CONSOL Energy Inc.'s Board of Directors has approved a 2010 Capital Budget of $1.0 billion. Included in the budget is $400 million for CNX Gas Corporation, which was approved separately by its Board of Directors.
J. Brett Harvey, chief executive officer of CONSOL Energy and chairman and CEO of CNX Gas Corporation said, "CONSOL Energy's 2010 Capital Budget of $1.0 billion achieves the goals of improving the efficiency and productivity of CONSOL's world-class fleet of mines, while simultaneously funding meaningful production growth in the gas business."
The $400 million Capital Budget for CNX Gas is about evenly split between shale programs and coalbed methane programs, with the largest single program consisting of $160 million for the Marcellus Shale. CNX Gas will be signing a contract for a second horizontal rig to drill in the Marcellus Shale effective March 1, 2010. This rig will be a flex rig that will allow for greater efficiencies when drilling multiple wells from the same pad.
Harvey continued, "We had excellent results from our 2009 Marcellus Shale program, and it makes sense for us to add another rig, especially as gas prices have strengthened recently. Our goal remains to accelerate the monetization of our highly promising acreage. We also have world-class assets in coalbed methane. We will continue to develop these in a measured way."
CONSOL Energy has budgeted $500 million for coal and $100 million for other (non-gas) activities. Included in the coal budget is $130 million in efficiency projects for longwall face extensions and overland conveyor systems. These projects are follow-throughs on commitments made prior to the economic downturn, and should help to improve unit costs.
Harvey concluded, "We are beginning to see the end of a once-in-a-generation recapitalization of our fleet of longwall mines. Many of these mines have decades of remaining reserves, so it makes sense for us to maintain them to the best of our ability. In looking beyond 2010, I believe that spending on coal will migrate to maintenance of production levels, while gas will likely be the growth vehicle. While a lot can happen between now and 2011, I currently envision that coal capital will be lower in 2011, while gas spending will be higher."
CONSOL Energy Inc., a producer of high-Btu thermal coal and metallurgical coal, is a member of the Standard & Poor's 500 Equity Index and the Fortune 500. It has 12 bituminous coal mining complexes in six states and reports proven and probable coal reserves of 4.5 billion tons. It is also a majority owner of CNX Gas Corporation, a leading Appalachian gas producer, with proved reserves of over 1.4 trillion cubic feet.
CNX Gas Corporation is the leading gas producer in the Appalachian Basin, when measured by revenue, net income, and safety.
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