West Virginia Oil and Gas Well Permit Surety Bond

The West Virginia Department of Environmental Protection, Office of Oil and Gas (the Office) is responsible for the issuing of permits and operator compliance of state laws and regulations for oil and gas well operations, exploration, drilling, storage and production. The Office conducts inspections for permitting, plugging and restoration of well sites; compiles and tracks active and inactive well data; manages abandoned well plugging and reclamation; ensures safe groundwater due to oil and gas activities; and provides a process in the event an operator fails to perform the duties to meet the performance bond requirement. The Surety Group no longer offers this bond but we can refer you to another agency that does.

Obligee and Bond Conditions

The obligee is the entity that requires the bond or other form of financial assurance. The West Virginia Department of Environmental Protection, Oil and Gas Office requires a performance bond prior to the drilling of any new wells, deepening of wells, and the plugging of wells. The bond ensures compliance of regulations and state laws. Failure to comply or perform the regulations and state laws may result in a claim filed against the bond by the Office. In the instance of a surety bond, if the Office 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.

The performance bond is a form of security to meet the permit requirement. There are several options for the performance bond: cash or a securities deposit, letter of credit, a certificate of deposit deposited with the state, or a performance surety bond.

A performance bond must be in place from the time of the initial permit up to completion 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 Office.

The performance bond also ensures the plugging and surface restoration of the well. The plugged well must pass through an inspection process and the surface restored to meet state standards. The Office will release the bond when the plugged well passes inspection and the premium for the bond will no longer be required.

Surety Bond Requirements

A performance surety bond is required based on the number of wells. The single well performance bond covers individual wells. A blanket performance bond covers multiple wells.

Permit Requirements

1. Complete the permit application and pay the application and well work fees.
2. The application requires the location of the well, type of well, depth of well, casing and tubing types, owner information, a copy of the lease (if applicable).
3. Complete the Surface Owner Waiver (if applicable)
   
4. Complete the In Lieu of Filing Lease(s) and Other Continuing Contract Forms (if applicable)
   
5. Complete the Notice to Surface Owners form
   
6. Complete the Groundwater Protection Plan form
   
7. Complete any other applicable form necessary for the operation or plugging of the well

How Much Will This Bond Cost?

The premium that you pay for a West Virginia Oil and Gas Well Performance Surety Bond is dependent on credit and the number of wells. Contact our agents for a referral to a surety company that can help you with your bond need.

Did You Know?

West Virginia maintains a well mapping system for each active and plugged well.

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