Virginia Raises Bond Amount for Oil and Gas Permit Blanket Surety Bond

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Virginia Raises Bond Amount for Oil and Gas Permit Blanket Surety BondOn March 12, 2019, a new bill that pertains to oil and gas wells in the Commonwealth of Virginia was passed.

The bill (SB 1271) affects a number of rules relating to oil and gas wells including an increase to the blanket surety bond amount.

 

Why is an Oil and Gas Permit Blanket Surety Bond required?

A surety bond is required of every permit applicant to ensure the compliance of the said person to the Virginia Oil and Gas Act. The permit applicant is required to conform to the relevant laws that pertains to the following:

  • Permitted activities
  • Submission of reports and other information required by the Board or Director

Blanket bonds are for individuals that have multiple permits. The Commonwealth allows a permit applicant to obtain a blanket bond instead of individual bonds for multiple permits.

A Virginia Oil and Gas Permit Bond must be issued by a surety that is permitted to conduct business in the Commonwealth. The bond must be submitted to the Virginia Gas and Oil Board and should be payable to the Commonwealth.

The amount of the bond should be enough to cover the cost of restoring the site and plugging a well in case the permittee fails to do so.

 

New Oil and Gas Permit Blanket Surety Bond Amounts

Section § 45.1-361.3 of the Code of Virginia requires that the bond amount should not be less than $10,000 per well. An additional $2,000 per acre of disturbed land must be added to the amount.

Below are the new blanket bond amounts:

Number of WellsBond Amount
1 to 10 wells$25,000
11 to 50 wells$50,000
51 to 200 wells$100,000
For more than 200 wells$200,000

The amount for blanket bonds will be calculated as follows:

One well is equivalent to one-tenth of an acre to 5 acres of disturbed land for a separately permitted gathering pipeline.

For sites that have been stabilized, the Virginia Gas and Oil Board Director will promulgate the regulations for the release of acreage used to calculate blanket bond amounts for separately permitted gathering pipelines.

The Virginia Gas and Oil Board Director may require additional surety bond for any well proposed to be drilled in Tidewater Virginia.

 

How to Get a Virginia Oil and Gas Permit Blanket Surety Bond

The permit applicant must apply from a reputable surety. An underwriter will require the applicant to submit several documents. These documents will be assessed to during the prequalification process.

After the initial assessment, the underwriter will ask for further information needed for the next step of the bonding process.

If you need a Virginia Oil and Gas Permit Blanket Surety Bond, APPLY FOR ONE HERE. Our surety bond specialists will get in touch with you immediately.

 

 

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