Staff Reported

This week oil and gas officials in Wyoming reported a significant drop in statewide drilling permits for January and it could be just the beginning of a downward trend, according to the industry.

The Wyoming Oil and Gas Conservation Commission reports that drilling permits were down 28 percent last month compared to the same time period last year. 623 permits were issues in January 2008 compared 446 permits 2009.

Bob King, interim supervisor of the commission said the figures is a clear indication of permit activity slowing. “It hasn’t been long enough to make a definite trend, but we definitely have seen a drop.”

In addition to the decrease in permits issued, a Bureau of Land Management sale Tuesday of 137 oil and gas parcels around the state netted about $2.4 million. That amount was 87 percent down from a similar sized lease sale conducted Feb. 5 last year that netted about $18.3 million.

While the recession and tumbling energy prices are being cited for the reduced drilling activity, Wyoming has not experienced as much drop off as other states. Nevertheless, two major players, EnCana Corp. (nyse: ECA - news - people ) and Questar Corp. (nyse: STR - news - people), have reduced some of their drilling operations in the state, in part because of low prices.

Another reason for the reduced drilling activity in Wyoming is wildlife protection that kicks in at this time of year, especially in the Powder River Basin.

Bruce Hinchey, president of the Petroleum Association of Wyoming, said the number of drilling permits issued was the best indicator of where the state’s industry may be headed in coming months. He noted that the oil and gas companies must keep up a certain amount of drilling to maintain their leases and pipeline commitments, but said 2009 may be different because he has been hearing that many of the companies are dropping plans to increase drilling when the winter wildlife restrictions expire.

“We had the same situation happen to us last year where we got shut down and then it was a rush to try to get all the drilling done. Well, this time they’re going to shut down and the rush won’t be nearly as large as it was just because companies have cut back,” he said.