BLM is responsible for managing, as of July 2008, approximately 700 million acres of subsurface mineral resources: 655.5 million of these acres are not affected by oil and gas production and 44.5 million acres are leased for oil and gas operations. Of these 44.5 million acres, 11.7 million acres are in oil and gas producing status and 472,000 acres have surface disturbance related to oil and gas production. To manage BLM programs and land, the agency maintains a network of state offices, which generally conforms to the boundary of one or more states. The state offices are Alaska, Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Wyoming, and Eastern States. BLM has little land in the eastern half of the United States, consequently, the Eastern States state office, in Springfield, Virginia, is responsible for managing land in 31 states. Figure 1 shows the boundaries of the 12 BLM state offices. When operators drill oil and gas wells, they typically remove topsoil from the well site and lay a well pad, where the drilling rig is located. Other equipment on site can include generators and fuel tanks. In addition, reserve pits are often constructed to store or dispose of water, mud, and other materials that are generated during drilling operations, and roads and access ways are often built to move equipment to and from the wells. Generally, these activities can degrade the environment in three ways: Air quality. Newly graded roads can produce dust, impairing air quality and visibility in the immediate area and downwind. Nitrogen oxides from diesel engines and compressors used at drilling sites can also degrade air quality. Water quality. Water draining off newly graded surfaces and roads or oil or water accidentally discharged during oil and gas production can increase the amount of sediment, salt, and pollutants discharged into rivers and streams, thereby degrading them. In addition, shallow aquifers can be polluted if required protective measures are not in place, and the production of methane gas from coal beds can deplete shallow aquifers that serve as domestic water sources. Habitat. A high density of drilling and production equipment can, in extreme situations, change the appearance of the landscape from a natural setting to an industrial zone. In addition, the noises, smells, and lights from trucks, drilling and construction equipment, and production facilities can disturb wildlife and people living nearby. Under FLPMA, BLM must manage federal lands for multiple uses, including recreation and mineral extraction, as well as for sustained yield. To that end, FLPMA requires BLM to develop resource management plans, known as land use plans. In developing its land use plans, BLM determines, among other things, which parcels of land will be available for oil and gas development. According to BLM officials, parties interested in leasing federal minerals submit an Expression of Interest or pre-sale offer on those lands they are interested in leasing. These are then reviewed and if the lands are eligible to be leased, are placed up for competitive oil and gas lease sale. Leases can vary in size reaching 2,560 acres for lands in the lower 48 states and 5,760 acres for lands in Alaska. Operators that have obtained a lease must submit an application for a permit to drill to BLM before beginning to prepare land or drilling any new oil or gas wells. The complete permit application package is a lengthy and detailed set of forms and documents, which, among other things, must include proof of bond coverage and a surface use plan of operations; this surface use plan must include a reclamation plan that details the steps operators propose to take to reclaim the site. However, operators generally do not have to submit cost estimates for completing the reclamation. The Mineral Leasing Act of 1920, as amended, requires that federal regulations ensure that an adequate bond or surety is established before operators begin to prepare land for drilling. The bond is intended to ensure complete and timely reclamation. Accordingly, federal regulations require the operator to submit a surety or personal bond to BLM, which is intended to ensure compliance with all of the lease’s terms and conditions, including reclamation requirements. Surety bonds are a third-party guarantee that an operator purchases from a private insurance company approved by the Department of the Treasury, and personal bonds must be accompanied by one of the following five financial instruments: certificates of deposit issued by a financial institution whose deposits are cashier’s checks; negotiable Treasury securities, including U.S. Treasury notes or bonds, with conveyance to the Secretary of the Interior to sell the security in case of default in the performance of the lease’s terms and conditions; and irrevocable letters of credit that are issued for a specific term by a financial institution whose deposits are federally insured, and meet certain conditions. In reviewing the application for a permit to drill, BLM (1) evaluates the operator’s proposal to ensure that the proposed drilling plan conforms to the land use plan and applicable laws and regulations and (2) inspects the proposed drilling site to determine if additional site-specific conditions must be addressed before the operator can begin drilling. After BLM approves a drilling permit, the operator can drill the well and commence production. After drilling the well, the operator may perform interim