Well drilling permit approvals in the deepwater Gulf of Mexico (GOM) increased significantly from April to October but still fall below pre-moratorium levels and they may for some time, according to updated research by IHS Inc.

According to the latest data, nine deepwater drilling permits (exploration and development) were approved in September versus four in April. The pre-moratorium average monthly rate from January 2005 to October 2010 was 13.

“All together annualized 3Q2011 and 4Q2011 volume of permit approval activity, respectively, was 41% and 56% of the historical annual average,” IHS noted. “On aggregate, in the 12 months following the lifting of the moratorium, the 51 permits approved result in an annual rate of approval that was 32% of the historical average of 151 permits.”

The original report, “Restarting ‘the Engine’ — Securing American Jobs, Investment and Energy Security,” analyzed the pace of regulatory approvals after the deepwater drilling moratorium was lifted in October 2010 (see Daily GPI, July 22). The study was commissioned by the nonprofit Gulf Economic Survival Team, a group that serves as a liaison between industry as well as state, local and the federal governments. It was completed by IHS CERA and IHS Global Insight.

Researchers originally analyzed publicly available data for GOM drilling permit approvals from Oct. 12, 2010 through April 10. The research indicated that permitting activity had fallen sharply, which in turn was having a big impact on potential gross domestic product opportunities associated with the “activity gap.” Because the data only looked at the six-month period, it was disputed as being inaccurate and incomplete by Michael Bromwich, who then was directing the former Bureau of Ocean Energy Management, Regulation and Enforcement (see Daily GPI, Aug. 4).

The update issued on Wednesday analyzed Department of Interior deepwater drilling permit approval data between April 20 and Oct. 12 — months six through 12 since the moratorium was lifted. It then compared those numbers with the previous six months, as well as the historical numbers since January 2005. Researchers also examined the temporary impact of classifying some, but not all, of the permit applications that had been submitted before the moratorium as “revisions” rather than as “new applications.”

“During the recovery after the moratorium, generally wells that had already received permit approvals before the moratorium were only able to proceed after receiving permit applications,” the report noted. “Including this ‘backlog’ of revised permit applications in the analysis would result in an adjusted permit count resulting in a 29% increase in the unique number of wells permitted in the one-year period post-moratorium.”

However, including the backlog of revised permits that already had been given the OK by federal officials is “problematic,” said the researchers.

“On average these permits require only 45 days to approve compared with the overall average of 80 days, and therefore, once the backlog of these revised permits has been exhausted, duration to approval for all permits will increase.”

The full year of data indicates that permit activity also is well below the historical annual average. The pre-moratorium annual average was 157 permits per year, versus the 12-month post-moratorium of 51 permits, which “yields 32% of the historical annual average,” IHS noted. Before the moratorium it took on average 16 days for an exploration well permit to be approved, but post-moratorium the average is 80 days. Development well approval had averaged 24 days; today it’s taking about 35 days.

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