U.S. Shale Producers Race for Permits

Over the past few months, there has been a drastic increase in U.S. shale producers’ race to acquire drilling permits from the Federal Government. This is due to the upcoming November presidential elections and concerns that a win by Joe Biden could mean a crackdown on oil and gas exploration. According to Reuters, “As of August 24, producers have received 974 permits so far this year for new wells on federal land in the Permian, compared with 1,068 for all last year and 265 in 2018, according to data firm Enverus. In the 90 days up till August 24, producers received 404 permits in the Permian, compared with 225 and 11 in the same period in 2019 and 2018, respectively. The scramble for permits comes despite the weak outlook for oil drilling and prices due to the ongoing coronavirus pandemic.”

There has been a race on to obtain drilling permits prior to other elections due to potential policy and regulatory changes. Most recently in the state of Colorado in 2018 , according to Enverus, “voters considered a proposition to increase the distance required between new wells and buildings, permitting jumped 165% in the last six months of the year compared with the first half.” Most of the race concerning these shale permits has been focused in the Permian in New Mexico according to Artem Abramov, head of shale research at Rystad Energy. Abramov was also quoted saying, “about 85% of well permits there have been on federal lands this year, up from 60% in 2018 and 2019 – evidence of companies trying to “fast track” permits on federal acreage”. Many political leaders see the benefit in U.S. Shale, New Mexico Governor Michelle Lujan Grisham, a Democrat, has said she, “would ask for a waiver exempting it from any drilling bans”. One third of New Mexico’s State revenue comes from the oil and gas industry and 65% of its production is on federal land which make it easy to see how this could affect one of our nation’s poorest states.

With an election on the horizon and overall uncertainty in the upcoming months its clear to see that why many oil and gas producers are racing to secure these permits.



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