Consol Energy Inc.'s agreement to sell five West Virginia coal mines and its river transportation division to an Ohio company for $3.5 billion is a big deal by definition. But for this region it may also be a defining moment.
Coal is to Consol what ketchup is to H.J. Heinz. The Pittsburgh-area company has a 150-year history of coal mining and coal jobs, and its very name originated with the subsidiary it is now selling, Consolidation Coal Co.
In announcing the deal, Consol chairman and CEO J. Brett Harvey recognized that these five mines have contributed to America's economy and Consol's legacy, "But it doesn't fit where we're headed."
Where the company is heading is expansion into natural gas, particularly from the Marcellus Shale. This doesn't mean Consol is abandoning coal -- the company is keeping seven mines, including several in Greene County, Pa., West Virginia and Virginia, as well as its Baltimore coal terminal.
Still, the future of the energy market has spoken to Consol and it has listened. While it hopes to sell natural gas when the market demands it and coal when that the market demands that, this is a strategic shift to fund a growing natural gas division.
The market, of course, also spoke to the buyer, Murray Energy Corp., saying that coal has a future -- this despite its CEO, Robert Murray, predicting in 2012 the "total destruction of the coal industry by 2030" after President Barack Obama was re-elected. Apparently not, judging by the price paid.
Politicians who rail about the administration's purported "war on coal" should take two messages from this -- that rumors of the industry's death are overblown given that a company will pay a high price for a bigger stake in it and that blindly defending the heritage of the coal business doesn't make sense when one of its great pioneers is staking its future on cleaner natural gas.