Surety Bond Encyclopedia

Oil Well Bond Bond - City of Los Angeles, CA in California

Brief Summary

Count your wells before you buy. Los Angeles wants $10,000 per well, but an operator with five or more wells can file one $50,000 blanket bond and add new wells by rider. The bond stays on file until the wells are properly abandoned, so the rate you lock in matters for years.

Every active oil well in the City of Los Angeles must have an active bond or cash deposit on file. The Los Angeles Fire Department sets the amount at $10,000 for each individual well, or a $50,000 blanket bond for five or more wells, with a rider added for each new well. The bond is written to the City of Los Angeles under Article 7, Chapter 5 of the Los Angeles Municipal Code and covers the City's cost to abandon, restore or repair wells if the operator does not.

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How to Apply for a Oil Well Bond Bond:

Count the active, unplugged wells you operate in the City of Los Angeles.
Choose a $10,000 bond per well, or a $50,000 blanket bond if you have 5 or more wells.
List each well and the property it sits on for the bond form.
Complete the surety application and pay the premium.
Have principal and surety signatures notarized and attach the surety's power of attorney.
Submit the bond through the LAFD Oil Wells Unit or CAO Risk Management, and keep the annual operational fire permit current.

Detailed Information About the California Oil Well Bond Bond:

Which amount applies to you

The LAFD Oil Wells Unit lists three options:

Individual well: a $10,000 bond for each well
Multiple wells: a $50,000 blanket bond covering 5 or more wells
Additional wells: a rider for each new well attached to the existing bond

An operator with four wells is posting $40,000 in individual bonds. At five or more, the blanket bond is usually the cleaner route. Every active well needs an active bond or cash deposit on file, and that does not end until the well is properly abandoned.

What the bond guarantees

The City's Oil Well Bond form ties the obligation to Article 7 of Chapter 5 of the Los Angeles Municipal Code, which governs permits for oil wells, refineries and natural gasoline plants. The principal agrees to comply with that article, to pay the City for any loss or damage from a violation, to reimburse the City for abandoning a well and restoring the site to a natural surface condition to the Fire Chief's satisfaction if the operator fails to do it, and to reimburse the cost of altering or repairing a well to bring it into compliance.

The bond continues until it is replaced by a new accepted bond covering the same wells or until all covered wells are abandoned as the code requires.

The bond is not the permit

This trips up new owners and buyers of older leases. Separate from the bond, every active well that has not been properly plugged needs an LAFD operational fire permit renewed every year until abandonment. LAFD lists the operating fee at $1,895 as of January 2026. Abandoning a well requires a Specific Action Permit for Abandonment, which LAFD lists at $3,790 as of January 2026.

Filing

The bond must be acknowledged before a notary for both principal and surety. LAFD's Oil Wells Unit at City Hall East can forward bond paperwork and acts as liaison with the City Administrative Officer and the Office of Finance. Signature instructions come from CAO Risk Management.

Eligibility and Requirements for a California Oil Well Bond Bond:

A surety authorized to write bonds in California.
City of Los Angeles as obligee on the City's Oil Well Bond form.
$10,000 per well, or a $50,000 blanket bond for 5 or more wells, with riders for added wells.
Compliance with Article 7, Chapter 5 of the Los Angeles Municipal Code.
Bond kept in force until every covered well is properly abandoned or a replacement bond is accepted.

California Oil Well Bond Bond FAQs:

How much bond do I need?

LAFD requires $10,000 for each individual well. If you operate 5 or more wells, a $50,000 blanket bond covers them, and each additional well is added by rider.

Can I post cash instead of a surety bond?

Yes. LAFD says every active well must have an active bond or cash deposit on file. A surety bond avoids tying up that cash until the wells are abandoned.

Does the bond replace the operating permit?

No. Each active well still needs an LAFD operational fire permit renewed annually until it is properly abandoned. Abandonment also needs its own Specific Action Permit.

When does the bond end?

When all covered wells are abandoned as the Municipal Code requires, or when a new bond covering the same wells is filed and accepted. The old surety is then off the hook for later defaults.

What does the premium depend on?

The bond amount, the number and condition of the wells, and the operator's credit and financial strength. Sureties weigh plugging and abandonment exposure closely on oil well bonds.