Industry interest in oil drilling in Canada is just as high this year as it was in the boom years from 2004 to 2007 but the natural gas side of the business is still setting new lows, according to well licence data for the first two months of 2010.

Bulletin records show a strong surge in oil permitting in Alberta, Saskatchewan and Manitoba - enough to push well licensing in all of Canada 17% above the year ago count in the first two months of 2010. But a decline in Alberta gas licences this year has held back activity in that province to a four per cent gain from a year earlier.

Horizontal drilling looks headed for a record year in 2010 with 981 new licences issued in the January-February period, an all-time high and up 76% from 557 last year.

Producers obtained permits for 1,253 new wells during the month of February, an encouraging 44% leap from only 871 for the same month last year when industry was reeling from three months of very low oil prices and turmoil in the world's stock markets as economies around the world shrank under a sharp recession.

Despite the rise last month, the number of permits issued remained far behind most years in the past decade which saw over 2,000 licences approved during the month of February.

For the first two months of 2010, operators were authorized by provincial governments to drill 3,205 new wells this year, 17% more than the 2,738 approved for the same period in 2009 but well below the 5,000 to 6,000 permits issued for the January-February period from 2006 to 2008.

The number of licences approved for oil and bitumen targets this year totals 1,348, more than double the 619 licences issued a year earlier. This year's total is at a decade high although it's only two licences more than in 2007.

The move by operators to take advantage of high oil prices and strong netbacks for both light and heavier crude streams was evident from Alberta to Manitoba.

The Energy Resources Conservation Board in Alberta authorized 721 new oil and bitumen wells to the end of February, up from 320 last year with most of the growth coming from conventional crude oil wells. Bitumen licences rose to 261 from 195 last year and oilsands evaluation holes increased to 774 licences from 725 last year.

In Saskatchewan, operators are busy again this year with 588 licences overall (526 aimed at oil targets) compared to only 295 to the end of February 2009. While permitting for oil in the province is the highest in the past decade, only 32 licences to drill for gas were issued in the first two months of 2010, far below counts in most years in the last decade.

Manitoba's small oilpatch is off to a very strong start to 2010 with 95 permits approved in the first two months of the year, up from 47 last year and the highest in more than 20 years.

British Columbia well assignments so far in 2010 total 176 (only six for oil wells), up from 138 a year earlier.

Permits to drill for natural gas and coalbed methane fell 27% over the January-February period to 918 licences from 1,263 for the same two months a year ago. The 2006 peak year saw 3,822 gas-hunting licences issued to the end of February. CBM licences issued for Alberta so far this year are the lowest since 2003.

Despite the overall decline in gas permits, Bulletin records show 128 horizontal well licences targeting natural gas (including two CBM wells) to the end of February this year, up from 80 a year earlier.

So far in 2010, Canadian Natural Resources Limited has taken over the top spot in well permitting from perennial leader EnCana Corporation which has now split its assets with newly formed Cenovus Energy Inc.

Canadian Natural licensed 261 new wells in the first two months of 2010 (up from 164 a year ago), including 183 bitumen wells. Second place Husky Energy Inc. obtained permits for 171 new wells, including 120 conventional oil wells. The leader on the gas side was Pengrowth Corporation which licensed 74 new gas wells out of 84 total.