reclamation—the practice of reclaiming surfaces that were disturbed to prepare a well for drilling but that are no longer needed. For example, operators may need a 10-acre drill pad to safely drill a series of wells. However, once the wells are drilled, operators may only need 4 acres to safely service the wells over their lifetime. In this case, the operator could reseed and regrade the 6 acres of the initial pad that are no longer needed. While BLM does not generally require interim reclamation in all permits it issues, it may decide to add interim reclamation as a requirement in drilling permits for specific oil and gas developments. Final reclamation occurs when an operator determines, and BLM agrees, that a well has no economic value. The terms of final reclamation are included in the lease and the drilling permit. The operator must follow the agreed-upon final reclamation plan, including plugging the wells, removing all visual evidence of the well and drill pad, recontouring the affected land, and revegetating the site with native plant species. In general, the goal is to reclaim the well site so that it matches the surrounding natural environment to the extent possible. BLM then inspects the site to monitor the success of the reclamation, a process that typically takes several years. Once BLM determines that reclamation efforts have been successful, it approves a Final Abandonment Notice. However, in some circumstances, the operator may delay performing reclamation and instead allow the well to remain idle for various reasons. For example, expected higher oil and gas prices may once again make the well economically viable to operate, or the operator may decide to use the well for enhanced recovery operations, for example using the well to inject water into the oil reservoir and push any remaining oil to operating wells. Under BLM policy, the agency must periodically review the status of these idle wells to ensure that the operator has legitimate reasons for allowing the wells to remain idle. According to BLM officials, the primary purpose of idle-well reviews is to ensure that these wells do not become orphaned—that is, they lack a bond sufficient to cover reclamation costs and there are no responsible or liable parties to perform reclamation. States have adopted laws and regulations governing oil and gas development on state and private lands, including bond and reclamation requirements. In addition, other Interior programs and offices that are responsible for managing the extraction of other federally owned resources have bond and reclamation requirements. Specifically, those programs and offices are: BLM Geothermal Resource Leasing. BLM issues leases for the development of geothermal resources on federal lands; these resources are used to develop electricity by capturing the geothermal heat generated in the earth’s core. BLM Hardrock Minerals Claims. BLM oversees the process for staking claims and extracting hardrock minerals on the lands it manages. These minerals are also referred to as locatable minerals and include gold, silver, and copper, among others. BLM Mineral Materials Sales. BLM oversees the sale of these minerals, such as sand and gravel, from federal lands. These minerals are also sometimes referred to as salable minerals. BLM Solid Minerals Leasing. BLM issues leases for the extraction of these minerals on federal lands; solid minerals are minerals other than coal and oil shale, and include silicates, potash, and phosphate. Solid minerals are also sometimes referred to as leasable minerals. Minerals Management Service (MMS) Offshore Oil and Gas Leasing. MMS issues leases to develop offshore oil and gas resources in the Gulf of Mexico, off the Atlantic coast, and off the Pacific coast states of California, Oregon, Washington, and Hawaii. Office of Surface Mining Reclamation and Enforcement (OSM) Coal Leasing. OSM regulates the surface mining of coal. States can choose to develop their own programs to regulate surface mining if that program is in accordance with federal law and approved by OSM. OSM is charged with enforcing states’ adherence to their approved programs or implementing a federal program if the state fails to submit, implement, or enforce its program. As of December 2008, oil and gas operators had provided 3,879 surety and personal bonds, valued at approximately $162 million, to ensure compliance with all lease terms and conditions for 88,357 wells, according to our analysis of BLM data. BLM officials told us that the bond amounts are generally not based on the full reclamation costs for a site that would be incurred by the government if an operator were to fail to complete the required reclamation. Rather, the bond amounts are based on regulatory minimums intended to ensure that the operator complies with all the terms of the lease, including paying royalties and conducting reclamation. As of December 1, 2008, the 88,357 oil and gas wells were covered by 16,809 leases, with 70 percent of all wells located in New Mexico and Wyoming. Cumulatively, Wyoming and New Mexico have more than four times as many wells as the total number of wells in Utah and California, which are the states with the third and fourth most wells at 7,388 and 7,215, respectively. Table 1 shows the number of oil and gas wells and leases located in the nine BLM state offices. According to our analysis of BLM’s data, as of December 1, 2008, oil and gas operators had 3,879 bonds valued at approximately $162 million