National Fuel Gas Co. expects its oil and natural gas production to jump by more than 20 percent both this year and next, the Amherst-based energy company said Monday.
National Fuel said it expects its oil and gas production to surge by about 28 percent this year and then jump by another 23 percent during 2014 even as the company continues its scaled-back drilling plans in the Marcellus Shale region of Pennsylvania.
National Fuel said it expects its combined oil and gas production to range between the equivalent of 102 and 112 billion cubic of natural gas during the fiscal year that ends in September, up 28 percent at the midpoint of the range from 83 billion cubic feet last year. It expects production to grow by another 23 percent next year to between 126 billion and 138 billion cubic feet.
That increase is forecast even though National Fuel executives have scaled back their drilling plans because of the steep drop in natural gas commodity prices, which has made it more difficult to drill new wells profitably. A new well in the Marcellus Shale region can cost upwards of $5 million to $6 million.
As a result, National Fuel, which had initially expected to ramp up its Marcellus Shale drilling to a pace that would require the use of six or seven drilling rigs at its peak, now is using only three rigs and expects to continue that level of drilling through next year. But even with that reduced drilling activity, National Fuel said it still expects to boost its production because of improved efficiency.
National Fuel, whose oil and gas drilling budget peaked at $694 million during 2012, expects to reduce its capital spending within its drilling business by about a third this year to between $480 million and $560 million. It expects to boost capital spending in its drilling business by about 15 percent next year to between $550 million and $650 million.