The Missouri Department of Natural Resources, Oil and Gas Council (the Department) regulates oil and gas production including drilling, deepening, plug-back or recomplete well operations. The Department issues operator permits, conducts inspections for new wells, plugging of wells and site remediation of well sites, collects and tracks active and inactive well data and maintains well field maps, and provides a financial assurance element in the event an operator fails to perform the duties to meet the state requirements.
The obligee is the entity that requires the bond. The Missouri Department of Natural Resources, Oil and Gas Council requires a form of financial assurance before the drilling of wells, deepening, operation, plug-back and recomplete of an existing well. The bond ensures compliance of regulations and state laws. Failure to comply or perform by the state laws and regulations may result in a claim filed against the bond by the Department. In the instance of a surety bond, if the Department files a claim against the surety bond, the owner and/or operator (named as the principal on the bond form) will be responsible for repayment of the claimed amount if the claim is paid out by the surety. Other forms of financial assurance will be forfeited when a valid claim has been made.
The Department allows for several options to meet the financial assurance requirement which includes a surety bond, an irrevocable letter of credit or a certificate of deposit. The option of an irrevocable letter of credit requires that the letter is to be issued by a qualified financial institution.
The surety bond must be in place from the time the permit is issued up to the plugging of the well and does not have the option to be cancelled (or irrevocable). The premium will renew on the bond on an annual basis for the life of the well. If the well transfers to new ownership (conversion), a new bond is required to fulfill the financial assurance conditions. Failure to maintain or replace the bond or financial assurance will result in a claim by the Department.
The surety bond also ensures the well will be properly plugged and surface remediation completed. The plugged well must pass through an inspection process and the land restored as near as practical to its original condition. The Office will release the financial assurance after the plugged well passes inspection, which in the case of a surety bond, the renewal premium will no longer be required.
A surety bond is required and the bond amount is based on the depth and number of wells. Applicants can choose either an individual well surety bond or a blanket surety bond for multiple wells. A well can be no deeper than 1,500 feet to qualify as a well under a blanket bond.
|Well Depth||Bond Amount|
|0 - 500 ft||$1,100 surety bond|
|501 - 1,000 ft||$2,200 surety bond|
|1,001 – 2,000 ft||$3,300 surety bond|
|2,001 – 5,000 ft||$4,400 surety bond|
|2,001 – 5,000 ft||$4,400 surety bond|
|5,000 ft||$5,500 plus $2 for each additional foot beyond 5,001 feet|
|Well Depth||Bond Amount||Maximum Number of Wells|
|0' to 800' ft||$22,000 surety bond||40 wells maximum|
|801' to 1,500' ft||$25,000 surety bond||10 wells maximum|
The surety bond will need to be filed with the Missouri Department of Natural Resources
Attn: Geological Survey Program
PO Box 250
Rolla, MO 65402
The premium that you pay for a Missouri Oil and Gas Well Surety Bond is dependent on credit and depth 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. Contact our Surety Bond Specialists for a free quote.
A sign is required to be posted at each well site with the well name, number an API number within 90 days of from the onset of drilling or the spud date. Stratigraphic test wells and non-commercial gas wells do not have to meet the sign requirement.
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.
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