PROPERTY, PLANT AND EQUIPMENT:



	December 31,
	2011		2010
Coal and other plant and equipment	$	5,160,759	$	5,100,085
Proven gas properties	1,542,837		1,662,605
Coal properties and surface lands	1,340,757		1,292,701
Intangible drilling cost	1,277,678		1,116,884
Unproven gas properties	1,258,027		2,206,399
Gas gathering equipment	963,494		941,772
Airshafts	659,736		662,315
Leased coal lands	540,817		536,603
Mine development	457,179		587,518
Gas wells and related equipment	408,814		367,448
Coal advance mining royalties	393,340		389,379
Other gas assets	79,816		84,571
Gas advance royalties	4,065		3,078
Total property, plant and equipment	14,087,319		14,951,358
Less Accumulated depreciation, depletion and amortization	4,760,903		4,822,107
Total Net Property, Plant and Equipment	$	9,326,416	$	10,129,251

Coal reserves are controlled either through fee ownership or by lease. The duration of the leases vary; however, the lease terms generally are extended automatically to the exhaustion of economically recoverable reserves, as long as active mining continues. Coal interests held by lease provide the same rights as fee ownership for mineral extraction, and are legally considered real property interests. We also make advance payments (advanced mining royalties) to lessors under certain lease agreements that are recoupable against future production, and we make payments that are generally based upon a specified rate per ton or a percentage of gross realization from the sale of the coal. We evaluate our properties periodically for impairment issues or whenever events or circumstances indicate that the carrying amount may not be recoverable.

Coal reserves are amortized using the units-of-production method over all estimated proven and probable reserve tons assigned and accessible to the mine. Rates are updated when revisions to coal reserve estimates are made. Coal reserve estimates are reviewed when events and circumstances indicate a reserve change is needed, or at a minimum once a year. Amortization of coal interests begins when the coal reserve is placed into production. At an underground mine, a ton is considered produced once it reaches the surface area of the mine. Any material effect from changes in estimates is disclosed in the period the change occurs.

Amortization of capitalized mine development costs associated with a coal reserve is computed on a units-of-production basis as the coal is produced so that each ton of coal is assigned a portion of the unamortized costs. We employ this method to match costs with the related revenues realized in a particular period. Rates are updated when revisions to coal reserve estimates are made. Coal reserve estimates are reviewed when information becomes available that indicates a reserve change is needed, or at a minimum once a year. Any material income effect from changes in estimates is disclosed in the period the change occurs. Amortization of development costs begins when the development phase is complete and the production phase begins. At an underground mine, the end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine's production capacity and is not considered to shift the mine into the production phase.

Gas wells are accounted for under the successful efforts method of accounting. Costs of property acquisitions, successful exploratory wells, development wells and related support equipment and facilities are capitalized. Costs of unsuccessful exploratory or development wells are expensed when such wells are determined to be non-productive. Also, if an exploratory well has found sufficient quantities of reserves but the determination is subsequently made that the related project is no longer viable, the exploratory well is expensed. The costs of producing properties and mineral interests are amortized using the units-of-production method. Wells and related equipment and intangible drilling costs are amortized on a units-of-production method. Units-of-production amortization rates are revised when events and circumstances indicate an adjustment is necessary, but at least once a year; those revisions are accounted for prospectively as changes in accounting estimates. Any material effect from changes in estimates is disclosed in the period the change occurs.

The following assets are amortized using the units-of-production method. Amounts reflect properties where mining or drilling operations have not yet commenced or have ceased, and therefore, are not being amortized for the years ended December 31, 2011 and 2010, respectively.



	December 31,
	2011		2010
Unproven gas properties	$	1,258,027	$	2,206,399
Coal properties	386,402		394,635
Leased coal lands	178,988		171,056
Mine development	78,990		34,907
Coal advance mining royalties	54,533		67,674
Airshafts	47,437		73,703
Gas advance royalties	3,884		2,800
Total	$	2,008,261	$	2,951,174

As of December 31, 2011 and 2010, plant and equipment includes gross assets under capital lease of $95,995 and $88,859, respectively. For the years ended December 31, 2011 and 2010, the Gas segment maintains a capital lease for the Jewell Ridge Pipeline of $66,919, which is included in Gas gathering equipment. For the years ended December 31, 2011 and 2010, the Gas segment also maintains a capital lease for vehicles of $8,664 and $5,919, respectively, which are included in Other gas assets. For the years ended December 31, 2011 and 2010, the All Other segment maintains capital leases for vehicles and computer equipment of $20,412 and $16,021, respectively, which are included in Coal and other plant and equipment. Accumulated amortization for capital leases was $39,854 and $30,251 at December 31, 2011 and 2010, respectively. Amortization expense for capital leases is included in Depreciation, Depletion and Amortization in the Consolidated Statements of Income. See Note 14–Leases for further discussion of capital leases.

Long-Lived Asset Abandonment

In June 2011, CONSOL Energy decided to permanently close its Mine 84 mining operation located near Washington, PA. This decision was part of CONSOL Energy's ongoing effort to reallocate resources into more profitable coal operations and Marcellus Shale drilling operations. The closure decision resulted in the recognition of an abandonment expense of $115,817 for the year ended December 31, 2011. The abandonment expense resulted from the removal of the June 30, 2011 carrying value of the following Mine 84 related assets from the Consolidated Balance Sheets: Mine development - $92,136, Airshafts - $15,352, Coal equipment - $2,080, Inventories - $757, and Prepaid Expenses - $385. Additionally, the Mine 84 abandonment expense also includes the recognition of a Mine Closing expense of $5,107. The effect on net income of the Mine 84 abandonment was $75,281 of expense for the year ended December 31, 2011. The impact to basic and dilutive earnings per share was $0.33 for the year ended December 31, 2011.

Industry Participation Agreements

In 2011, CONSOL Energy entered into two significant industry participation agreements (also referred to as "joint ventures" or "JVs") that provided drilling and completion carries for our retained interests. The following table provides information about our industry participation agreements as of December 31, 2011:

Industry

Drilling

Participation

Total

Carries

Drilling

Shale

Agreement

Drilling

Billed to

Carries

Play

Partner

Date

Carries

Partner

Remaining

Marcellus

Noble

September 30, 2011

2,100,000

10,180

2,089,820

Utica

Hess

October 21, 2011

534,000

1,200

532,800