to ensure compliance with lease terms and conditions for 88,357 wells on federal land. Fifty-two percent of these bonds—2,086—were surety bonds valued at approximately $84 million, and 48 percent—1,793—were personal bonds valued at almost $78 million. The number of wells and the value of bonds held by BLM have increased over the past 20 years. The value of bonds increased from approximately $69 million as of September 30, 1988, to approximately $164 million as of September 30, 2008, as the number of wells increased from almost 50,000 to more than 85,000. As figure 2 shows, this increase in the number of wells occurred primarily in the last decade. The Mineral Leasing Act of 1920, as amended, requires that federal regulations ensure that an adequate bond or surety is established that ensures complete and timely reclamation. Under BLM regulations, bonds are conditioned upon compliance with all of the terms and conditions of the lease, including but not limited to, paying royalties, plugging wells, reclaiming disturbed land, and cleaning up abandoned operations. To ensure operators meet legal requirements, including reclamation, BLM regulations require them to have one of the following types of coverage: individual lease bonds, which are to cover all wells an operator drills under one lease; statewide bonds, which are to cover all of an operator’s leases in one nationwide bonds, which are to cover all of an operator’s leases in the other bonds, which include both unit operator bonds that cover all operations conducted on leases within a specific unit agreement, and bonds for leases in the National Petroleum Reserve in Alaska (NPR-A). BLM regulations establish a minimum bond amount in order to ensure compliance with all legal requirements and also authorize or require BLM to increase the bond amount in certain circumstances. These minimum bond amounts were set in the 1950s and 1960s and have not been updated. Specifically, the bond minimum of $10,000 for individual bonds was last set in 1960, and the bond minimums for statewide bonds—$25,000—and for nationwide bonds—$150,000—were last set in 1951. If adjusted to 2009 dollars, these amounts would be $59,360 for an individual bond, $176,727 for a statewide bond, and $1,060,364 for a nationwide bond. Figure 3 shows the current amounts set in 1951 and 1960 and what these amounts would be if adjusted to 2009 dollars. Of the three primary bond categories—individual, statewide, and nationwide—statewide bonds accounted for most of the bonds covering oil and gas wells. Figure 4 shows the value and percentage distribution of the bonds by type. Appendix II provides more detailed information on the number and value of BLM-held bonds by state. While BLM regulations set minimum amounts for bonds, they also require bonds in an increased amount in certain circumstances and authorize BLM to require an increased bond amount when the operator poses a risk due to certain factors. First, when an operator who has failed to plug a well or reclaim lands in a timely manner that resulted in BLM making a demand on a bond in the prior 5 years applies for a new permit to drill, BLM must require a bond in an amount equal to the BLM cost estimate for plugging the well and reclaiming the disturbed area if the cost estimate is higher than the regulatory minimum. Second, BLM officials may require an increase in the amount of any bond when the operator poses a risk due to factors that include, but are not limited to, a history of previous violations, a notice from MMS that there are uncollected royalties due, or the fact that the total cost of plugging existing wells and reclaiming lands exceeds the present bond amount based on BLM estimates. According to BLM data, the agency spent about $3.8 million to reclaim 295 orphaned wells in 10 states from fiscal years 1988 through 2009. The 10 states where orphaned wells were reclaimed include California, Colorado, Montana, New Mexico, North Dakota, Oklahoma, Ohio, Utah, West Virginia, and Wyoming. Some of these states, such as Ohio and West Virginia, do not currently produce high volumes of oil and gas compared with other states in the West, although they did in the late 1800s and early 1900s. Although reclamation costs averaged $12,788 per well, the amount spent to reclaim wells varied by reclamation project, state, and fiscal year. For example: Cost per project. The amount spent per reclamation project varied from a high of $582,829 for a single well in Wyoming in fiscal year 2008, to a low of $300 for three wells in Wyoming in fiscal year 1994. These variations are due to differences in the amount of surface and subsurface disturbance and the amount of effort required to reclaim these wells. Number of wells and spending by state. The number of wells reclaimed and the amount spent in each state also varied considerably. California had the most orphaned wells reclaimed—140 of the 295 wells reclaimed, or about 47 percent—while Colorado and West Virginia had the fewest, each with 1 reclaimed well. However, over one-third of the amount spent to reclaim orphaned wells—about $1.3 million—went toward reclaiming 44 wells in Wyoming. Amount spent per year. In the fiscal years that BLM spent funds to reclaim orphaned wells, the amount spent in each fiscal year varied from a high of $632,829 to reclaim two wells in 2008, to a low of $24,962 to reclaim a single well in Ohio in fiscal year 2001. BLM had no expenditures to reclaim orphaned wells in fiscal years 1989 