Nevada Oil and Gas Well Surety Bond

The Nevada Commission of Mineral Resources, Division of Minerals (the Division) regulates oil, gas and geothermal production or injection including re-drilling, deepening, drilling, abandoning and production of minerals at well sites. The Division issues operator permits, conducts inspections of new wells, plugging of wells and completion, collects and tracks active and inactive well data and maintains well field maps, and provides a financial responsibility element in the event an operator fails to perform the duties to meet the state requirements.

Obligee and Bond Conditions

The obligee is the entity that requires the bond. The Nevada Commission on Mineral Resources, Division of Minerals requires a form of financial responsibility in order to obtain a permit for oil, gas or geothermal drilling. The bond ensures compliance of state laws and state regulations and the plugging of wells. Failure to comply or perform by the state laws and regulations may result in a claim filed against the bond by the Division. In the instance of a surety bond, if the Division 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 responsibility will be forfeited when a valid claim has been made.

The Division allows for several options to meet the financial responsibility requirement which includes a surety bond, a time certificate or a certificate of deposit. The option of a surety bond must be issued by a company licensed to do business in Nevada, in which SuretyGroup.com meets the criteria. The option of a certificate of deposit or time certificate requires a deposit in a Nevada bank or savings and loan association and made payable to the State of Nevada.

The surety bond must be in place from the commencing of oil and gas operations, deepening, re-drilling, and abandoning of the well and does not have the option to be cancelled. The premium will renew on the bond on an annual basis for the life of the well. If the well is sold to another company or person, a replacement bond is required to fulfill the financial responsibility conditions. Failure to maintain or replace the bond or financial responsibility will result in a claim by the Division.

The surety bond also ensures the well will be properly abandoned and plugged upon completion and inspected until the financial responsibility is released by the Division. In the case of a surety bond, the renewal premium will no longer be required.

Surety Bond Requirements

A surety bond is required and the bond amount is based on the number of wells for oil and gas or geothermal drilling. Applicants can choose either an individual well bond or a blanket bond for multiple wells.

Single or individual wells require a one-well surety bond of $10,000 for each well.

Multiple wells require a $50,000 blanket surety bond.

Operators drilling on federal lands and have a bond on file with the Bureau of Land Management are not required to have an additional bond with the state.

Permit Requirements

1. Complete the permit application to drill an oil or gas wells and pay the permit fee.
2. The permit application will need to include the well location, operator and lease information.
3. Wildcat wells are required to include a plat completed by a licensed surveyor.
4. Provide the appropriate surety bond.

How Much Will This Bond Cost?

The premium that you pay for a Nevada Oil and Gas Drilling Surety Bond is dependent on credit and the number of wells.

Did You Know?

The Division must approve all work-over operations and maintenance throughout the duration of the well up until completion.

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