Geothermal Resources Lease (Single) Bond - BLM in All States
Table of Contents
Brief Summary
If you hold one federal geothermal lease, an individual bond is the smallest instrument BLM will take before you build a well pad or drill. You pay a premium to a surety rather than tying up a certificate of deposit or letter of credit with the government.
A single lease geothermal bond covers operations on one federal geothermal lease. Under 43 CFR 3261.18 the minimum for drilling on a single lease is $10,000. A new bond for a single exploration operation has a $5,000 minimum under 43 CFR 3251.14. The bond goes on BLM Form 3000-4 and is filed with the BLM State Office that oversees the lease.
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How to Apply for a Geothermal Resources Lease (Single) Bond:
- Confirm whether the bond covers drilling or exploration, since the minimum differs.
- Have the lease serial number and the names of all record title owners, operating rights owners and operators.
- Complete the surety application and review the quoted premium.
- Have the bond executed on BLM Form 3000-4 or 3000-4a by a Treasury-listed surety.
- File one originally signed copy with the BLM State Office that oversees the lease.
- Do not begin ground disturbing work until BLM approves the bond.
Detailed Information About the All States Geothermal Resources Lease (Single) Bond:
Which minimum applies to you
The amount depends on the stage of work the bond covers.
- Drilling operations, including building a well pad: at least $10,000 for a single lease (43 CFR 3261.18).
- Exploration under a new geothermal bond: at least $5,000 for a single operation (43 CFR 3251.14).
- Utilization: an electrical generation facility needs a separate site license bond of at least $100,000 (43 CFR 3273.19). BLM sets the amount for a direct use facility.
If you expect to hold several leases in one state, a statewide bond may cost less in paperwork than a stack of single lease bonds. Those carry higher minimums.
What the bond guarantees
Under 43 CFR 3214.12 the bond covers exploration, drilling and utilization on the lease, reclamation of the surface and other resources, rental and royalty payments, and compliance with 43 CFR 3200.4. It must name or cover all record title owners, operating rights owners, operators and anyone working on the lease. If a well is not plugged, the land is not reclaimed or royalties go unpaid, BLM can collect up to the face amount, and you must restore the bond before any further operations.
BLM can raise the amount
The numbers above are minimums. Under 43 CFR 3214.14 BLM may require more for a history of noncompliance, a prior claim against a surety, unpaid royalties, or when estimated reclamation costs exceed the bond.
Filing
The bond goes on BLM Form 3000-4 or 3000-4a, June 1988 or later editions, written by a surety on the Treasury Department's Circular 570 list. File one originally signed copy with the BLM State Office that oversees the lease. Cash bonds are not accepted. Confirm the required amount with that State Office before the bond is issued.
Eligibility and Requirements for an All States Geothermal Resources Lease (Single) Bond:
- Corporate surety listed in Treasury Circular 570.
- At least $10,000 for drilling on a single lease, or at least $5,000 for a single exploration operation.
- Bureau of Land Management, Department of the Interior, as obligee.
- A new bond or rider when the lease is transferred or a new operator is designated, unless prior operations are fully reclaimed.
- Premium set by the surety after reviewing financials and credit.
All States Geothermal Resources Lease (Single) Bond FAQs:
At least $10,000 for drilling operations on one lease under 43 CFR 3261.18, or at least $5,000 for a single exploration operation under 43 CFR 3251.14. BLM can set a higher amount.
No. An electrical generation facility needs a site license bond of at least $100,000 under 43 CFR 3273.19.
You must post a new bond equal to the original or restore the existing one before more operations. If you do not, BLM may shut in wells and terminate affected leases.
Yes, as a personal bond backed by an irrevocable letter of credit or certificate of deposit meeting 43 CFR 3214.21 or 3214.22. A surety bond avoids tying up that cash or credit line.
