The Texas Railroad Commission (RRC), which regulates the state’s oil and gas industry, issued a third more oil and gas drilling permits in April than a year ago, according to data released May 10th, as higher prices continue to spur an increase in activity.
The RRC issued 1,221 original drilling permits in April, up around 34 percent from last year.
Oil prices have climbed to near $71 per barrel, the strongest level in nearly 3-1/2 years, aided by production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and declining supplies from Venezuela. A fresh round of U.S. sanctions on Iran announced this week also is anticipated to take some supply out of the market, further supporting prices.
Well completions in Texas also rose in April, with the regulator processing 616 oil completions, versus just 439 a year ago. The commission has processed 3,514 completions so far this year, an increase of 43 percent from the same time last year.
Although completions are on the rise, the backlog of drilled-but-uncompleted wells (DUCs) continues higher as the availability of hydraulic fracturing crews remains tight. There were some 3,044 DUCs in the Permian in March, up 122 from the month prior, according to the U.S. Energy Information Administration.
While the Permian Basin in Texas and New Mexico remains the fastest-growing shale spot, congested pipelines and shortages of labor and materials there are crimping profits, making other fields attractive alternatives.