Marcellus shale drilling execs may fill the sky
As the Marcellus shale natural gas industry takes off in Pennsylvania, air traffic is growing with it.
Increasingly, officials say, executives are flying into local airports on corporate jets, chartering flights and hiring helicopter pilots to fly them over the vast Marcellus region to hunt for potential drilling sites and view work by their companies and competitors.
“It’s the best way to see what’s going on, both on their rigs and other companies’,” said Edward Kilkeary, president of L.J. Aviation, which is based at Arnold Palmer Regional Airport in Unity. He said his company provides an average of two helicopter rides a month to executives at a price of up to $1,800 an hour.
The new business isn’t yet enough to count on for local airports and fixed-base operators, companies that supply aircraft fuel, maintenance, charter flights and other services to customers.
But says Mike Vargo of Corporate Air, an Allegheny County Airport fixed-base operator: “We’re just at the tip of the iceberg.”
One aircraft broker says interest from companies looking to buy private jets for travel to and from Pennsylvania is soaring as well.
About 60 oil and gas companies have permits to drill natural gas in the Marcellus shale formation a mile below the surface of much of the state. It’s expected to make companies rich.
“I don’t think anyone in the oil and gas industry would spend all this time or money unless they thought it was worth it,” said Janine Iannarelli, president of aircraft broker Par Avion Ltd., based in Houston.
Iannarelli said she is talking with several drilling companies about jet deals after a lull of almost two years because of the recession. She specializes in selling used jets valued from $1 million to $55 million; the most popular brand is an eight-seater that sells for about $15 million.
She would not identify the companies but said they want to ferry executives and other employees to Pennsylvania at least once every two weeks — more if they’re establishing regional offices, purchasing leases or bringing wells online.
“It’s not a perk or a status symbol,” Iannarelli said of the jets.
Vargo agreed: “Automakers got demonized for their use of corporate jets, but they are a valuable business tool.”
Several out-of-state firms working in Pennsylvania, including Range Resources, Chief Oil & Gas, Exxon and Anschutz Exploration, did not return calls from the Tribune-Review or declined to comment on their executives’ travel habits. Others, such as Chesapeake Energy and Talisman Energy, say they rely on commercial travel.
Vargo said commercial flights from Pittsburgh International Airport serve only three dozen markets nonstop, while private jets can travel nonstop to thousands of airports across the country, including some near rural drilling sites. Often company executives can hit multiple locations and make it home for dinner, he said.
Statistics on corporate travel are hard to track, officials say. Fixed-base operators are reluctant to give specifics, citing customers’ privacy concerns, and say they don’t know the business of many customers. Many airports being used don’t have control towers.
Airport managers in Pennsylvania and neighboring West Virginia and Ohio say they noticed increases in business.
Westmoreland County Airport Authority Executive Director Gabe Monzo, co-director of the Pennsylvania Air Service Committee, said there’s been a slight bump at Arnold Palmer and Rostraver airports. The committee points to Marcellus development as a motive for improving links between the state’s big-city and regional airports, he said. Pittsburgh has service to Philadelphia International Airport, but no others in the state.
Washington County Airport Manager Ken Krupa said the airport benefited last year and early this year when a company kept a helicopter there and used it to explore almost daily.
Vargo wouldn’t say how much Marcellus-related traffic Corporate Air handles, but he said the “modest increase” increased fuel sales, hangar rentals and aircraft maintenance work. Companies can spend up to $1,600 filling up a Gulfstream jet, he said.
Todd Heming, manager of Indiana County’s Jimmy Stewart Airport, can’t collect as much per plane because its 4,000-foot runway cannot accommodate bigger corporate jets. Traffic varies from six to seven corporate arrivals in a busy week to none in others. The airport lacks available hangar space.
Aside from money collected through fuel sales, maintenance work and other services, the airport brings in about $6,500 a month from wells drilled on its property. Heming said all of it is “invested right back into the airport.”
John Carlen, general manager of the fixed-base operator Atlantic Aviation at Pittsburgh International, said he noticed about three to five Marcellus-related flights a week for the past two years. He thinks that could at least double as drilling activities increase.
“Our business isn’t built around it, but it obviously helps,” Carlen said.