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Alabama Multiple Well & Single Well Methane Gas Surety Bonds

Methane Gas Plant
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The State Oil and Gas Board of Alabama is a regulatory agency that promotes conservation and protection of the environment.

The board enforces the state rules and regulations through oversight of oil and gas exploration, drilling, operation, and production, Class II injection wells, and underground storage of gas in reservoirs in Alabama.

The Oil and Gas Board of Alabama Administrative Code 400-3-2-.01 thru 400-3-9.01 defines the regulations process for coalbed methane gas regulations and operations including the permit requirement. Any owner/operator that plans to operate, drill in search of oil or gas, plug, drill a class II injection well or convert to a class II for enhanced recovery or salt water disposal must first obtain a permit.

What is Needed to Obtain a Permit?

To obtain a Coalbed Methane Gas Operations Blanket Bond Permit or a Single Well Bond Permit for the purpose of commencement of “drilling, competing, converting operating, or producing any coalbed methane gas well or Class II injection well, including production facilities, injection facilities, pipelines, and other equipment associated with such wells “(400-3-2-.03) the following is required:

  1. Completion of the permit application and payment of the permit fee
  2. Submit with the permit application a “Certified Plat” (in triplicate). The certified plat must meet the conditions and requirements for the applicable operation (offshore, onshore, CBM, etc)
  3. Complete an affidavit of ownership or control (Form OGB-2)
  4. Complete an organization report (Form OG-5)
  5. Maintain drilling records, if cores are taken, obtain samples of the drill cuttings and cores . Submit applicable drilling records and cores (if any) to the board.

Surety Bond Requirement:

Obtain a surety bond in the amount as follows for the number and depth of wells:

Multiple Wells: Measured Depth (ft) - Amount of bond required:

  • 0 - 5,000 ft=$100,000 surety bond
  • 5,001 – 10,000 ft =$100,000 surety bond
  • 10,001 – 15,000 ft =$100,000 surety bond
  • 15,001 – 20,000 ft=$100,000 surety bond
  • Greater than 20,000 ft= $100,000 surety bond

    • Single Wells: Measured Depth (ft) - Amount of bond required:

  • 0 - 5,000 ft=$5,000 surety bond
  • 5,001 – 10,000 ft=$10,000 surety bond
  • 10,001 – 15,000 ft=$15,000 surety bond
  • 15,001 – 20,000 ft =$30,000 surety bond
  • Greater than 20,000 ft=$50,000 surety bond

    • How Much Does an Alabama Coalbed Methane Gas Operations Bond Cost?

    The premium that you pay for an Alabama Coalbed Methane Gas Operations Blanket Bond or a Single Well Bond is dependent on credit and the depth of the well(s). Rates start as low as 1% with your good credit.

    Did You Know?

    The first traces of natural gas were discovered in the counties of Morgan and Blount Alabama during the late 1880’s.

    The cities of Huntsville and Hazel Green used natural gas in 1902.
    (http://www.encyclopediaofalabama.org/article/h-1578)

    Related Links:

    Alabama Coalbed Methane Resources of Alabama
    Coalbed Methane Association of Alabama

    More Surety Bond Questions?

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