Pennsylvania oil & gas wells bond update

Pennsylvania Oil & Gas Wells Bond

Gov. Tom Corbett signed HB 1950 into law on February 14, thereby amending Title 59 of the Pennsylvania Consolidated Statutes, which relates to the regulation of Pennsylvania oil and gas wells. The new law does many things, such as the following:

  • Establishing the Natural Gas Energy Development program
  • Providing for the proper distribution of fees and transfers
  • Providing for local ordinances relating to oil and gas operations
  • Defining the regulations for making an appropriation and making a related appeal
  • Consolidating the Oil and Gas Act with modifications and additions relating to oil and gas well management

HB 1950 also amends the surety bond requirements for oil and gas well operators. The previous law had required $2,500 of surety bond coverage per well or a $25,000 blanket bond that covered all wells operated by a Pennsylvania permit holder. Now Pennsylvania oil and gas well bond amounts will strictly be based on the well depth and the number of wells operated by the permit holder.

According to the amendment, surety bond amounts for wells with a total well bore length of less than 6,000 feet are as follows:

(A) For operating up to 50 wells, $4,000 per well; but no bond may be required under this clause in excess of $35,000

(B) For operating 51 to 150 wells, $35,000 plus $4,000 per well for each well in excess of 50 wells; but no bond may be required under this clause in excess of $60,000

(C) For operating 151 to 250 wells, $60,000 plus $4,000 per well for each well in excess of 150 wells; but no bond may be required under this clause in excess of $100,000

(D) For operating more than 250 wells, $100,000 plus $4,000 per well for each well in excess of 250 wells; but no bond may be required under this clause in excess of $250,00

Similar requirements exist for wells with a total bore length greater than 6,000 feet.

(A)  For operating up to 25 wells, $10,000 per well, but no bond may be required under this clause in excess of $140,000

(B)  For operating 26 to 50 wells, $140,000 plus $10,000 per well for each well in excess of 25 wells, but no bond may be required under this clause in excess of $290,000

(C)  For operating 51 to 150 wells, $290,000 plus $10,000 per well for each well in excess of 50 wells, but no bond may be required under this clause in excess of $430,000

(D)  For operating more than 150 wells, $430,000 plus $10,000 per well for each well in excess of 150 wells, but no bond may be required under this clause in excess of $600,000

Under the new law, operators may still maintain individual bonds for each well or a blanket bond to cover all of the operator’s wells. These bond amounts could range from just $4,000 to $600,000.

If you’re an oil or gas well operator who needs a Pennsylvania oil & gas wells bond, you can contact a surety specialist online or by phone at 1 (800) 308-4358.

For more information about the bonding requirements amended by HB 1950, consult this official PDF guide to Pennsylvania Oil and Gas Well Surety Bond Requirements.

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