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 Permit counts provided exclusively to Reuters by data firm Drilling
Info showed 4,551 new well permits were approved last month, up less
than 1 percent from November's count of 4,523.
New permits plunged nearly 40 percent in November compared with
October, signaling a potential slowdown in the shale oil and gas
boom that brought the United States head to head with Saudi Arabia
as the world's top crude producer.
Crude oil prices have plunged 55 percent since June as demand has
not kept up with hefty global supply, including that from the U.S.
shale oil boom. [O/R]
Allen Gilmer, chief executive officer of Drilling Info, said the
December counts were equivalent to December 2013 and January and
February last year.
"What has been lost is the 2014 adds," he said.
New permit counts help indicate what drilling rigs will do several
months in the future.
But they do not capture what many analysts consider better
predictors of output: the length of new wells being drilled, and the
number of points along each well being hydraulically fractured to
coax oil out of tight rock.
Vikas Dwivedi, global oil and gas strategist for Macquarie, said a
sharp drop in new permits in a single month is not as reliable a
sign of a pullback than consistent drops over three months.
Gilmer said the data helps illustrate that producers are focusing on
high-producing wells, backing off marginal areas and, in some cases,
drilling to hold acreage.
Baker Hughes Inc's <BHI.N> average December U.S. land rig count was
1,684, down 60 rigs, or 3.4 percent from November, but up 0.4
percent from a year earlier.
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Among major U.S. oilfields, new permits issued in the Permian Basin
in Texas and New Mexico rose 0.3 percent in December to 638, after
having fallen 38 percent in November. Permian output is expected to
reach 1.87 million barrels per day this month, according to the U.S.
Energy Information Administration.
The Eagle Ford shale in South Texas saw new permits rise 2 percent
to 382 after November's decline of 28 percent. And new permits
issued in North Dakota's Bakken shale rose 5.4 percent to 252 last
month after declining 29 percent in November.
The EIA said Eagle Ford production would reach 1.68 million bpd this
month, and Bakken output would be 1.25 million bpd.
The most stark reversal among the 13 individual fields tracked by
Drilling Info was in the Niobrara shale in Colorado and Wyoming,
where new permits issued rose 72 percent in December to 541 after
having fallen 32 percent in November. The EIA projects Niobrara
output to reach 382,000 bpd this month.
Gilmer said rigs in the Niobrara, unlike the bigger oilfields,
largely drill vertical wells rather than horizontal, allowing
producers to save costs by using older or cheaper rigs.
(Reporting by Kristen Hays; Editing by Terry Wade, Frances Kerry and
Marguerita Choy)
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