Thursday, May 05, 2011
Knight Ridder/Tribune Business News
by Kim Leonard, The Pittsburgh Tribune-Review
Consol Energy Inc.'s big move into natural gas production last year puts it in line to sell gas to chemical companies that could locate in the Pittsburgh region, as well as utilities and other industries that need the fuel, CEO J. Brett Harvey said on Wednesday.
"We think the utilities will build out the next round of generating (plants) for gas," Harvey told shareholders at the company's annual meeting at the Hyatt Regency hotel in Findlay. "We also believe chemical companies will come and build plants here because the fuel and water are here."
Regional leaders have approached five chemical makers about building gas "cracking" plants in Southwest Pennsylvania or northern West Virginia, said Dennis Yablonsky, CEO of the Allegheny Conference on Community Development.
A plant with cracking furnaces that turn ethane into ethylene typically costs $1 billion, and employs about 250 people, Yablonsky said.
The Energy Alliance of Greater Pittsburgh, which the conference and business investment group Innovation Works formed two years ago, is pushing the idea that the "wet" gas -- rich in ethane, butane and propane -- that comes from Marcellus shale and other wells is ideal for making ethylene. The compound is used in coatings, adhesives and other products.
Harvey is one of 16 energy company CEOs advising the alliance as it tries to entice new businesses to the region.
Yablonsky wouldn't say which chemical companies have been contacted but, "The response has been pretty good," he said.
Cecil-based Consol focused on coal for most of its 150-year history, but now views natural gas as a "perfect hedge," Harvey said, considering environmental policies that discourage coal use.
"And if you push against coal," he said, "the fuel that comes back to mind in terms of acceptance is natural gas."
Consol last year bought the 16.7 percent of CNX Gas Corp. that it didn't already own, and it paid $3.5 billion for Dominion Resources Inc.'s Appalachian Basin natural gas exploration-production business. The company controlled 3.7 trillion cubic feet of gas reserves as of Dec. 31.
Record revenue last year resulted in a $347 million profit, Harvey said, but Consol's stock performance was disappointing. "The acquisition of the gas piece confused the marketplace," he said.
Consol stock traded at around $56 in January 2010 and dipped to around $32 in midsummer before rebounding. Shares closed at $51.03 yesterday, down $1.23.
Shareholders approved Ernst & Young as Consol's independent auditor, and shareholders also approved advisory votes on executive pay. One shareholder, who declined to be named, criticized Harvey's 16 percent pay boost and other executives' raises in 2010, while stock returns dipped.
Oil & Gas Post
Promote Your Page Too
No comments:
Post a Comment