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National Fuel eyes more funds for drilling; Will boost exploration of Marcellus Shale field

National Fuel Gas Co. plans to spend about 18 percent more next year on its oil and natural gas drilling business as the Amherst-based energy company continues to ramp up its exploration program in the Marcellus Shale region in northwestern Pennsylvania.

The company said Monday it has preliminary plans to drill 115 to 140 new horizontal wells in the Marcellus Shale during the fiscal year that begins in October as part of a drilling program that is expected to cost between $685 million and $800 million.

About two-thirds of those wells -- between 80 and 95 of them -- will be operated directly by National Fuel, while the remaining wells will be operated by EOG Resources, which is the company's partner in a joint venture within the Marcellus region.

National Fuel's drilling efforts within the Marcellus Shale have expanded rapidly over the last year, with daily production now topping 120 million cubic feet of gas, up eightfold from the company's output levels of a year ago.

National Fuel expects its total oil and natural gas production next year to rise to the equivalent of between 83 billion and 100 billion cubic feet of natural gas, which would be about 35 percent more than the company's anticipated production this year of between 64 billion and 71 billion cubic feet.

"We are anticipating another strong year of production growth," said Matthew D. Cabell, who runs National Fuel's oil and gas drilling business.

Most of National Fuel's drilling has been focused on wells in Tioga and Clearfield Counties in Pennsylvania, but Cabell said the company also has seen "encouraging results" from new wells it has drilled on the western portion of the 745,000 acres of land where it controls the drilling rights in the Marcellus region.

National Fuel expects its production from the Marcellus Shale to rise to between 58 billion and 71 billion cubic feet of gas next year, which would equal about 70 percent of the company's expected oil and gas output.