UGI Corp. and Tenaska Resources, an affiliate of the Omaha, Neb.-based independent power generator, are teaming up to do more natural gas drilling in north-central Pennsylvania.

Under the deal announced yesterday, Tenaska will drill for gas in Potter County, Pa., northwest of Williamsport. Valley Forge, Pa.-based UGI will build and operate about 20 miles of gas-gathering pipelines and processing facilities to accommodate the gas production.

The companies plan on spending about $65 million over the course of a decade to develop the shale gas-bearing acreage. UGI purchased a minority interest in Tenaska acreage in Tioga County, just to the east of Potter, along the Pennsylvania-New York border.

The Marcellus Shale project breathes a little more life into a shale basin that has been hit particularly hard by sustained low natural gas prices. Millions of acres are leased for development, but rig counts have declined in the Marcellus gas region stretching across Pennsylvania, New York, eastern Ohio and West Virginia. The price for gas has remained under $4 per million British thermal units for much of the past year, forcing producers to shift their drilling to areas rich in gas liquids or oil.

Pittsburgh-based Consol Energy Inc. is also digging in its heels to do more Marcellus drilling and increasing its search for gas liquids that can be sold at a higher price.

Consol said Monday it would invest up to $935 million on gas operations in 2013, about $160 million of which is to maintain production. About $600 million of the total gas spending will go toward developing its existing Marcellus Shale assets. Consol has long been a coal producer in Ohio and Pennsylvania but started producing in the Marcellus and Utica gas formations several years ago through acquisitions and joint ventures.

Consol's costs and benefits from its joint venture with Noble Energy hinge in part on the gas price rising above $4 per MMBtu for three consecutive months. In a statement Monday, ahead of its Jan. 31 fourth-quarter earnings report, Consol said it remains "focused and disciplined to drill our higher rate of return projects." Further, it hopes to benefit from the flexibility to drill other acreage positions depending on the price and contract terms.

Consol said it expects to drill 126 horizontal wells in the Marcellus Basin, including 90 wells in regions rich in gas liquids like ethane, used for chemical production. The company's investment in "dry" gas wells for producing natural gas for the power sector could change, said the company, "in light of the commodity price curve."

Next door, in the deeper Utica Shale formation in Ohio, Consol has a partnership with Hess Corp. Consol said it expects to invest $122 million, with $90 million allocated toward the costs of drilling 27 wells. Hess will bear the brunt of the drilling costs, but production will be split under the deal.