The United States Department of the Interior, Bureau of Land Management, otherwise known as the BLM, is responsible for bringing together local, state and tribal governments to protect federal lands in the process of acquiring of natural resources. The BLM determines how, when and where the use of federal lands will be leased including accepting applications for permits to drill. The BLM follows the Federal Land Policy Management Act (FLPMA) to guide the agency in determining the conditions for permitting.
The BLM is also responsible for inspection and enforcement of Federal and Indian leases to ensure all laws are observed and followed. Inspections can include, production and drilling inspections, abandonment inspections, workover inspections, environmental inspections, records verification and undesirable or theft inspections.
The obligee is the entity that requires the bond. The Bureau of Land Management requires a surety bond for leasing of federal lands for the purpose of drilling of oil, gas and geothermal wells. The bond ensures faithful performance and compliance of federal regulations and rules. Failure to comply or perform the regulations and rules may result in a claim filed against the bond by the BLM. In the instance of a surety bond, if the BLM files a claim against the surety bond, the 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 is a form of financial security to meet the permit requirement. There are two options of financial security to meet the requirement: a surety bond or a personal bond. The personal bond option requires the bond amount to be paid through a certificate of deposit made payable to the Department of Interior, or a cash deposit by certified check, or cashier’s check. The surety bond option must be issued by an insurance company approved by the Department of Treasury, in which SuretyGroup.com is appointed with surety companies meeting this requirement.
A surety bond must be in place from the time of the initial lease up until the release of the lease and can be only cancelled by the BLM. The premium will renew on the bond on an annual basis for the life of the lease. Failure to maintain a surety bond can result in a claim against the bond.
A surety bond is required based on the type of leases a well operator has: Nationwide, Statewide, Individual or National Petroleum Reserve. A nationwide bond includes coverage of multiple exploration operations throughout the nation including the National Petroleum Reserve in Alaska. The statewide bond covers multiple explorations in a single state. The individual bond is for a single lease operation. And the National Petroleum Reserve In Alaska bond covers either a single lease or multiple leases for exploration operations.
The premium that you pay for a Bureau of Land Management Gas, Oil and Geothermal Lease Surety Bond is dependent on credit and the required bond amount. Bond amounts over $50,000 will require personal and/or business financial statements.
According to the BLM, in 2016 there were approximately 12,771,829 producing acres and 23,926 producing leases on Federal lands.
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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