through 1991, 1996 through 1998, or in 2005. BLM officials explained that orphaned wells were not reclaimed in those years because the decision to do so is left to the discretion of BLM state office officials. Further, there is no dedicated budget line item to fund orphaned well reclamation; instead, it is dependent on whatever funds are available from BLM state offices and the BLM Washington office. Table 2 provides a summary of the number of wells reclaimed, the expenditures per year, and the states where reclamation occurred by year; table 3 shows the number of wells reclaimed and expenditures by state. BLM has identified an additional 144 orphaned wells on BLM and other federal land that need to be reclaimed in seven states. Although BLM reclamation estimates were not available for all of these wells, officials in BLM field offices have completed reclamation cost estimates for 102 of the 144 wells, for a total estimated cost of $1,683,490. More than half of these wells for which BLM has estimated costs are in Oklahoma—the state with the highest concentration of orphaned wells. The estimated reclamation costs in each state differ substantially—from an average cost per well in Wyoming of $93,641 to a low of $9,100 in Arizona. These differences are due to such factors as well age, well depth, the amount of surface disturbance, and costs for materials and labor. Table 4 shows the orphaned wells and the estimated reclamation costs by state; table 5 shows the wells by surface management agency. In addition, BLM is responsible for reclaiming 67 wells in Alaska that are commonly referred to as legacy wells. Unlike orphaned wells, which were drilled by private-sector operators, legacy wells were drilled by the U.S. Navy and the U.S. Geological Survey from the early 1900s to 1981 on what was then the Naval Petroleum Reserve No. 4—a 23-million-acre roadless area 200 miles north of the Arctic Circle. The wells were drilled to evaluate the mineral potential of the area and to test arctic oil and gas exploration and engineering practices. In 1976, the reserve was renamed the National Petroleum Reserve-Alaska (NPR-A) and its administration was transferred to BLM—including responsibility for reclaiming those wells drilled prior to the transfer. Because of the remote location and difficult weather conditions in the NPR-A, mobilizing equipment and personnel to perform reclamation can be unusually expensive. For example, BLM estimates that reclaiming one well—known as Drew Point #1—will cost $23.6 million, owing in part to the well’s close proximity—less than 500 feet—to the Arctic Ocean, which is eroding the shore nearby. Although estimates are not available for reclaiming all 67 of these legacy wells, BLM estimated in 2004 that reclaiming 37 high-priority legacy wells would exceed $40 million. Like BLM, states have bonding requirements for oil and gas operations. However, in most states, bond amounts reflect some of the well’s characteristics and are generally higher than BLM’s minimum amounts. The states with regulatory minimum bond amounts not based on well characteristics generally have minimum amounts higher than BLM’s minimum amounts. In addition, federal regulations for other resources generally require the bonds to reflect the cost of reclamation or have minimum bond amounts that have been more recently established. The 12 western states have bonding requirements for oil and gas operations that differ in their approach from BLM’s onshore oil and gas bonding requirements. The states use bonds that cover either all wells in the state (similar to BLM’s statewide bond but referred to as statewide blanket bonds), multiple wells in the states (referred to as blanket bonds), or an individual well. Regarding the amount of bond required, the 12 western states generally either use a minimum bond amount established by regulation regardless of the well’s characteristics or determine bond amounts based either on the depth of the well(s) or on the total number of wells covered by the bond. The latter approach is often more complex than the regulatory minimum requirements and triggers increases in bond amounts when certain additional factors come into play. For example: For individual wells, Wyoming determines bond amounts based on well depth. If the well is less than 2,000 feet deep, the state requires a bond of at least $10,000, and if the well is 2,000 feet or deeper, the state requires a bond of at least $20,000. For statewide bonds, the minimum bond amount is $75,000. However, Wyoming may require an additional bond, currently in the amount of $10 per foot of well depth, when a well is not producing, injecting, or disposing after an operator’s total footage of idle wells reaches a certain threshold. Finally, the amount of this additional bond will increase every 3 years in accordance with the percentage change in Wyoming consumer price index. For statewide bonds, California uses an approach that considers the number of wells and imposes an additional requirement on operators with idle wells. If an operator has 50 or fewer wells, then the bond amount is set at $100,000; if an operator has more than 50 wells exclusive of properly abandoned wells, the bond amount is set at $250,000. In addition to these bond amounts, operators must either (1) pay an annual fee for each idle well, (2) establish an escrow account of $5,000 for each idle well, (3) provide a $5,000 bond per idle well, or (4) have filed a management and elimination plan