Drilling permits in oil formations rose to 465 in the first week of December, up 91% from the final week of November, as activity remained consistent in Texas and in the Midwest, along with the Bakken Shale bouncing back, according to a tally by Evercore ISI.
Analyst James West and his crew crunched the numbers using individual state and federal data and found Gulf Coast permitting, which covers all of Texas, climbed week/week (w/w) by 49% in the first week of December, while Midwest permitting jumped by 84%.
“Improving activity in the Gulf Coast is primarily related to an increase in the Permian to 140,” rising by 36% w/w, and in the Eagle Ford Shale, where 63 permits were issued, which was 152% higher than the final week of October, according to Evercore.
In addition, permitting in the Mississippian Lime was up by 84% in the first week of November with 57 permits issued. There also were 25 permits issued in the Bakken, a 92% gain from the final week of October.
Texas has proved to be the “yin to the Rockies yang,” West said. During November, Gulf Coast activity remained steady, up 3% month/month (m/m), supported by the Permian.
U.S. drilling permitting overall increased slightly to 3,190 permits, about 2% higher m/m, on improving activity (3%) in the Gulf Coast region, which covers the Permian to the Eagle Ford, and from the Midwest, which saw a 19% increase.
“The Permian generated 840 permits (up 7% m/m), which comprised 92% oil and gas permits, a 6% increase in injection wells, with the remaining balance targeting observation, service and ‘other’ permits,” Evercore noted.
The upturn in Texas came from an unlikely source, the Barnett Shale, which saw a 71% gain m/m in permitting activity, and from the Granite Wash, with 17% more permits than in November. Offsetting the monthly permit gains in Texas was a 10% decline in activity in the Eagle Ford.
Permits also rose in the Woodford Shale, up 45% from October, and in the Mississippian, with a 6% gain m/m.
“Improving activity stemmed from a rebound in the Rockies” during November, on growth in the Denver-Julesburg (DJ) Basin/Niobrara, up 71% m/m to 173, and in the Powder River Basin, climbing by 5% to 898.
Partially offsetting the gains during November was a 10% decline m/m to 248 in the Bakken and an 83% slump to 10 permits in the Green River Basin.
Through November year-to-date, oil permitting has remained strong, up 9% year/year to 44,610, according to Evercore.
However, DJ/Niobrara oil permitting through November was down by 4,479 from the same period of 2018. Declines also have been seen in the Permian, which had 867 fewer permits through November year/year (y/y), and from the Mississippian, down by 1,029.
“This has been offset by applications occurring in the Powder River (up 10,940 y/y) and the Green River (up 745 y/y).”
On the natural gas side of the ledger, November permitting inched 2% higher m/m on stronger activity in the Utica Shale to 34, 89% higher than in October. Haynesville Shale permitting contracted m/m by 7% to 167, while the Marcellus Shale was flat, down 1% to 110.
“Gas permits are lower at 3,884 year-to-date,” down 13% through November, with the Haynesville showing a sharp decline to 1,742, or 19% lower year-to-date. Overall gas permitting in the first half of 2019 also was down from a year earlier by 26%, according to compiled data.