What is a Pennsylvania Oil and Gas Wells Bond?
Oil and gas wells operators in Pennsylvania may not drill, restore, alter or manage oil and gas wells unless they have registered for a permit. As part of the permit condition, they must also furnish a surety bond to guarantee their complete performance of obligations.
The Oil and Gas Wells Bond requires oil and gas well operators to faithfully perform and conform to all applicable rules and statutes regarding the drilling, restoration, water supply replacement, and plugging of oil and gas wells.
The bond also covers all additional wells in Pennsylvania for which the operator obtains a well permit. The Operator and the Surety agree that they may waive any rights of prior notice or objection to the addition of wells.
What are the bond conditions?
- The bond must be written by a Surety authorized to conduct business in the Commonwealth of Pennsylvania.
- The Principal (oil and gas well operator) must act by the 1984 Oil and Gas Act and the 2012 Oil and Gas Act, and all prescribed rules by the Pennsylvania Department of Environmental Protection, Office of Oil and Gas Management.
- The Department reserves the right to require additional bonding from the Principal, which additional bonding will serve as a supplement to the bond liability provided.
- The liability of the Surety will not exceed the specified bond amount.
What is the bond amount?
The bond amount is $2,500 for each well to be bonded.
The blanket bond amount of $25,000 for all bondable wells in Pennsylvania.
According to the Oil and Gas Act of 2012, bond amounts for wells with a total wellbore length of less than 6,000 feet are as follows:
- 50 wells = $4,000 but not more than $35,000
- 51 to 150 wells = $35,000 + $4,000 per well for each well in excess of 50 wells; not more than $60,000
- 151 to 250 wells = $60,000 + $4,000 per well for each well in excess of 150 wells; not more than $100,000
- More than 250 wells = $100,000 + 4,000 per well for each well in excess of 250 wells; not more than $250,000
Bond amounts for wells with a total bore length greater than 6,000 feet are as follows:
- 25 wells = $10,000; not more than $140,000
- 26 to 50 wells = $140,000 + $10,000 per well for each well in excess of 25 wells; not more than $290,000
- 51 to 150 wells = $290,000 + $10,000 per well for each well in excess of 50 wells; not more than $430,000
- More than 150 wells = $430,000 +$10,000 per well for each well in excess of 150 wells; not more than $600,000
The cost of the bond is a percentage of the bond amount, which you can get between 1% and 5%. This will serve as your bond premium and be determined by the Surety.
How can I obtain an Oil and Gas Wells Bond?
STEP 1: Apply for the bond
You need to submit a bond application to us. If you’re ready to apply now, you may do so HERE!
STEP 2: Underwriting
We will ask you for a couple of relevant information needed for the bond. A certified surety underwriter will carefully evaluate your credit score to gauge your bonding capacity. Do not worry; there are no intimidating financial statements required for this type of bond!
Also, you need to submit a copy of the BOND FORM, which can be obtained from the Pennsylvania Department of Environmental Protection, Office of Oil and Gas Management.
If the operator is replacing a bond already on file with a surety bond, the form entitled Surety Bond for Oil and Gas Well (5500-FM-OG0039) or Blanket Surety Bond for Oil and Gas Wells (5500-FM-OG0041) should be filed.
STEP 3: Bond execution
Once the underwriter is done with the underwriting process, we will immediately issue the bond and send it to you!
Call us at 800-333-7800 today!