NiSource Inc. announced on Tuesday that it intends to upgrade its Columbia Gas Transmission pipeline network in several states.
It also announced preliminary success in its initial natural gas wells in the Utica shale in eastern Ohio and western Pennsylvania.
NiSource, based in Merrillville, Ind., will spend $1.8 billion through 2017 on pipeline improvements.
The pipeline system transports an average of 3 billion cubic feet per day of natural gas in 10 U.S. Northeastern, mid-Atlantic and Midwestern states.
The company will work on updating the infrastructure in states including Ohio, Kentucky, Maryland, Pennsylvania, Virginia and West Virginia, it said.
The company got federal approval in late January to pass those costs on to its customers.
The Utica test wells in Ohio and Pennsylvania are "quite encouraging," company president and CEO Robert C. Skaggs Jr. told investors.
He refused to provide specific flow data but said the wells were producing "high gas, about 1,200 btu (British thermal units)."
The wells are also producing significant volumes of natural gas liquids such as ethane, butane and propane, he said.
NiSource will continue its well testing and expects to drill 10 to 20 wells in the area later this year, he said.
NiSource and its partner, Hilcorp, have about 100,000 acres in and around the Youngstown, Ohio, area.
It also intends to build a new natural gas gathering system and processing plant through Pennant Midstream LLC.
The two companies have put $300 million toward that project.
The plan calls for 50 miles of pipelines plus a processing plant capable of processing 200 million cubic feet of natural gas per day before it is shipped into major pipelines for transportation.
The plant is due to be completed by the end of 2013.
An expansion of the Pennant Midstream's project is projected to cost an additional $300 million.
Skaggs said NiSource had "another year of strong performance" in 2012.
The company reported earning $416.1 million, or $1.39 per share, in 2012 on revenue of $5.06 billion. That compares to revenue of $299.1 million, or $1.03 per share, in 2011 on revenue of $5.97 billion.
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