Register Today! Webinar on June 16 | Geopolitics & Energy – Supply Risks on the Rise

What’s up with New Drilling Permits? January 2016 Update


Last Thursday when we published our latest DI Index of New Production Capacity (NPC), a relatively large increase in new (month over month, national) permits filed (18%!) raised the question, “what’s up with permits?” So we dusted off a few of our various spyglasses and microscopes in the DI Gallery and looked into the increase.

DI Index

First, we took a look at the DI Index itself.

Permits aside, NPC – which is a measurement of oilfield activity that accounts for the type, size and placement of active rigs in order to give a more accurate prediction of what today’s drilling activity will ultimately generate in production – for the month of December was down a little bit verses November, as has generally been the case throughout the year. Our daily rig Count, has also been showing a downward trajectory.

When we drilled down into some of the monthly basinal and geographical reports we didn’t immediately see a spike in permitting activity in, say, The Permian Basin or the Eagle Ford. (We do have a neat perspective on Bakken activity this month which you should check out).

DI Activity Maps

Next we turned on our handy DI Activity Maps, and looked at our 30 day permitting heatmap to look for any weirdness.
drilling permits fig 1

Clearly the areas that we expect to see activity are burning brightly – the northern counties in the Eagle Ford, the Midland and Delaware basins, Colorado’s Niobrara, the Bakken in North Dakota, the Appalachian plays. But California looks like it has some new heat, as does Wyoming.

DI Classic

A quick check of new drill permits (as opposed to re-entries) in California showed a rather sizable spike in Kern County (from 749 in November to 1284 in December) adding 535 permits in one month, which accounts for a large portion of that 18% M/M increase. A recent county ordinance to fast-track permitting may explain that spike. In fact, in both November and December, Kern County had the highest number of permits of any county in the country by far, so this increase has a big impact on the national total.

Mapping the new Kern County permits shows that the great majority are within the confines of known fields. Kern county also had 422 re-entry permits filed in December, so most of this activity is just more straws into the milkshake.

drilling permits fig 2

Converse County, Wyoming (Niobrara) also had a significant jump in permits – from 53 in November to 153 in December. In this county, a large number of permits look to have been filed in the second half of December in a few select leases.

Your Turn

What do you think? Leave a comment below.

The following two tabs change content below.

Eric Roach

Eric Roach is the editor of Drillinginfo's blog, which was selected as the Top Oil & Gas Industry Blog based on visibility, engagement and relevance. He also prepares a weekly newsletter of top industry news for blog subscribers, and would be grateful if you would subscribe and tell your friends. (There's a box on the upper right of the page where you can subscribe).