Analyst finds Gulf of Mexico drilling permits decreasing

Offshore staff

NEW YORK – Evercore ISI’s Oilfield Services, Equipment & Drilling group has released an update detailing drilling permits issued in the US.

A total of 15 new permits were issued in the US Gulf of Mexico last month, down from 21 in November and down from 25 a year ago. Five permits were issued for new wells, including one deepwater, three midwater, and one shallow-water. Six permits were issued for side tracks while four were issued for bypasses.

A total of 220 new permits were issued in 2015, down 31% versus 2014, driven primarily by sharply lower bypass and new well permits. Only 81 new well permits were issued in 2015 compared to 133 during 2014. While the number of ultra-deepwater and midwater new well permits were relatively robust over the past year, deepwater new well permits fell 17% to 25 and shallow-water new well permits dropped 78% to just 14 (from 65).

Meanwhile, the number of new exploration plans filed in the GoM last month fell to two (from seven) and operators filed plans to drill a total of just 10 wells, down from 11 in November. Only one development plan was filed to drill during December; development of the Lower Tertiary appears to remain a long ways off as the industry has filed few development plans year-to-date.

With pricing having contracted sharply, the analyst expects development activity to accelerate slightly in the coming months and years and believes the Gulf of Mexico will be the only relative bright spot for deepwater activity in 2016-2017.

Evercore ISI commented that activity in the GoM is down sharply, even though two plans were filed last week: Fieldwood Energy filed one exploration plan for one well in 260 ft (760 m) water depth while Apache filed one exploration plan for three wells in 45 ft (13 m) water depth. Each plan is estimated to start next month.


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