The oil and natural-gas operations of Talisman Energy Inc. span the globe. Based in Calgary, Alberta, the company is active in Papua New Guineau, Romania, Peru and Tunisia. But one of its most exciting fields is located in upstate New York, near the town of Horseheads.

After years of neglect, big energy exploration and production companies like Talisman are returning to the Appalachian Basin, an enormous region that stretches from New York to Tennessee. It's known mostly for its abundant coal, but energy companies are hoping to find large pockets of natural gas there.

While the region has been punctured by drill bits for more than a century and a half, most of the wells have been fairly shallow. Now, companies that have had success drilling wells two and three miles deep elsewhere are setting their sites on Appalachia's complex geology, hoping to find natural gas at the doorstep of the gas-hungry East Coast and Midwest.

A couple of years ago, an oil industry geologist called it the "most drilled and least explored" region in the world -- a label that has stuck.

The emergence of Appalachia as a gas hot spot is part of a larger trend unfolding in North America's energy patch. Many historically prolific regions are believed to be in decline after the best reservoirs have been found and are on the way to being pumped dry. So, flush with cash from high energy prices, companies are scouring about for new opportunities and taking a new look at old rocks they had previously ignored.

This new wildcat spirit has led a number of companies to set up shop in places like Horseheads, hoping that the Appalachian Basin has a few secrets left. The companies also are applying expensive technology -- such as drill bits that can execute a 90-degree turn deep underground and better seismic imaging of geologic formations -- to find energy prizes buried under Appalachia's oak forests and small farms.

The biggest bet made, so far, has been by Chesapeake Energy Corp., an Oklahoma City gas driller. Last November, it purchased Columbia Natural Resources LLC -- a closely held natural-gas exploration company with assets in Appalachia -- for $2.2 billion, plus the assumption of $750 million in debt.

Appalachia's deep rocks are "a very underexplored region, yet the feeling was it was a dead area," says Aubrey K. McClendon, Chesapeake's chairman and chief executive.

There have been hundreds of thousands of wells drilled in Appalachia, says Mr. McClendon, but only a fraction went below 10,000 feet and fewer than 20 below 15,000 feet. "It was fully drilled at shallow depths, but greatly underexplored at the deeper depths," he says.

Chesapeake plans to triple Columbia Natural's drilling and exploration budget to $200 million a year and this summer purchased a Pennsylvania drilling contractor -- best known for boring the hole that reached nine trapped miners at the Quecreek coal mine in 2002 -- to accelerate exploration.

But the emerging deep-drilling gamble in Appalachia isn't going to be easy. Drilling deep wells anywhere is expensive, since rigs are rented by the day and deeper wells take longer to drill. Along the oil-rich Gulf Coast, rigs churning under the topsoil can slice through 12,000 feet of easy-to-penetrate sandy soil.

But in the Appalachian Basin, the geology has created a big disincentive to drill deep. "As soon as you get below the grass and dirt, you go into really hard rock," says Jim Coleman, the chief scientist for the U.S. Geologic Survey's Eastern Energy Resources Team.

Shallower wells have found both oil and gas -- although not in quantities to make the larger, better-financed energy-exploration companies sit up and pay attention.

So the Appalachian region has come to be dominated by natural-gas utilities, which were interested in drilling shallow wells that didn't produce huge amounts of gas, but also didn't require much investment or entail much risk. The Appalachia wells have produced small gas flows for decades. The utilities harvest the gas, putting it into storage caverns for winter's peak demand. They've come to see their wells as respectable cash cows.

For the most part, these utilities don't have an appetite for rank exploration and still remind investors that they aren't interested in drilling expensive dry holes in the search of a big pay day. For instance, Equitable Resources Inc., a Pittsburgh-based gas utility, wrote to investors earlier this year that "management believes that virtually all of the company's wells are low-risk development wells."

While these utilities and a handful of closely held companies have been content to punch shallow wells, the exploration industry has undergone a series of technological leaps. Advances in drilling and completion now allow wells to be drilled several miles deep with greater reliability. Seismic imaging allows geologists to peer underground in search of faults and traps where oil and gas pooled over millennia into rock reservoirs.

These developments have emboldened energy explorers to drill very deep, albeit hugely expensive, wells in Texas and the Gulf of Mexico. Now they are hoping to deploy these technologies to find new gas fields in Appalachia.

