Dominion, Consol unveil gas deal

Dominion Resources will ship 500 million cubic feet of West Virginia natural gas per day to pipeline connections in Ohio, while the company will also lease 100,000 acres of Marcellus Shale drilling rights to Consol Energy.

Consol will pay Dominion about $200 million over nine years as part of a lease agreement that calls for Consol to drill on about 80,000 acres of Dominion-owned storage area land in the Gilmer County and Ritchie County areas of West Virginia. Dominion will retain the storage fields, but permit fracking into the much deeper Marcellus Shale formation.

Consol officials believe more than 50 percent of this acreage will contain both dry methane gas, as well as wet forms of gas such as ethane, propane and butane.

Consol recently completed its $3.5 billion sale of five West Virginia coal mines to Murray Energy Corp., as Consol officials said they would use the proceeds from the deal to expand their natural gas drilling operations.

“This transaction reinforces Consol Energy’s commitment to being a leading natural gas producer in the Appalachian Basin,” said J. Brett Harvey, chairman and CEO. “These parcels represent what could be the largest untapped contiguous acreage in the southern core of the Marcellus Shale. They complement our already significant acreage position in northern West Virginia.”

In conjunction with this deal, Dominion plans to ship 2.5 million cubic feet of natural gas daily to an interconnection with the Texas Eastern pipeline at Mullet, Ohio, and another 2.5 million cubic feet per day to the interconnection with the Rockies Express Pipeline in Clarington, Ohio.

Directly across the Ohio River from Clarington is the Blue Racer Midstream processing plant in Marshall County. Dominion developed the Blue Racer plant, while the full-time workers at Natrium are considered Dominion employees. Blue Racer now officially owns the facility as part of a $1.5 billion deal between Dominion and Caiman Energy.

However, the plant remains shut down following a Sept. 21 fire. Officials expect Blue Racer to be up and running again early next year.