National Fuel

From Wikimarcellus

Amherst, New York-based National Fuel Gas Co. (NYSE: NFG) is a diversified energy company with four main segments to its business: utility, pipeline and storage, exploration and production, and energy marketing. The company owns Marcellus shale drilling rights in Pennsylvania through a subsidiary known as Seneca Resources headquartered in Houston, Texas. It planned to drill in Pennsylvania on its own behalf during 2009, but also engaged in a partnership with EOG Resources to develop jointly-held property.

In the forth quarter of 2008 it added 24,000 acres in Lycoming and Tioga Counties, Pennsylvania to its leasehold.

The joint venture with EOG's first Marcellus well initally produced 1 Mmcf/d, but thereafter production leveled off to 400 Mcf/d. The EOG partnership's as well as National Fuel's own drilling activities are discussed more fully under Seneca Resources.

According to a May, 2009 report National was in the process of completing three new Marcellus wells with its joint venture partner EOG and was drilling four more Marcellus wells on its own. The same report indicated that the company had abandoned an 8,000 acre Marcellus lease that it won in a State of Pennsylvania auction for forest land because of pipeline right-of-way issues. It still retained 15,000 acres obtained in the same auction.

In January, 2010, National Fuel was again in the news buying drilling rights to Pennsylvania forest land at auction in Tioga and Potter Counties. This purchase consisted of two parcels amounting to 18,000 acres. The purchase price had been $71.8 million or $4,000 per acre. Both tracts were located in close proximity to others in Tioga County where National owned drilling rights.

Also in May, 2009, National Fuel was in the process of building a 30 mile pipeline gathering system in Tioga and Lycoming Counties that connected to a major interstate pipeline. Update: An anchor shipper had been secured for the project for $200 million per day of natural gas. Part of the plan involved a 39 mile pipeline spur stretching through Elk, Cameroon and Clinton Counties to the Leidy Hub that was to flow $100 million per day and come online in 2011. A second phase scheduled for completion by 2012 was to go west to east for another 43 miles through Clearfield and Jefferson counties.

National Fuel Gas Supply Corp, another wholly-owned subsidiary of National Fuel, maintains an extensive gas pipeline stretching 2,877 miles from southwestern Pennsylvania intersecting the U.S.-Canadian border at the Niagara River.

National Fuel also owns and operates the Empire Pipeline, a 150 mile plus high pressure gas pipeline originating with a connection to the TransCanada Pipeline in Buffalo, NY and traversing western and central New York State to end up near Syracuse, New York. It serves primarily industrial customers.

National has also expanded the Empire Pipeline southeast of Rochester, NY to connect with the Millennium Pipeline in Chemung County, NY through the Empire Connector.

Through another subsidiary, the company operates the Covington Gathering System, a 100 Mmcf/d pipeline connecting Tioga County gas producers including Seneca to the Tennessee 300 Line. The company planned a second phase of the Covington System to extend the gathering pipeline south to state tract 595 where Seneca held acreage and planned to drill during the summer of 2010. The necessary rights-of-way had been purchased, pipeline secured, and it was timed for completion when first production was to come online for sales.

The subsidiary, National Fuel's Supply Corporation was also in the process of building a new compressor station at a Tennessee pipeline interconnection in Lamont, PA with a takeaway capacity of a 40 Mmcf/d. The new facility was to compliment an expansion of its Line-N pipeline. This pipeline was to bring $150 million per day of mainly Range Resources production.

• David Smith is President and CEO of National Fuel.
• Matthew D. Cabell is Chief of Oil And Gas Drilling and President of Seneca Energy.
• Ronald Tanski is Treasurer and CFO.
• Jim Welch is Director of Investor Relations.

Resources

National's exploration and production unit -Seneca Resources