Coal: CONSOL Energy expects to produce 13.4 – 13.8 million tons during the quarter, including 0.6 million at the Buchanan Mine, which is expected to re-start on the week of November 5.
: CONSOL's 2012 gas production guidance remains at 157 - 159 Bcf (net to CONSOL). Fourth quarter 2012 gas production is expected to be 42.5 – 44.5 Bcf.
Coal Division Operations/Marketing
The Coal Division Operations were coordinated with the Marketing Department during the quarter in order to maintain discipline in the face of weak markets for low-vol, mid-vol, and high-vol coal. CONSOL was successful in lowering total company inventory, in spite of weak markets.
CONSOL's strong liquidity gives it the flexibility to respond to weak markets by voluntarily curtailing production. The company believes it is counterproductive to sell into certain markets that are going through a de-stocking phase.
CONSOL's CNX Marine Terminal also proved valuable in the quarter by loading 34 vessels with total outbound tonnage of 3.1 million, including third party cargos.
The one unplanned idling was that of the Bailey and Enlow Fork mines in Southwestern Pa. As announced at the end of July, two newly-installed conveyor belts that feed the common preparation plant collapsed. Engineers and contractors working around the clock had one belt rebuilt by the third week in August. The mines were re-started at a 60% capacity utilization rate. The second belt was repaired in late September, so the fourth quarter began with the entire complex running normally.
Gas Division Operations
In continuous improvement, CONSOL-operated Marcellus Shale wells in
, Southwest Pa., and Northern W. Va. all achieved record peak 24-hour production rates for their respective districts. The Gas Division also has been dramatically extending its completed Marcellus Shale lateral lengths. In 2011, the average completed lateral was 3,300'. For Marcellus Shale wells turned on line through the first three quarters of 2012, completed lateral lengths have averaged 4,870' and have reached a maximum completed lateral length of 8,460' during the recent quarter.
CONSOL's economics are also being improved by cost reductions in items such as costs per frac stage. In 2011, CONSOL was spending
per stage. In 2012 to date, frac costs have fallen to
per stage. These costs are all-in, from TD to flowback.
The Gas Division continued to use water from coal mines for hydraulic fracturing. This is another in a long line of synergies between CONSOL's coal and gas divisions. During the third quarter, the MOR 10F was fractured with a blend of up to 16% mine-sourced water. The MOR 10F (13 stages, 3,613' completed lateral) came on line on
at an initial rate of 10.8 MMcfd.
Another technical innovation in Southwest Pa. was the testing of fractures of 450' stage lengths versus the normal 300' stages. The three-well MOR 17 (completed laterals ranging from 2,211' to 2,594') with initial 24-hour flow rates between 7.0 and 8.0 MMcfd, These are truly exceptional results from wells of such short lengths.