for all long-term idle wells. In lieu of complying with this requirement for idle wells, operators can post a $1 million statewide bond. In contrast, BLM’s method for deciding when and how much to increase the minimum bond amount is not automatic, unless the operator has previously failed to plug a well or reclaim lands; rather, it is based on the judgment of field and state office officials. Table 6 shows the 12 western states’ bonding requirements. The 12 western states generally require bond amounts that are at least equal to or higher than the minimum amount BLM requires for its individual lease and statewide bonds, or determine the bond amount based on well depth or number of wells covered by the bond. For example: The 4 states that require minimum bond amounts for individual wells regardless of well depth—Alaska, Idaho, Nevada, and Washington—set minimum bond amounts at $100,000, $10,000, $10,000, and $50,000 per well, respectively. Because these bond amounts are required for each well, in most circumstances they are generally higher than BLM’s minimum amount of $10,000 for individual lease bonds since most BLM leases have more than one well. The 7 states whose regulations establish a bond amount or minimum bond amount for statewide or blanket bonds regardless of a well’s characteristics—Alaska, Idaho, Montana, Nevada, New Mexico, Washington, and Wyoming—have amounts that range from a high of $250,000 in Washington to low of $25,000 in Idaho. All states except Alaska, Idaho, Nevada, and Washington determine the amount of individual well bonds based, at least in part, on well depth. Three of the 9 states whose regulations provide for statewide bonds— California, Colorado, Utah—also determine the amount based on well depth or the number of wells covered by the bond. Because of the nature of these approaches, it is difficult to compare them with BLM’s bonding requirements to determine which would result in the higher bond amount. However, these approaches are generally more sophisticated than minimum requirements in that they associate the bond amount with the amount of drilling, which may reduce the potential liability to the states in cases where the operator fails to perform the necessary reclamation. See appendix III for detailed information on the bonding requirements in each of the 12 western states. Regulations governing the extraction of other resources owned by the federal government generally require (1) bond amounts that consider the cost of reclamation, which reduces the government’s potential liability for reclamation costs; or (2) use minimum amounts that were established more recently than the amounts for BLM oil and gas bonds. First, bonding requirements for the extraction of coal and hardrock minerals—such as gold, silver, and copper—require operators to post bonds that cover the full estimated cost of reclamation. These requirements reduce the potential reclamation liability to the federal government should the operations fail to perform the necessary reclamation. Second, for the remaining types of federally owned resources, minimum bond amounts are established by regulation. These regulations are similar to BLM’s regulations; however, these regulatory minimum amounts generally have all been established or updated since BLM established its current regulatory minimums for oil and gas leases in 1951 for statewide and nationwide bonds, and in 1960 for individual lease bonds. Table 7 provides a summary of the type and amount of bonds required for the extraction or use of federally owned resources. Additional detail on the structure, amount, and types of bonds permitted is contained in appendix IV. GAO provided Interior with a draft of this report for its review and comment. Interior provided technical comments, which we incorporated as appropriate. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to interested congressional committees; the Secretary of the Interior; and the Director of the Bureau of Land Management. The report also is available at no charge on the GAO Web site at http://www.gao.gov. If you or your staffs have any questions about this report, please contact me at (202) 512-3841 or mittala@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix V. This appendix details the methods we used to examine three aspects of the Department of the Interior’s (Interior) Bureau of Land Management (BLM) bonding requirements for BLM oil and gas leases and reclamation of oil and gas wells. Specifically, we were asked to (1) determine the types, value, and coverage of bonds held by BLM for oil and gas operations; (2) determine the amount that BLM has paid to reclaim orphaned wells over the past 20 years, and the number of orphaned wells BLM has identified but has not yet reclaimed; and (3) compare BLM’s bonding requirements for oil and gas operations with the bonding requirements the 12 western states use for oil and gas operations on state and private lands and other Interior agencies’ bonding requirements for other resources. Overall, we reviewed federal regulations and BLM guidance on bonding for oil and gas leases, and discussed this guidance and a broad range of issues related to how BLM oversees bonding for oil and gas leases during interviews with bonding officials at BLM state offices and field offices in Colorado and Wyoming—two states that have a large number of oil and gas wells and administer bonds that account for a significant amount of the value of BLM-held bonds. For objective