If you needed any further evidence the steep economic downturn and battered commodity prices are hammering the oil and natural gas industry here in Colorado, the latest report on drilling permits for new wells in the state provides stark evidence.

The Colorado Oil and Gas Conservation Commission, which oversees the industry, says it expects the number of drilling permits issued to drop 38 percent this year, compared to 2008.

The agency reports that as of Aug. 6th it had approved 3,360 drilling applications and expects that number to climb to 5,000 by the end of the year. Still, it’s almost a 40% drop from the record 8,027 drilling permits approved in 2008. What’s more, the COGCC report also says the number of active drilling rigs has dropped 60% from the 2008 peak.

An abundance of natural gas coupled with extremely low prices is a brutal one-two punch for energy companies, particularly those on the Western Slope who have been forced to significantly reduce drilling activities in locations such as the Piceance Basin.

Many in the industry also point to the stringent new regulations for drillers approved by the commission earlier this year as another big reason for the downturn.

“During the toughest period for the industry in years, they’ve put more hurdles up for us to overcome,” one energy executive told Colorado Energy News. “It’s definitely impacted how we are doing business in Colorado,  just as has the economy has.”

As we reported late last month, Garfield County leads all counties with 1,247 approved drilling permits, 37 percent of the total approved as of Aug. 6, according to COGCC. Weld County is in second place, with 904 approved permits, or 27 percent of the total.