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Domestic Onshore Drilling Permits Gain in August, Slow Down in Early September

A total of 4,389 permits to drill in the U.S. onshore were filed by operators during August, up 22% from July and nearly one-third higher from a year ago, according to data compiled by Evercore ISI.

Each month the analyst team provides an overview of domestic drilling permit activity onshore and offshore using data compiled from all major states and the Bureau of Ocean Energy Management. Drilling permits require approval before exploration and production companies may drill a new well or bypass/sidetrack an existing well.

According to Evercore, August data is nowhere near the heights achieved in August 2014, when 7,746 permits were filed, nor the monthly onshore permit count peak of 8,441 in June 2008.

Analysts also cited some “weakening” permit numbers for the month in Wyoming, down 24% from July, as well as Mississippi (off 44%) and Ohio (off 15%), which pressured the permit totals.

However, the permit losses in August from July were “more than offset” by gains in Colorado (66%), Texas (21%) and Kansas (66%).

Still, the year-to-date domestic permit count remains 2% below the count during the 2009 cyclical downturn, according to Evercore.

This month began slow for permitting, with a total of 742 U.S. onshore permits and one new offshore plan issued during the first week of September, down from the first week of August at 830.

“Year-to-date onshore weekly average is down at 742 permits from 2017’s weekly average of 847 permits,” said analysts.

For the Gulf of Mexico (GOM), 18 permits were issued in August, up from 13 in July and 11 in the year-ago period. Eight permits were issued for new wells, two deepwater, three midwater, and three shallow water. Seven permits were issued for sidetracks, while three were issued for bypasses.

Year-to-date in August, permits for new GOM wells, sidetracks, and bypasses have increased. Ultra-deepwater and deepwater year-to-date permits year/year increased, while midwater and shallow water were flat.

“Meanwhile, the number of new exploration plans filed in the Gulf last month increased to eight (from three in July) and operators filed plans to 46 new wells, up from plans to drill four wells in July,” Evercore noted. “Four development plans were filed to drill during August,” after none were filed during July.

For the first week of September, GOM permitting activity fell with only one plan filed, versus four for the first week of August.

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