U.S. oil and natural gas permitting during November increased 60% from a year ago and was up by almost one-third month/month (m/m), aided by strong gains in Colorado, New Mexico and Wyoming, according to Evercore ISI.
Each month the firm compiles permit data for U.S. land and offshore drilling activity using state and federal reports. Onshore permits usually are issued several months before drilling begins, while offshore permits often are secured even further in advance.
“A total of 6,360 permits were issued in the U.S. last month, which is the highest peak year-to-date, up 32% m/m and 60% year/year,” Evercore’s James West and his team said. “The data compares to the permit count high of 7,746 in August 2014 and the monthly onshore permit count peak of 8,441 in June 2008.”
Requests for onshore permits during November surged m/m in Colorado to 1,228 from 814 — a 51% gain. Wyoming permitting accelerated 63% from October, while New Mexico permits climbed by 55% from the month before.
Texas permitting “had a slower ramp, from 1,047 to 1,080, up 3% m/m,” the Evercore team noted.
Meanwhile, permitting fell m/m in Illinois (down 55%), Utah (down 38%) and California (down 16%).
“Year-to-date the U.S. permits count is flat compared to the count during the 2009 cyclical downturn,” analysts noted. However, the domestic. horizontal rig count average stood at 934, up 1% from October.
For the Gulf of Mexico (GOM), permitting fell m/m but it was higher than in November 2017. Fourteen permits were issued to drill in the GOM from 17 in October but up from 11 a year earlier.
“New well offshore permits stood at eight (33% m/m), pushed by a midwater permit increase from two to four,” West said. Sidetrack permits, however, fell 40% m/m to three, weighted down by a decrease in deepwater permitting, which fell to zero from two. Total bypass permits decreased to three, off by half from October, because of a deceleration in midwater and deepwater permits.
Year-to-date in November, new well permits for drilling in the GOM had increased from 2017, while sidetracks and bypass permits were flat.
GOM development plans also indicated a “moderate increase, up at four versus two on the prior month,” Evercore noted.
In a sneak peak of what permitting may total in December, usually a slow month because of the holidays and weather, Evercore reported there were 1,352 onshore permits and four offshore plans issued during the first week. That compares with the first week of November, when 1,474 onshore permits were issued.
Through the first week of December year-to-date, the onshore weekly average was pegged at 1,051 permits, compared with a weekly average of 844 permits for the same period of 2017, Evercore noted.
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