Oil, gas permits rising in Permian Basin

The number of drilling permits approved in the Permian Basin, the nation’s most productive oil field, continues to rebound from the pandemic downturn, analysts say, hitting a three-year high in July.

The number rose in July by 273 permits to 1,526, the highest number since 2019, according to investment banking advisory conpany Evercore and data firm Enverus. The figure represents permits across the entire Permian Basin, which spans West Texas and southeastern New Mexico.

In Texas oil fields alone, there were 901 approved drilling permits in July, a 16 percent increase from the 779 issued during the same month last year. State regulators approved 1,146 permits in June, and 963 in May.

The rise in permit approvals has followed the dramatic increase in the price of West Texas Intermediate, the nation’s benchmark, which jumped to a 14-year high after Russia invaded Ukraine on Feb. 24. From over $120 a barrel in March, the price of WTI futures remained above $90 until last week.

Evercore analysts said in a research note that 40 percent of permits issued in the U.S. are in the Permian and that 13 percent are in Texas’ Eagle Ford shale play. The Eagle Ford runs northeast from the Mexico border, north of Laredo, to around Bryan and College Station.

But it’s the Permian that has experienced explosive growth in the past decade. Norwegian research firm Rystad Energy predicts that daily output will grow by 1 million barrels to 5.6 million barrels this year and to 6.5 million barrels per day next year, placing its daily production third behind that of Russia and Saudi Arabia.