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Consol Energy to spend $1.5 billion to speed up natural gas production

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Consol Energy announced Jan. 21 it expects to spend about $1.5 billion this year to speed up its growth in natural gas production to hit its growth target of 30 percent.

"Our 2014 Capital Budget advances our E&P growth strategy," Consol Energy Chairman and CEO J. Brett Harvey said in a prepared statement. "We executed in 2013 by selling low-growth, non-core coal assets.

"Our primary sale, which closed last month, yielded approximately $1 billion in cash when taking into account after-tax proceeds and related administrative cost reductions."

Harvey said those funds would be applied toward an "aggressive" 2014 natural gas drilling plan, but he said the company expects its coal business "to also generate meaningful cash to support the capital program for the E&P segment" of the company.

The company announced Jan. 22 it had selected Timothy Dugan, formerly the vide president of the Appalachia South Business Unit for Chesapeake Energy, to be the new chief operating officer for its exploration and production, or E&P division.

Dugan had worked with Chesapeake's operations in the Marcellus and Utica shales since 2009 and he also spent time working at Cabot Oil and Gas Corporation as well as EQT Corporation.

"Tim's intimate knowledge of all operational aspects, specifically in the Marcellus and Utica shales, his industry perspective, as well as his experience on the ground floor of a major airport drilling project, made him the logical choice to lead Consol Energy's E&P division, which is poised for dynamic growth in the coming years," DeIuliis said. "This hire represents a critical step in implementing the growth strategy we have embarked upon."

Consol Energy expects to invest about $1.1 billion within its gas operations category, with much of that directed toward drilling and completion costs in Marcellus and Utica shale formations. The company and its partner plan to operate an average of five horizontal rigs each to drill at least a combined 162 gross wells in a Marcellus Shale joint venture, and at least 88 of the joint venture wells will be drilled in the liquids-rich areas of the play. That count includes two within the recently acquired land beneath Pittsburgh International Airport.

At least 74 wells are planned to target the dry gas areas of the joint venture, with two of those planned for Doddridge County. The plans for both partners will use shorter stage laterals and reduced cluster spacing, enhanced completion techniques that already have shown to be "very promising" in Southwestern Pennsylvania, according to Consol Energy, with initial production rates improving by as much as 40 percent.

A total of 32 gross wells are planned to be drilled in the Utica Shale joint venture through the Ohio counties of Harrison, Belmont, Guernsey and Noble, and the enhanced completion technique will be tested there as well.

Apart from the joint venture activity, Consol expects to invest $24 million in Monroe County, Ohio and its coalbed methane program is expected to be at minimal drilling levels again this year, with only 71 wells expected to be drilled at a total capital of $34 million.

And Consol expects to invest $200 million to complete the single-longwall BMX Mine, which is located adjacent to Consol's Bailey and Enlow Fork mines in Southwestern Pennsylvania, in mid-March.