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Army Veteran Owned | Expert Surety Bonds Since 2004
Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
The Arkansas Oil and Gas Commission will not take an application to drill until financial assurance comes with it, and the right amount depends on the type of well and how many you hold. A surety bond lets you post that assurance without tying up cash or a certificate of deposit, and a blanket bond can cover a whole program of wells under one instrument.
Under 15 CAR 275-202, the Arkansas Oil and Gas Commission requires financial assurance with every application to drill or transfer a well. The minimum for an oil or gas production well is $3,000 per well, or a blanket of $25,000 for 1 to 25 wells, $50,000 for 26 to 100 wells, or $100,000 for 101 or more. Brine, Class II disposal, Class V and commercial disposal wells carry higher amounts. Oil well operators who have been a permit holder of record for at least two calendar years pay annual fees instead of posting the bond.
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15 CAR 275-202(g) sets these minimums:
**Oil or gas production wells**, Class II disposal wells tied to liquid hydrocarbon wells, Class II enhanced recovery wells and related water supply wells: $3,000 per well, or a blanket of $25,000 for 1 to 25 wells, $50,000 for 26 to 100 wells, or $100,000 for 101 or more wells.
**Brine production or supply wells**: $25,000 per well, or a blanket of $250,000 for 1 to 25 wells, $500,000 for 26 to 50 wells, or $1,000,000 for 51 or more wells.
**Class II disposal wells not tied to liquid hydrocarbon wells and Class V brine injection wells**: $25,000 per well.
**Class II commercial disposal wells**: $50,000 per well, plus surface facility assurance of $50,000 for 1,000 bbls of on site tank storage, $100,000 for over 1,000 up to 2,000 bbls, or $250,000 for over 2,000 bbls, and another $150,000 if a sump or dump vat is used to off load fluids.
The director can require more based on how long you have operated in Arkansas, the environmental and engineering factors at the site, and your compliance history.
All gas well, brine, Class V, commercial disposal and other well permit holders must post assurance. Operators of liquid hydrocarbon (oil) wells and their associated Class II wells only post it if they have not been a permit holder of record with the Commission for at least two calendar years before the application. Established oil operators pay annual fees instead, assessed every January 1 and due by March 1.
The assurance must stay in force for at least one year after the drilling permit issues if the well is never drilled. If it is drilled, it stays in force until the well is plugged and the site restored, or until the well is transferred to a new permit holder. Release also requires that all notices of violation and compliance orders against you are satisfied.
If you fail to plug, replug, repair or restore a site within 30 days of a Commission order, the director can forfeit the assurance. You have 15 days after the certified mail notice to request a hearing. The surety may be allowed to do the work itself.
For production wells it is $3,000 per well or a blanket of $25,000 for up to 25 wells. Once you hold more than eight production wells, the $25,000 blanket costs less in bond amount than separate $3,000 bonds.
Not for liquid hydrocarbon wells and their associated Class II wells if you have been a permit holder of record for at least two calendar years. You pay the annual well fees instead. Gas, brine and commercial disposal wells still require assurance.
Yes, if assurance applies to you. The rule requires financial assurance with any application to transfer ownership or operations of an existing well.
The surety prices it on the bond amount, the operator's financial strength and its plugging and compliance history. Blanket and high value disposal well bonds get closer underwriting.
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