More than half of National Fuel Gas Co.’s (NFG) fiscal year (FY) 2019 capital expenditures are to be spent on its upstream business in Appalachia, as plans call for subsidiary Seneca Resources Corp. to continue running three rigs with year/year production forecast to increase by 24%.

The company added a third rig in May to help fill its 190 MMcf/d capacity on the Atlantic Sunrise pipeline expansion, which came online early last month. NFG CEO Ronald Tanski said Seneca is using its full capacity on the system and has an “array of contracts for all that gas priced at premiums” to the New York Mercantile Exchange.

NFG narrowed its FY2019 guidance to $725-810 million from range set in August of $745-845 million. Seneca is to receive more than half, at $460-495 million, and is forecast to produce 210-230 Bcfe in FY2019, which began in October. Even after narrowing its spending target, the company would spend $167 million more at the midpoint than it did in FY2018 primarily because of Seneca’s development plans in the Marcellus and Utica shales.

FY2018 production came in at 178.1 Bcfe, up 3% year/year for the highest output in company history. Production in fiscal 4Q2018 also increased 17% year/year to 47.3 Bcfe and was up from 44.6 Bcfe in fiscal 3Q2018.

The gains come as NFG is finally making progress on more takeaway for its natural gas assets, which are mostly clustered in remote parts of the Appalachian Basin in Northeast and Northwest Pennsylvania. The company recently received a favorable environmental assessment (EA) for the Empire North project, which would move 205 MMcf/d through New York and into Canada. Tanski said during a call to discuss year-end results on Friday that the EA puts the project on track for a FERC certificate by early spring 2019 and a second half FY2020 in-service date.

The company’s beleaguered Northern Access expansion project also got a “boost,” Tanski said, when the Federal Energy Regulatory Commission found in August that New York waived its authority to issue a water quality certification for the pipeline by failing to act within the one-year timeframe required under the U.S. Clean Water Act. While the project still faces an uphill battle, the order cleared a path toward construction, which has been on hold since last year when New York regulators denied the certificate.

While “we’re still a couple of years, and likely a few legal challenges away, from constructing this project, it’s a giant step in the right direction,” Tanski said of FERC’s decision. The project was originally scheduled to enter service in 2016, but regulatory delays pushed it back indefinitely. Tanski said the company now sees a 2022 in-service date for Northern Access.

Seneca also secured more than 300 MMcf/d on Transcontinental Gas Pipe Line Co.’s Leidy South expansion, another Appalachian takeaway project to move more gas to the East Coast. That’s expected to be online by the end of 2021.

Seneca President John McGinnis said the company now has 11 Utica wells producing in its Western Development Area in Northwest Pennsylvania. The company transitioned to a full Utica program there last year. Plans call for 11 more wells to come online during the first half of FY2019.

“So, as we enter our third quarter, we should have sufficient producing inventory to further optimize drill target and completion design,” McGinnis said.

NFG reported consolidated net income, which includes its upstream, midstream and downstream business segments, for the fiscal fourth quarter of $38 million (44 cents/share), compared with $45.6 million (53 cents) in the year-ago period. FY2018 net income increased to $391.5 million ($4.53/share), compared with net income of $283.5 million ($3.30) in FY 2017.

Seneca’s fiscal fourth quarter profits declined to $19.6 million from $30.4 million in the year-ago period. The upstream segment’s earnings were impacted by a decline in average realized prices that stemmed from the expiration of physical firm sales and financial hedge contracts over the last year that had favorable pricing.

Seneca’s FY2018 net income increased, however, to $180.6 million from a profit of $129.3 million in FY2017.