The Oklahoma Corporation Commission, Oil & Gas Conservation Division (the Division) regulates oil and gas drilling, re-drilling, deepening, drilling, abandoning and production at well sites, commercial pits, seismic operations, and commercial soil farming. 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 security element in the event an operator fails to perform the duties to meet the state requirements.
The Oklahoma Corporation Commission, Oil & Gas Conservation Division requires a form of financial security in order to obtain a permit for oil or gas drilling, deepening, re-entering, plugging and abandoning of wells. 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 operator by the Division. In the instance of a surety bond, if the Division (the obligee) 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 security will be forfeited when a valid claim has been made.
The Division allows for several options to meet the financial security requirement which includes a surety bond, a letter of credit, or proof of financial minimum $50,000 net worth. The option of a surety bond must be issued by a company licensed to do business in Oklahoma, in which SuretyGroup.com meets the criteria. The option of a letter of credit requires an FDIC insured Oklahoma bank or savings and loan association to complete Form 1006C. The option of meeting the financial minimum net worth requires completing Form 1006A.
The financial security in the form of a surety bond must be in place from the commencing of oil and gas operations, deepening, re-drilling, and abandoning of the well and does have the option to be cancelled with a six month notice. If the surety bond is cancelled, a replacement bond or alternative form of financial security is required. Failure to maintain or replace the bond, letter of credit, or minimum net worth can result in a claim by the Division.
The surety bond ensures the well will be properly abandoned and plugged upon completion, and inspected, until the financial security is released by the Division. In the case of a surety bond, the renewal premium will no longer be required.
A corporate surety blanket bond is required for multiple wells in amount of $25,000 (Form 1006), or;
A corporate surety bond in an amount for the estimated plugging and abandoning of each well if the plugins will be less than $25,000. The Affidavit of Well Plugging Cost for Oil and Gas Well Operators (Form 1006D) is required to be completed and signed by a pipe and pulling and well plugging company licensed in Oklahoma and will need to be submitted along with the bond (Form 1006) for the estimated plugging costs.
The premium that you pay for a Oklahoma Oil and Gas Well Corporate Surety Bond is dependent on credit, the number of wells and/or the cost to plug the well. Contact our Surety Bond Specialists for a referral to an agency that writes these bonds.
Drilling operations must begin within 6 months from the approval date of the permit or it becomes void. A copy of the permit must be displayed at the well site from the beginning of drilling until plugged.
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.