Drilling permits for oil and natural gas fell by 15pc in February compared to the same time last year as producers contend with softer pricing and constraints in the field.
Most of the 700 permits issued in February were for targeting hydrocarbons with a small number granted for injection and service-related purposes, according to the Texas Railroad Commission (RRC) this week.
There were 667 permits issued in February for drilling oil, drilling gas, or drilling for both oil and gas, according to the regulator, down from 780 in the same month 2022. This is also down from 804 in January of this year.
Commodity prices in North America have seen notable declines over the past year, adding some pressure to drilling plans. The average settled price of West Texas Intermediate (WTI) crude futures across February was $76.83/bl, down from $91.64/bl in February 2022, while the spot price for natural gas has fallen to $2.83/Mmbtu from $4.69/Mmbtu across the same period.
Permits intended for wells targeting only crude came in at 151 in February, the lowest since August 2021. Natural gas permits also hit a recent low with only 44 issued in February, the lowest since June 2021.
Two of Texas' most prominent oil and gas regions accounted for most of the permitting declines from a year ago as tightness in the service sector and labor constraints in the oil patch have constrained some producers.
Operators in the Midland area, or District 8, were issued 353 permits for oil and/or gas wells in February, down by 31 from same period in 2022.
Drillers in the San Antonio region, or District 1 which includes the northern part of the Eagle Ford basin, were issued 76 permits for oil and/or gas wells in February. This is down by 37 compared to February 2022.
