Drilling permits for oil and natural gas in Texas fell by 11pc in March compared to the same time last year as cost pressures and labor shortages limit producers in the field.
Permitting in the Midland area was down from the same period 2022 while drillers increasingly sought out permits in areas to the southeast, according to data from the Texas Railroad Commission (RRC) this week. Most of the 1,052 permits issued in March were for targeting hydrocarbons with a small number granted for injection and service-related purposes.
There were 999 permits issued in March for drilling oil, drilling gas, or drilling for both oil and gas, according to the regulator, down from 1,035 in the same month 2022. This is up from 620 in February.
Adding pressure to drilling plans has been the notable fall in commodity prices over the past year for both oil and gas. The average settled price of West Texas Intermediate (WTI) crude futures across March this year was $73.37/bl, down from $108.26/bl in March 2022, while the spot price for natural gas has fallen to a monthly average of $2.33/mmBtu from $4.86/mmBtu across the same period last year.
Permits intended for wells targeting only crude came in at 272 in March, up by 16 from the same period last year. Natural gas permits bounced off a recent low with 55 permits in March, up from 44 in February, but still below the 76 permits recorded in March last year.
Operators in the Midland area, or District 8, were issued 461 permits for oil and/or gas wells in March. This is down by 139 permits in the same period in 2022.
Bordering the Midland area to the south and east is the San Angelo region, or District 7C, which saw permits nearly double to 99 in March this year from 55 a year earlier.
Drillers in the San Antonio region, or District 1, which includes the northern part of the Eagle Ford basin, were issued 166 permits for oil and/or gas wells in March. This is up by 45 compared to March 2022.
Further evidence of a slowdown in the US shale patch emerged last week after a closely watched survey from the Federal Reserve Bank of Dallas showed growth stalled in the first quarter as industry optimism waned.
"Oil field inflation has to be the number one problem," an exploration and production company executive said, also highlighting difficulties obtaining materials, parts, pumps, pipe and tubing for projects in west Texas.
