A quirk in the system rather than a surge of new exploration and production (E&P) interest in Wyoming has created a backlog of about 10,000 applications for permits to drill (APD), according to the state's oil and gas supervisor.
The volumes are too high for the Wyoming Oil and Gas Conservation Commission (WOGCC) to deal with directly, so Supervisor Mark Watson established a process to focus attention on wells likely to be drilled.
Most of the deluge of drilling applications creates placeholders by operators hedging their bets, Watson told NGI’s Shale Daily on Thursday.
"We have a policy of approving the first APD submitted, and because of the costs of drilling and completing a horizontal well, everyone wants to be the operator of the well and, thus, they flood WOGCC with APDs to hold their place," Watson said.
For example, one operator submitted 7,000 APDs covering every spacing unit in which the operator holds a working interest, he said. With the state's current rig count at 30, Watson said it is doubtful an operator could drill even a fraction of the permits sought.
"Because of this issue, I was forced to establish a policy in which the WOGCC staff evaluate APDs that will actually get drilled before working on the other applications," he said. The state agency is prioritizing drill-ready applications and also extending the time span for valid permits.
Without prioritizing APDs, Watson had said it would take five years to process the backlog even if no other applications were filed.
In reality, most of the APDs are never used, Watson said. His staff is asking for confidential, six-month rig schedules with the APDs to distinguish which permits are most likely to be activated.
Wyoming previously dealt with a surge in permit applications in the early 2000s, when E&Ps were developing coalbed methane (CBM). CBM wells were drilled vertically, making them less complex to drill compared to horizontal jobs.