Natural-gas production in the U.S. began in Appalachia, although with very low-tech tools. In 1821, the first commercial gas was developed near Fredonia, N.Y., more than a quarter century before Col. Edwin Drake famously struck oil in Titusville, Pa. Locals knew that gas seeped from rocks in the bed of Canadaway Creek. A 70-foot well was drilled, and the gas was used to light streetlamps and sold to hotels and businesses in the town.

In 1831, a lighthouse on nearby Lake Erie also was illuminated by natural gas. A masonry cone was built atop the seep to trap the gas, and a pipe collected the fuel and conveyed it to the lighthouse. The gas lasted until 1838, when apparently the gas source dried up; after that oil was used to burn lamps in the lighthouse.

Following the 1859 Pennsylvania oil strike, gas was found in Pennsylvania, Ohio and Kentucky. Enough gas was found in Indiana that a glassmaking industry sprung up near a town about halfway between Indianapolis and Fort Wayne that was later named Gas City.

But the domestic energy-exploration industry soon shifted to Texas and later the Gulf of Mexico, Alaska and the Rockies -- where bigger reservoirs of oil and gas were found that promised richer profits. Gas production in most Appalachian states peaked in the 1930s as wildcatters moved elsewhere.

While Appalachia still isn't a major gas-producing region -- only three of the 100 largest gas fields in the U.S. are in the region, according to the federal Energy Information Administration -- it's showing signs of perking up.

The eight-state region produced about 700 billion cubic feet of gas in 2004, the most recent year for which the Energy Information Administration has compiled data. That's enough to heat about 10.5 million homes for a year. By comparison, Texas produces 5.7 trillion cubic feet of gas a year, enough for 86 million homes.

The reawakening started in 2004, when Talisman began drilling in the Finger Lakes region of upstate New York, using new drilling technologies to explore two miles underground. The resulting wells found surprisingly large volumes of gas in the Trenton/Black River rock formation. The wells were quickly among the top-producing gas wells in the Eastern U.S.

"We all felt it was a matter of time for the deeper formations to be explored, and we were very happy to see that happen," says Bradley Field, director of the mineral resources division of New York State's Department of Conservation. "There are a lot of new millionaires in the southern tier of New York state who (previously) were struggling to pay taxes on their farms."

Those early successes helped kick off the interest in deep drilling as producers looked elsewhere in New York and Pennsylvania to see how far the productive Trenton/Black River rock extended. Companies are lining up to lease state forest land in north-central Pennsylvania. They also have expressed interest in more than 200,000 acres in a state lease scheduled for next year.

"There is a great deal of interest in our land right now," says Nathan Bennett, a geologist with the Pennsylvania Department of Conservation and Natural Resources.

Earlier this year, Ultra Petroleum Corp., a Houston company best known for drilling in Wyoming, sunk an 11,000-foot well in Pennsylvania's Tioga County. The first well in its Appalachia exploration program, the results couldn't have been better. The well was turned on in late May and soon began flowing nearly four million cubic feet a day under extraordinary pressure. By comparison, Appalachia's shallow wells might flow about 20,000 cubic feet a day.

"It takes their wells 200 days to produce what my well does in a day," says Ultra Chief Executive Officer Michael Watford. "It's a whole different profile of production."

Exploration also has picked up elsewhere in Appalachia, but generally without the same degree of success. In West Virginia, companies are tapping into coal seams to unlock natural gas with some good results.

Because of the cost of moving gas through interstate pipelines from the Gulf Coast or Rockies to East Coast markets, gas on the Gulf Coast typically sells at a $2 or $3 discount per million British thermal units to prices on the New York Mercantile Exchange futures markets. By comparison, gas in Appalachia commands a slight premium to Nymex prices. Simply put, gas discovered in Pennsylvania can be worth 40 percent more than gas found in Louisiana.

As the relative newcomers enter Appalachia, the region's longtime shallow drillers are keeping a keen eye on their deep exploratory wells.

David Lind, president and chief executive of Pennsylvania General Energy Co., has been drilling in Appalachia since 1972. He believes the excitement about Appalachian is overblown. "Yes, there are really nice deep plays," he says, "but they are very hard to find."

Mr. Lind concedes it is possible that there are some huge undiscovered fields several thousand feet deep and that the new companies will "prove us all jerks by finding big new fields deep under our noses."

He isn't worried, however. "If you show me it can be done, I can do it too," he says. And PGE, as the Warren, Pa., closely held company is known, has something the other companies covet: nearly 800,000 acres under lease.

As for Talisman, which has about one million acres under lease in Appalachia, Mr. Lind has another idea: Follow the same rocks north, across the St. Lawrence River into Quebec.