one—to determine the number, value, and coverage of bonds, as of December 2008—we analyzed data from BLM’s bond and surety system, and Automated Fluid Minerals Support System (AFMSS), and met with agency officials who administer the systems. From the bond and surety system, we received 13 tables from BLM containing 747,926 records on bonds from June 19, 1925, to December 17, 2008. We also received 9 tables containing 106,705 records on wells from January 7, 1930, to August 20, 2009 from BLM’s AFMSS. Because the bond and surety system contains records on bonds that have been terminated and do not have any well liability attached, we first determined which records contained active bonds. Because bond data were limited to records before December 17, 2008, we selected the first day of the final month for which we had data, December 1, 2008. We corroborated the number of active bonds using a range of different methodologies that uses other data in the bond and surety system and confirmed that the list of active bonds was sufficiently complete for the purposes of our analysis. To determine the number of bonds, we selected all active bonds as of December 1, 2008, in the bond and surety system and grouped them by bond type into surety or personal bonds. BLM’s data further identified personal bonds as letter of credit, time deposit, Treasury security, and guaranteed remittance. We analyzed 43 C.F.R. § 3104.1, which addresses bond types, and spoke to BLM officials, before deciding to group the various types of personal bonds into a single personal bond category. To determine the value of bonds, we selected all active bonds as of December 1, 2008, in the bond and surety system and grouped them by unique bond file number. To calculate the total value of all active bonds, we summed the bond amount for all unique bonds. We also grouped bonds by bond type and bond coverage type to calculate the value for each group. Finally, we grouped all bonds by BLM state office using the administrative state field in the bond and surety system and summed the amount of all bonds for each BLM state office, as well as categorizing bonds by bond type and bond coverage type. For bond coverage, we selected active bonds as of December 1, 2008, from the bond and surety system and grouped them by the following categories: individual, statewide, nationwide, and other. The other category included collective (unit), blanket bonds, and bonds for the National Petroleum Reserve in Alaska. We analyzed 43 C.F.R. §§ 3104.2-3104.4 and spoke with BLM officials to determine the appropriate bond coverage type categories, creating the other category for the 6 percent of bonds not typically used for current wells. To determine the number of wells, we received and analyzed data BLM generated from the AFMSS database that included records current as of August 20, 2009. The set of data received from BLM excluded all wells that had been reclaimed prior to this date and whose bonds had been released, helping to ensure that our data only included wells that required a bond. To have the well data match the bonding data, we selected all well records in AFMSS that were drilled before December 1, 2008. We identified wells using the well’s unique American Petroleum Institute number, which is assigned when the well is drilled. In addition to information on producing wells, the data also included information on wells that were shut in (i.e., could return to production) and temporarily abandoned (i.e., could be used for a purpose other than producing oil or gas). We also grouped these wells by their BLM state office using a location field in AFMSS. To determine the number of leases, we grouped the number of wells listed before December 1, 2008, by unique lease number, and analyzed these leases by state using the location field of the lease within AFMSS. Because the AFMSS system can generate current data only, our analysis excludes those wells that were reclaimed between December 1, 2008, and August 20, 2009. Although these wells were not included in our totals, we concluded the data were sufficiently reliable for the purpose of our analysis, as data published in BLM’s Public Land Statistics show that only 231 wells were plugged and abandoned in all of fiscal year 2008. We also compared our total number of wells with the total number of wells in the fiscal year 2008 BLM Public Land Statistics. We determined that the difference between our total for December 1, 2008, and BLM’s total for September 30, 2008—a difference of about 3 percent—did not significantly affect our analysis. For figure 2 in the report—the number of wells and value of bonds, from September 30, 1988, to September 30, 2008 (the most current date for which BLM data were available)—we selected five dates at 5-year intervals for the past 20 years, and calculated the total value of all bonds using data in the bond and surety system and the number of wells from BLM Public Land Statistics. We used the following dates to assess coverage: September 30, 2008; September 30, 2003; September 30, 1998; September 30, 1993; and September 30, 1988. For each of these dates, we selected all active bonds, providing us with those bonds that were accepted, but not terminated, before each of the five dates. To calculate the total value of these bonds, we grouped unique bonds for each of the five dates, and summed the bond amount field in the bond and surety system. To calculate well totals, we were limited by the dynamic nature of