Airports and Wonderland: The authority must explain why it chose a low offer
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"Curiouser and curiouser" are the words famously said in Lewis Carroll's "Alice's Adventures in Wonderland." Allegheny County residents left wondering about the bidding process to drill for natural gas on the 9,263 acres at Pittsburgh International and Allegheny County airports might want to borrow Alice's language.
As reported by the Post-Gazette's Mark Belko, the first curiosity is the winning bid for the drilling. The Allegheny County Airport Authority approved Friday the go-ahead for a lease agreement with CNX Gas Co. LLC, part of Consol Energy Inc., containing a per-acre lease bonus of $20.8 million rather than the one submitted by EQT Corp., which offered a lump sum payment of $44 million.
In other words, the winning bid appeared to be more than $20 million lower than the losing bid, which would make even the Mad Hatter shake his head. But things are not as they appear, according to the airport authority's executive director, Bradley D. Penrod. He said the authority went through the Consol bid "in very close detail" and decided that it was a better value overall.
Mr. Penrod would not elaborate on the specifics that he said made it a better deal. He would not even say whether the EQT bid was disqualified because it did not contain a required check for 10 percent of the total lease bonus payment. At that point the curiosity of the apparent low winning bid became curiouser.
As further explained by County Executive Rich Fitzgerald, the authority looked also at the ongoing royalties -- set at 18 percent -- and not just at the bonus payment. The size of the royalties, he said, depended on a number of factors including the number of wells drilled.
It may very well be that the initial bonus payment is not the best measure of a deal like this -- indeed, the Post-Gazette story quoted an industry accountant who said just that -- but with officials being coy about the details there's no way for the public to know. While the deal is being finalized, the public is basically being asked to never mind the man behind the curtain, to borrow from another children's story.
The Post-Gazette has been in favor of drilling at the airports as a way to raise revenue, but officials have a lot of explaining to do -- and county council should insist on it. Alice went down a rabbit hole to find a topsy-turvy world; the public doesn't need to go down a drilling hole to find it.
First Published December 18, 2012 12:00 am