Beneath Pittsburgh lies abundance of gas

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"That big one, that's Pittsburgh," said Bill Zagorski, vice president of geology for Range Resources, poking at the reddest spot on a heat map of this half of Pennsylvania.

He was giving a presentation at an oil and gas conference in August and the map showed the hot spot where the Marcellus Shale was projected to hold the most gas.

Turns out, it's the Pittsburgh metropolitan area.

"We're not going to get that for a while." Mr. Zagorski said, not at all regretfully.

On Oct. 30, after the company released slides showing how the intersection of the Marcellus, Upper Devonian, and the Utica shales under the western part of Allegheny County makes it the most gas-rich spot in the play, an analyst asked when Range will start rolling rigs through Pittsburgh.

"We're not going there," Range's COO Ray Walker said during the conference call to discuss earnings. "I can't imagine anybody wanting to tackle that. The urban development, coupled with the surface topography and all that, it's just going to be a nightmare. So trust me, I used to live there."

No shale operator has expressed a desire to drill in Pittsburgh.

City council put a ban on hydrofracking in 2010, and while many in the industry believe that ban is unconstitutional -- similar moves in other cities have been taken up in court and some have been reversed -- no one has tried to challenge Pittsburgh's rule.

Instead, companies including Texas-based Range Resources have been leasing land for drilling at the corners of Allegheny County.

Downtown-based EQT Corp. is piling up acreage in Elizabeth, Monongahela and Jefferson Hills, in the southern portion of the county near Round Hill Park.

EQT is concentrating around its existing infrastructure and adding to acres it acquired from Chesapeake Energy in a $113 million deal last May, said company spokeswoman Linda Robertson.

"We're not trying to get closer to Pittsburgh at all," she said, "just expanding our position and planning for the future."

Huntley & Huntley, a Monroeville-based shallow oil and gas developer, has more than 100 leases in Allegheny County, along the northeastern and southeastern borders. The company bills itself as "Western Pennsylvania's premier-urban developer of natural gas."

Several years ago, the company began co-developing its acreage with Range Resources, which drills into the Marcellus. Now, Huntley & Huntley serves as, essentially, a leasing agent for Range in the county, said Range spokesman Matt Pitzarella.

The pair have signed dozens of new leases together around Tarentum, Fawn and Frazer, near Deer Lakes Park.

That focus may soon yield dividends as Allegheny County considers allowing drilling underneath Deer Lakes, a 1,180-acre property that could hold sizable gas reserves. The county issued a request for proposals to drill in September; Range, perhaps because of its extensive leasing in the area, was the only company that responded.

Range and Huntley & Huntley are currently negotiating with the county, which -- so far -- has maintained momentum despite a public outcry from residents, some of whom have pleaded before county council at every meeting since the plan came to light. The council has the final say on whether the deal goes forward.

While there are no active offers to drill in other Allegheny County parks, Mr. Pitzarella said that if Range's Deer Lakes offer is accepted, it may open the door to other opportunities. County Executive Rich Fitzgerald also has mentioned Round Hill Park and White Oak Park as possible prospects for drilling.

"The county does own a tremendous amount of property," Mr. Pitzarella said. "We're positive that this is going to be a great experience if they decide to move forward with us."

Range also has stepped up its leasing efforts in Imperial, Clinton, North and South Fayette, near the airport. But it's Consol Energy, a Cecil-based operator, that will be reaping the bounty of the rich gas under the airport.

Even before drilling has begun, expectations for the gas underneath the airport have been climbing. Consol signed a $500 million deal with the county to drill at least 47 Marcellus and Upper Devonian wells on its property.

The idea of co-developing the triple stack -- the Marcellus, Upper Devonian and the Utica -- is catching on among regional players. Consol believes the method will enhance gas recovery as the layers interact.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455. Andrew McGill: amcgill@post-gazette.com or 412-263-1497.


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