Texas RRC Oil & Gas Well Permit Surety Bond

The Texas Oil and Gas Railroad Commission known as the RRC, is responsible for the permitting, compliance, enforcement and environmental cleanup programs for the state. Operators of wells are required to obtain either an Individual Performance Surety Bond or a Blanket Performance Surety Bond or other form of financial assurance or financial guarantee depending on the number of wells the operator has.

Performance Surety Bond:

The P-5 Performance Surety Bond ensures that the operator will maintain the wells in compliance with the state standards which includes the plugging of wells, restoring wells for beneficial use and prevention of fluids leaking into ground or surface water.

The Performance Surety Bond (Texas form P-5 PB-1 or P-5 PB-2) or financial assurance will need to be in the amount of:
$25,000 for 1 to 10 wells;
$50,000 for 11 to 99 wells; or
$250,000 for 100 or more wells.
Bond terms may be more than 12 months based on the RCC's discretion or run mulitple years. The bond premium will be adjusted based on the number of months of the term.

The P-5 PB-1 performance surety bond is filed for an individual well and a P-5PB-2 blanket performance bond for multiple wells.

Permit Requirements:

The oil and gas well drilling, recomplete, or re-enter permits requirements include:

1. Complete the application and pay the permit fee.
2. Provide the surface location and acreage information for the well site.
3. Type of wellbore, such as horizontal or vertical, directional
4. Provide the lease and operator name.
5. Provide field information including district and and well type.
6. Provide a plat at a scale of 1" =1,000 or 1" = 2,000 with survey lines and heavy line or crosshatching for each proposed well location.
7. Obtain a performance surety bond or provide another form of financial assurance such as a letter of credit or a cash deposit equal to the bond amount.
8. Note any reason for exceptions for each well application.

How Much Will a Texas RRC Performance Bond Cost?

The premium that you pay for a Texas RRC Oil and Gas Well Performance Surety Bond is dependent on credit and the bond amount required based on the number of wells. We would be glad to refer you to a surety agency that will write these bonds.

Did You Know?

The financial assurance must be filed with the initial application or acquisition of any well and the financial guarantee must remain in force until either replaced by another form of financial guarantee or is released by the Commission.

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