Alabama Administrative Code › Title 400 - STATE OIL AND GAS BOARD OF ALABAMA › GOVERNING ONSHORE LANDS OPERATIONS › Chapter 400-1-2 - PERMITTING OF WELLS › Section 400-1-2-.03 - Bond

Current through Register Vol. 42, No. 9, June 28, 2024
(1) Before any person(s) shall commence
				drilling, completing, converting, operating, or producing any oil, gas, or
				Class II injection well, including production facilities, processing
				facilities, injection facilities, underground storage facilities in reservoirs,
				plants, pipelines, and other equipment associated with such well, said
				person(s) shall file with the Board a single well bond on Form OGB-3. Such bond
				shall be payable to the State of Alabama, executed by said person(s) as
				principal(s), and by a surety approved by the Supervisor or Board; conditioned
				that such person(s) shall, in connection with the drilling, completing,
				converting, operating, or producing of such well, including production
				facilities, processing facilities, injection facilities, underground storage
				facilities in reservoirs, plants, pipelines, and other equipment associated
				with such well, prevent the escape of oil or gas out of one stratum to another,
				prevent the intrusion of water into any oil or gas stratum from a separate
				stratum, prevent the pollution of the sea, prevent pollution of all surface and
				ground water; conditioned also that such person(s) shall file all reports
				required by the Board, including drilling records and all logs of such well, if
				taken, and shall file drill cuttings and cores or core chips, if cores are
				taken, within six (6) months from the time of completion of such well, and in
				the event such well does not produce oil or gas in commercially profitable
				quantities or ceases to produce oil or gas in commercially profitable
				quantities or if the operations of such well shall cease for a period of six
				(6) months or if such well should become dangerous to the public, such
				person(s) shall plug and abandon such well in compliance with Rule 400-1-4-.14,
				dispose of all pit fluids and close the pit in compliance with Rule
				400-1-4-.11, restore the location in compliance with Rule 400-1-4-.16, and
				maintain the site in compliance with Rule 400-1-6-.10; and conditioned further
				that such person(s) shall drill, operate, produce, and plug and abandon, such
				well, and that such person(s) shall dispose of pit fluids, close the pit,
				restore the location, and maintain the site in compliance with all lawful
				rules, regulations, and orders of the Board now existing or hereafter
				promulgated, and with the laws of the State of Alabama now existing or
				hereafter enacted. The amount of such bond shall be in accordance with the
				following relationship to measured depth:
Measured Depth
								(ft)
Amount of bond
								required
0 - 5,000
$5,000
5,001 - 10,000
$10,000
10,001 - 15,000
$15,000
15,001 - 20,000
$30,000
Greater than 20,000
$50,000
(2)
				The Board may, however, accept a blanket bond on Form OGB-4 in the amount of
				one hundred thousand dollars ($100,000.00). Such blanket bond shall be
				conditioned upon the same requirements as set forth for single well bonds,
				except that a blanket bond may apply to more than one well. Furthermore, the
				Board may require a separate Bond of one hundred thousand dollars ($100,000.00)
				for an operator of a processing plant and associated facilities and pipelines
				where such plant operator does not operate any oil and gas wells.
(3) Any such bond filed with the Board,
				including any amendment or addendum thereto, must set forth the correct legal
				name and address of the principal and the surety thereto and must be
				countersigned by an Alabama agent of such surety, setting forth the correct
				legal name of such agent and such agent's company affiliation and correct
				business address. If more than one person is to be designated as operator, then
				each such person shall file a separate bond or a joint bond, whichever is
				appropriate.
(4) Provided, further,
				the Board, in its reasonable discretion for good cause, after notice and
				hearing, may require a different amount of bond because of environmentally
				sensitive conditions at the site or for other justifiable reasons for good
				cause and may deem and determine any existing bond to be inadequate and may
				require the filing of a new bond, that shall be approved by the Board or
				Supervisor, upon the Board's own motion or upon petition by any party allowed
				to file a petition by these rules and regulations, and the amount of such bond
				required may be more or less than hereinabove set forth.
Author:
State Oil and Gas Board
Statutory Authority:
Code of Ala.
					 1975
, §§
											9-17-1,
et
					 seq
.