Report shows ‘upward momentum’ in GoM drilling permits
Evercore ISI’s most recent US Drilling Permit Monthly report noted that permitting numbers in the Gulf of Mexico were showing “another step in the right direction.”
The May total of 15 new permits grew 7% from 14 in April, and was down just 6% from permitting in May 2016.
Shallow-water permitting doubled up to six permits, with three new wells, two side tracks, and one bypass approved. Seven new midwater permits were filed in May, flat from the previous two months. Deepwater permitting fell by one to two, with two side track permits approved.
No ultra-deepwater permits were filed in May.
Overall, new well permits grew from seven in April to nine in May, while side track permits slid to two and bypass permits were flat sequentially. The sharpest decline from the 2014 peak (except ultra-deepwater) has come from shallow-water permitting, down 90% in 2017 from year-to-date 2014.
The analyst firm said: “We believe thatoffshore drilling (and specifically jackup utilization) is starting to turn the corner, but continued attrition/consolidation will be critical in supporting slowly-improving permit and drilling activity.
“Offshore planning from last month points to modest offshore improvement in the 2H 2017 timeframe, courtesy of larger players such as Chevron and Shell. Four shallow-water drilling plans were filed for possible tieback work, while nine plans were submitted by Chevron for the deepwater Mississippi Canyon, and seven were filed for the midwater Mississippi Canyon by Shell.
“Overall, we remain cautious in allocating optimism to the offshore space, but permitting trends have certainly shown upward momentum over the first quarter of 2017.”
May represents the second highest permit total since November 2015, Evercore said.