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Oil and Gas Surety Bond

If you're a business owner in the oil and gas industry, you've probably heard about the importance of oil and gas surety bonds. In this post, we'll take a look at some of the basics of these bonds so that your business can be prepared to get the bond coverage it needs.

What is an Oil and Gas Bond?

Oil and gas bonds are license/permit surety bonds. Oil and Gas Bonds are required by governing entities to ensure different aspects of operating and closing oil or gas wells are managed and/or completed in accordance to governing laws and regulations.

Some of the Oil and Gas well activities that have been scrutinized for compliance with applicable laws and regulations are as follows:

  • Well drilling, re-drilling, or deepening.
  • Well operation.
  • Well maintenance and repair.
  • Managing prevention of waste and pollution from well operations.
  • Well plugging and surface reclamation.

Oil and Gas Bond Amounts

Bond amounts vary depending on the governing entity requiring the Bond. A bond may be required for each well although some states allow for a single bond to cover multiple locations.

If you're operating in California, there are new state requirements in place as of January 1st, 2018. Businesses have the option of paying the bond amount per well, or acquiring a blanket bond that covers their entire operation. The new bond requirements are:

Individual onshore well bond requirements:

  • Wells less than 10,000 feet deep: $25,000
  • Wells more than 10,000 feet deep: $40,000

Blanket onshore well bond requirements:

  • 50 or fewer wells: $200,000
  • 51 to 500 wells: $400,000
  • 501 to 10,000 wells: $2,000,000
  • Over 10,000 wells: $3,000,000

Oil and Gas Bond Prices

The premium amount of an oil and gas bond is calculated as a percentage of the bond amount. There are many factors that go into calculating premium price, including credit and financial history of the business requesting the bond. Quotes for these bonds vary greatly from one application to the next so the only sure way to get an idea of what the cost for an oil and gas bond will be is to apply for a quote.

The Viking Bond Service, Inc. team is committed to providing businesses with the surety coverage that they need at the lowest price possible.

Your Source for Oil and Gas Bonds

Oil and gas bonds are considered risky and can be difficult to place. Viking Bond Service has markets that work with these types of bonds nationwide. We can typically obtain a quote for these bonds the same day or within 24 hours of receiving the surety bond application and any required documentation.

At Viking Bond Service, we have decades of experience issuing surety bonds of all types. Our surety bond experts combine a strong commitment to client service with the intimate knowledge of the specific bond needs of your business. Every step of the way, Viking Bond Service, Inc., can help your oil and gas company with superior surety bond solutions.

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