According to the state Department of Environmental Protection (DEP) information, the number of unconventional well permits issued for this year’s first quarter has dropped by 30 percent; the lowest it has been over the last five years.
Compared to last year, the DEP issued 863 permits just in the first three months. This year, the number of permits given out fell to 601. However, these numbers are not surprising considering companies across the U.S. have been cutting back on capital spending, laying off workers and shutting down rigs due to the low energy prices.
In certain cases, like Antero Resources, some companies that were issued permits have chosen to defer well completions. The well will be drilled, but the work required to complete the well will be put on hold until it is needed. Antero has decided to hold off on 50 well completions located in the Marcellus Shale.
As reported by Pittsburgh Business Times, on Monday during a conference call with analysts, executives from Halliburton Co. explained that there are 4,000 oil wells in North America alone that are waiting to be completed. CEO of Deep Well Services Mark Marmo stated that he believes that if oil and gas prices stay under $60 per barrel and $3 per thousand cubic feet that the number of wells deferred will increase. He also explained that he does think there will be an activity increase later this year:
Companies will drill, but not necessarily complete a well since the completion side costs more than drilling. It all depends on the company hedge programs and the production goals they need to meet … With oil prices going up, and … with the coal-to-gas conversion from the power companies, the (exploration and production companies) will increase activity … I see gas prices going above $3 per thousand cubic feet, especially if it’s a hot summer.