The Permian is the heart of modern oil and gas activity, with well over 300 rigs operating and tremendous growth to continue. But companies need to continually drill new wells to fuel this growth, which requires companies to obtain drilling permits from the Texas Railroad Commission (RRC) .
The current shale resurgence has kept the Commission busy. The RRC has issued 6,262 drilling permits so far this year.
There are a total of 53 counties in the Railroad Commission’s Districts 7C, 8 and 8A, where the Permian lies. Drilling permits have been approved in all but five of these counties, though activity concentrates in a few key locations.
Source: RRC
Reeves County accounts for 15% of all Permian drilling
As might be expected, the heart of the Delaware basin portion of the Permian, Reeves County, is the most popular county in the Permian basin.
Since the beginning of the year the Railroad Commission has issued 974 permits in Reeves, which represents over 15% of all of the permitting this year. Midland County ranks second in permitting activity, with 725 permits issued since the beginning of the year. These two counties alone represent more than one quarter of all permitting activity in the Permian. The next three counties, Loving, Martin and Howard make up another quarter.
Source: EnerCom Analytics
Permitting activity has not followed any particular trend this year, and does not directly correspond to the oil price. The drop in prices in March did lead to decreased permitting activity in April, but as prices continued to fall in May and June permitting activity increased.
Source: EnerCom Analytics
Reeves County far surpassing previous activity
Virtually every Permian county saw permitting activity fall in 2014, as diving oil prices squeezed producers. Some counties, like Andrews and Upton, have not yet recovered to their previous highs. In the Delaware, however, activity is surging far beyond previous levels.
In Reeves County, for example, 769 permits were issued in 2014. This level has already been surpassed, and the year is far from over. If permitting continues at the same pace, over 1,450 permits will be approved for Reeves County in 2017.
Source: EnerCom Analytics
Midland basin has not returned to 2014 activity levels
In the Midland basin portion of the Permian, activity is increasing, but in most cases has not reached the levels seen in 2014.
Midland County, where the largest number of Midland basin permits have been issued, is currently on track for nearly 1,090 permits in 2017, which would surpass the 1072 permits the Railroad Commission approved in 2014. Other counties are still well below 2014 levels, though.
Source: EnerCom Analytics
Delaware wells are the longest in Permian
Based on well permits from this year, wells are significantly longer in the heart of the Delaware than in the Midland basin.
The average well in Loving County has a total measured depth of over 12,900 feet, well above the overall average of 10,075 feet. Reeves and Ward counties are close behind, as the average permitted well in each county is longer than 12,000 feet. Among Midland basin wells, lateral length is roughly correlated with activity. Midland and Martin Counties, the most and second most popular Midland basin locations, have the longest and second-longest laterals of any counties in the basin.
Source: EnerCom Analytics
352 companies have received permits
The Texas Railroad Commission has approved drilling permits from a total of 352 different private and public companies, ranging from supermajors to tiny private companies. Public companies make up most of the activity, however, as nine of the top ten companies are public. With a total of 377 drilling permits approved, Anadarko (ticker: APC) is the biggest operator in the Permian by permitting activity. Oxy (ticker: OXY) comes in second with 309, followed by XTO.
Source: EnerCom Analytics
Apache, Centennial and Anadarko foremost in Reeves County
Reeves County, the most popular county, also has a large number of different companies receiving permits. Apache (ticker: APA) ranks first among Reeves County companies, with 102 permits this year. Centennial Resources (ticker: CDEV) comes in a close second with 100, closely followed by Anadarko with 98.In total, there are 59 different private and public companies with drilling permits in Reeves County.
Source: EnerCom Analytics
Pioneer, XTO, Endeavor active in Midland
Like Reeves County, Midland County has three primary operators, each of which has received around 100 drilling permits this year. Pioneer (ticker: PXD) and XTO (ticker: XTO) are tied for first place in the basin, with 100 drilling permits each. Privately-held Endeavor Energy Resources is in third place, with 98 wells. A total of 34 different companies have received drilling permits from the Railroad Commission in the Midland basin in 2017.
Source: EnerCom Analytics
Anadarko dominates Loving County
In Loving County activity is more concentrated in the top companies, with two-thirds of all permits going to the top three. Anadarko dominates, with 181 drilling permits, or nearly one-third of all permits in the county. EOG and Shell (ticker: RDS.A) take another third, with 103 and 81 permits, respectively. Twenty seven companies have received drilling permits in Loving County this year.
Source: EnerCom Analytics
This article is the first in a series. Check back next month for a new dive into the most popular basins in the U.S.
