Number of oil, gas permits in Utah soars
For the first three months of 2006, the Utah Division of Oil, Gas and Mining handed out 513 permits, a 72 percent increase over 298 applications granted in the first quarter of 2005.
John Baza, director for the division, told a legislative interim committee Wednesday that 2006 could set a new record in the number of oil and gas permits approved.
In 2005, the division handed out 1,629 oil and gas permits, the most ever for one year in the state's history.
"In the 1991-1992 period, the division was hard pressed to approve even 100 applications for permit to drill," Baza told members of the Public Utilities and Technology Interim Committee. "As we look at the number that we've seen since the beginning of this year, we'll probably end up with 30 percent greater than last year's activity."
Baza anticipates that oil and gas permits approved this year likely will surpass 1,800. As of Wednesday, 719 permits have been approved so far this year.
The rush to drill over the past year has intensified as oil prices have soared. Oil futures reached $75.35 on April 21 and 24, the highest since trading began in 1983. And while oil for June delivery fell 84 cents, or 1.2 percent, to $68.69 a barrel Wednesday on the New York Mercantile Exchange, the lowest close since April 12, prices are still 40 percent higher than a year ago, according to a Bloomberg News story.
"There's a lot of reasons for that, but most of it is the business plan and the timing," Baza said. "When we issue a permit to drill, most companies are not ready to issue drilling contracts at that point or mobilize rigs."
Baza added that companies have one year to commence drilling after securing a permit, but they can be granted an additional year extension.
Companies requesting permits usually can receive them within 30 to 45 days, Baza said, even with the recent ramp-up in activity.
"We don't do these things lightly. We don't do these things in order to just push paper out the door," Baza said. "We have a team of scientists, engineers and geologists who review every application and ensure that it meets the requirements."
About 10 percent of Utah's oil production is coming from a wildcat find in Sigurd, Sevier County, by Wolverine Gas & Oil Corp., which is based in Michigan.
Despite the big strike, most companies are drilling for natural gas, which is a more sure find, Baza said.
"People are still looking for where the next major field might be down there," Baza said. "They haven't found it yet."
E-mail: danderton@desnews.com
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