carriers to expand operations at PIT.
But the fly in the ointment is of course the County itself. The County Executive has commented that the County and Authority agreed to split the proceeds of any drilling 50/50. He would love to get his hands on this kind of cash. But the FAA may have the last word as its rules require any money from drilling to be reinvested back in to the airport itself. The only exception is to allow some money earned at general aviation airports to be spent on other transportation projects. In this case the general aviation airport is the County Airport in West Mifflin-the smaller of the two. The vast majority of the land available for drilling is at PIT which does not fall under the exception and thus any money earned there would stay there.
One thing is certain any money earned through drilling at PIT would be a welcome sight for the beleaguered airport.