North Dakota Administrative Code › Title 43 - Industrial Commission › Article 43-02 - Mineral Exploration and Development › Chapter 43-02-03 - Oil and Gas Conservation › Section 43-02-03-15 - Bond and transfer of wells

Current through Supplement No. 393, July, 2024
1.
Bond
				requirements.
Prior to commencing construction of a site or appurtenance
				or road access thereto, any person who proposes to drill a well for oil, gas,
				injection, or source well for use in enhanced recovery operations, shall submit
				to the director and obtain the approval of the director, a surety bond or cash
				bond. An alternative form of security may be approved by the commission after
				notice and hearing, as provided by law. The operator of such well shall be the
				principal on the bond covering the well. Each surety bond shall be executed by
				a responsible surety company authorized to transact business in North
				Dakota.
2.
Bond amounts and
				limitations.
The bond shall be in the amount of fifty thousand dollars
				when applicable to one well only. Wells drilled to a total depth of less than
				two thousand feet [609.6 meters] may be bonded in a lesser amount if approved
				by the director. When the principal on the bond is drilling or operating a
				number of wells within the state or proposes to do so, the principal may submit
				a bond conditioned as provided by law. Wells utilized for commercial injection
				operations must be bonded in the amount of one hundred thousand dollars. A
				blanket bond covering more than one well shall be in the amount of one hundred
				thousand dollars, provided the bond shall be limited to no more than six of the
				following in aggregate:
a. A well that is a
				dry hole and is not properly plugged;
b. A well that is plugged and the site is not
				properly reclaimed;
c. A well that
				is abandoned pursuant to subsection 1 of North Dakota Century Code section
				38-08-04 or section 43-02-03-55 and is not properly plugged and the site is not
				properly reclaimed; and
d. A well
				that is temporarily abandoned under section 43-02-03-55 for more than seven
				years.
If this aggregate of wells is reached, all well permits, for
				  which drilling has not commenced, held by the principal of such bond are
				  suspended. No rights may be exercised under the permits until the aggregate of
				  wells drops below the required limit, or the operator files the appropriate
				  bond to cover the permits, at which time the rights given by the drilling
				  permits are reinstated. A well with an approved temporary abandoned status for
				  no more than seven years shall have the same status as an oil, gas, or
				  injection well. The commission may, after notice and hearing, require higher
				  bond amounts than those referred to in this section. Such additional amounts
				  for bonds must be related to the economic value of the well or wells and the
				  expected cost of plugging and well site reclamation, as determined by the
				  director. The director may refuse to accept a bond or to add wells to a blanket
				  bond if the operator or surety company has failed in the past to comply with
				  statutes, rules, or orders relating to the operation of wells; if a civil or
				  administrative action brought by the commission is pending against the operator
				  or surety company; or for other good cause.