The oil and gas industry in Illinois has been regulated by the State since 1939. Today the Illinois Department of Natural Resources, Office of Oil and Gas Resource Management, regulates the permitting, drilling, operating, and plugging oil and gas production wells. The Department implements the Illinois Oil and Gas Act, enforces standards for the construction and operation of production equipment and facilities, regulates the injection of fluids into underground injection wells, and cleans up abandoned well sites. Drilling operators are required to obtain a security to guarantee compliance with state laws and a surety bond fulfills this requirement. The Department issues around 800 permits each year.
The "obligee" is the entity that requires the bond or other form of security. In Illinois, the obligee is the Department of Natural Resources. The Department requires surety bonds or another form of security from oil and gas drillers to help protect Illinois' oil and gas resources, the environment, land, and water resources. Types of bonds are: liquid oilfield waste transportation systems, blanket bond (all wells or permits) and Individual bond (single well or permit).
In Illinois, surety bonds are required to:
Other means of security acceptable by the Department are an irrevocable letter of credit, or a certificate of deposit equal to the required bond amount.
The bond must be in place at all times and does not have the option to be canceled. The premium will renew on the bond on an annual basis for the life of the well. If the bond is replaced or ownership has changed, a new bond must be filed with the state. Failure to maintain a bond will result in a claim by the Department. Bonds remain in effect until all requirements have been satisfied, and the bond is released by the Department.
A financial security instrument surety bond is required based on the number of wells for any well sold, transferred, drilled or permitted.
Oil and gas operators must have a Permit to Drill, Deepen or Convert a Production Well (Form OG-10) from the Department before drilling can begin and a form of security, such as a surety bond must be in place.
Contents of the application include:
Failure to provide a bond will result in the issuance of a cessation of operations order from the Department.
A bond is considered released when all wells covered by the bond are plugged and the site restored and the permittee is not in violation of the Illinois Oil and Gas Act.
The premium that you pay for an Illinois Oil and Gas Well Surety bond is dependent on credit and the number of wells. Our rates start at $100 for bond amounts $10,000 and under with good credit. Bond amounts over $10,000 start at 1% of the bond amount with good credit. For bond amounts over $50,000 business and/or personal financial statements will be required. Contact our Surety Bond Specialists for a free quote.
Most of the oil and gas production in Illinois is located in the southern part of the state.
Check out our FAQ page or What’s a Surety Bond? page. Should you need or choose to buy a surety bond, buy from us. SuretyGroup.com has been underwriting surety bonds throughout the U.S. for more than 35 years. When you work with us, you enjoy the unique benefit of dealing with a team of highly experienced surety agents with in-house underwriting authority. This allows you to receive competitive, low rates, quick approvals, and immediate bond delivery. In most cases, your bond will be delivered within 24 hours after you apply for it.
For a downloadable application