Home New Mexico Bonds New Mexico Oil and Gas Well Plugging Surety Bonds

New Mexico Oil and Gas Well Plugging Surety Bonds

The New Mexico Energy, Minerals, Natural Resources Department, Oil Conservation Division (the Division) is responsible for the issuing of permits and operator compliance of state laws and regulations for oil and gas well drilling, plugging, deepening and operations. The Division reviews forms and reports, compiles and tracks well data; production of wells and well location mapping; conducts the permitting, plugging and restoration of well sites; investigates and inspects wells; ensures well operations meet the states regulatory standards; and provides a process in the event an operator fails to perform the duties to meet the financial assurance requirement. WE NO LONGER WRITE THESE BONDS BUT YOUR LOCAL INSURANCE MAY BE ABLE TO HELP YOU FIND A SURETY THAT DOES.

Obligee and Bond Conditions

The obligee is the entity that requires the bond or other form of security. The New Mexico Energy, Minerals, and Natural Resources Department, Oil Conservation Division requires a surety bond prior to the drilling of new wells, deepening of wells, and the plugging of wells. The bond ensures compliance of regulations and state laws. Failure to comply or perform with regulations and state laws may result in a claim filed against the surety bond by the Division. 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.

A surety bond must be in place from the time of the initial permit up to plugging of the well 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 well transfers to new ownership, a new bond is required to fulfill the permit conditions. Failure to maintain a bond will result in a claim by the Division.

The performance surety bond also ensures the plugging and surface restoration of the well. The well must pass through an inspection process for proper plugging and the surface restored to meet state standards. Upon the release, the premium for the bond is no longer required.

Instead of a surety bond, another form of financial assurance may be accepted by the Division. The other acceptable form of security would be a cash deposit made to the state in an amount equal to the required bond amount

Surety Bond Requirements

A performance surety bond is required based on the number and depth of the well. Either a One Well (or single well) Plugging Bond or a Blanket Plugging Bond will be needed to meet state requirements

One Well (or single well) Plugging Bonds:

A $25,000 plus $2 per ft of well depth surety bond is required for either horizontal or vertical wells. (Effective 1/14/19)

Blanket Plugging Bond:

A surety bond is required for multiple wells, from $50,000 to $250,000.
$50,000 bond covering one to ten wells
$75,000 bond covering eleven to fifty wells
$125,000 bond covering fifty-one to one hundred wells
$250,000 bond covering more than one hundred wells

Well plugging bonds for all districts will need to be filed at the District IV office, 1220 S. St Francis Dr., Sante Fe, New Mexico 87505

The surety bond must be issued be a reputable corporation.

Permit Requirements

Complete the application and pay the first application fee. Provide the surface location, proposed hole location including well type, proposed casing and cement, proposed blowout prevention program and any additional information.
File the application with the District Office for your well location. District 1 Hobbs, District 2 Artesia, District 3 Aztec and District 4 Sante Fe.
Obtain either a one well performance plugging bond or blanket plugging bond based on the number and the depth of the wells.

How Much Will This Bond Cost?

The premium that you pay for a New Mexico Oil and Gas Well Plugging Surety bond is dependent on credit and the number of and depth of wells. Contact our Surety Bond Specialists for a referral for an agency that writes these bonds.

Did You Know?

New Mexico utilizes an online reporting and application system called E-Permitting. Operators will need to register their organization and assign an operator administrator to submit permits and forms.