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Lower 48 Permitting Climbs in January but Down Sharply From Year-Ago Totals
U.S. onshore permits climbed 12% to 2,612 in January from December, mostly from a rebound in the Permian Basin, but overall activity was sharply off from a year ago, according to a recap by Evercore ISI.
“Overall, the total U.S. permit count bottomed out to levels not seen since 2017 at 2,537,” said the Evercore analyst team led by James West.
Permit requests fell 60% year/year from January 2019’s 6,570 applications. Operators in January 2018 had filed 3,870 permit requests. The Evercore analysts compile a monthly report using data from federal and individual state resources. Permitting often precedes actual oil and gas development in the onshore by several months.
Leading the way in January permitting was the Permian, up 36% month/month (m/m), to 1,047 from 769. New Mexico’s portion of the Permian accounted for 77% of the total.
A 116% increase also was reported in the “Other” category for Lower 48 permits from December.
“Excluding drilling for injection wells, total oil and gas wells permitted to drill in Texas were 1,110 (up 32% m/m), representing 97% of January activity levels,” the Evercore analysts said.
Permitting in the Eagle Ford Shale increased by 20% from December, continuing a positive trend in South Texas for the third consecutive month.
Meanwhile, permitting activity in the Rockies was mixed.
Denver-Julesburg (DJ) Basin/Niobrara permitting in Colorado climbed 66% m/m, led by Occidental Petroleum Corp. Occidental inherited an extensive DJ portfolio with its takeover of leading Wattenberg field producer Anadarko Petroleum Corp. Occidental permitting in the DJ rose by 59 m/m, or by 210%.
In the Powder River Basin (PRB), however, permitting declined by 80% from December to 95.
“January permitting levels were 60% lower versus a year ago due to weaker applications in the Rockies by private operators to 377 (minus 84% year/year),” analysts noted.
Natural gas permitting was mixed m/m, with overall onshore permitting down by 27% year/year (y/y).
There were double-digit permit declines in the Marcellus Shale, down 57% from December, but stronger results in the Utica and Haynesville shales.
“Gas permits increased modestly to 223 (up 5% m/m),” with activity improved in the Haynesville, up 10% to 121 in January, and in the Utica, up 13% to 17.
“Permitting occurring in the Marcellus has remained poor over the past three months attributable to consistent declines from both private and public operators,” said the Evercore team. “Even though the Haynesville permits have strengthened to 121 (plus 73% y/y), this has been more than offset by lackluster permitting in the Marcellus to 85 (down 61% y/y). Overall gas permits are down 27% y/y.”
Operators also are picking up the pace in requesting injection well permits, Evercore noted.
In Texas, injection permitting climbed by 43% m/m to 31, representing 3% of all permit applications. DJ/Niobrara injection well permits hit four in January, while in the Piceance Basin, there were two permit requests.
According to the Baker Hughes Co. the Lower 48 rig count was mixed as of last Friday (Feb. 7). The Ardmore Woodford added one rig last week, while the Arkoma Woodford, Cana Woodford, Marcellus and Permian each dropped one rig.
Among the states, New Mexico added three rigs for the week to grow its total to 112, up slightly from 111 rigs in the year-ago period. Oklahoma, meanwhile, dropped three units week/week to fall to 50 active rigs, less than half of the 120 rigs active at this time last year.
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