AFMSS, which restricted us from calculating the number of active wells for specific dates in the past. Due to this limitation, we relied on BLM’s Public Land Statistics for the well totals for our specified dates. For figure 3 in the report—individual, statewide, and nationwide current bond minimums adjusted to 2009 dollars—we used the bond minimums established in 43 C.F.R. §§ 3104.2, 3104.3 and searched the Federal Register to determine the dates the bond minimums were established. We then calculated the amount of each bond minimum in 2009 dollars. We reviewed the reliability of the data we used from the bond and surety system and AFMSS and found these data sufficiently reliable for the purpose of our review, including: total number of bonds, total number of wells, number and value of bonds by bond type, number and value of bonds by coverage type, number of wells by state, number of leases by state, number and value of bonds by state, average value of bonds by state office, number and value of bond types by state office, and number and value of coverage types by state office. To test the sufficiency of the bond and surety system and AFMSS data used to calculate the number, types, values, and coverage of bonds, we electronically tested the database and conducted interviews with BLM staff responsible for the integrity of the data. We also electronically tested all fields related to our analysis, including tests for null values, duplicate records, accurate relationships between code and text fields, and outliers. We also conducted 20 interviews with BLM staff between December 12, 2008, and November 13, 2009, on the following topics: data entry, use of data, completeness of data, accuracy of data, edit checks, supervisory oversight, internal reviews, different data fields, and data limitations. We determined that there were no significant issues with the bond and surety system and AFMSS data we used to calculate the number, types, value, and coverage of bonds. To address our second objective—determine how much BLM has paid to reclaim orphaned wells over the past 20 years, and how many wells BLM has yet to reclaim—we obtained data collected by BLM officials from BLM field and state offices. To determine the expenditures for reclaiming orphaned wells, we obtained data for fiscal years 1988 through November 30, 1994, from a 1995 BLM report. We obtained data through fiscal year 2009 from BLM officials. These data included federal dollars paid to reclaim orphaned wells, the number of wells reclaimed, and their location. To determine the number of orphaned wells yet to be reclaimed, we reviewed BLM’s Instructional Memorandum No. 2007-192, which directs BLM field office staff to report data on orphaned wells to BLM’s Washington Office. The Instructional Memorandum directs field office staff to complete an “Orphaned Well Scoring Checklist” for each orphaned well identified. This checklist asks for such information as the well’s location; well name; and other factors relating to reclamation, such as the well depth or estimated reclamation cost. We reviewed these checklists and analyzed all available estimated reclamation amounts. We then calculated and summarized estimated reclamation cost data by state and surface management agency. To address our third objective—compare BLM’s bonding methods with those used by the 12 western states and other Interior agencies—we analyzed state oil and gas bonding laws and regulations, as well as federal bonding regulations for the extraction or use of other federally owned resources. These federal agencies and resources included BLM Geothermal Energy, BLM Hardrock Minerals, BLM Mineral Materials, BLM Solid Minerals, Mineral Management Service Offshore Oil and Gas Leasing, and Office of Surface Mining Reclamation and Enforcement Coal Leasing. We summarized the bonding requirements, including scope, structure, amount, and method for determining bond amounts. We conducted our work from January 2009 to January 2010 in accordance with all sections of GAO’s Quality Assurance Framework that are relevant to our objectives. The framework requires that we plan and perform the engagement to obtain sufficient and appropriate evidence to meet our stated objectives and to discuss any limitations in our work. We believe that the information and data obtained, and the analysis conducted, provide a reasonable basis for any findings and conclusions. This appendix provides information on BLM held oil and gas bonds from BLM’s AFMSS and bond and surety systems, including the number, value, and average value of all BLM held bonds (table 8); the number and value of surety and personal bonds (tables 9 and 10); and the number and value of individual, statewide, nationwide, and other bonds (tables 11 and 12). Single well bond. Blanket bond covering all of the operator’s wells in the state. Surety bond by an authorized insurer who is in good standing. unless the applicant demonstrates that the cost of well abandonment (plugging) and location clearance will be less than $100,000. Personal bond and security in the form of (1) a certificate of deposit, (2) irrevocable letter of credit, or (3) an otherwise adequate security. Not less than $200,000. Conditioned on drilling, plugging dry or abandoned wells, repairing wells causing waste or pollution, maintaining and restoring well sites, and acting in accordance with the applicable laws and regulations. Individual well bond. Blanket bond to cover multiple wells. $10,000 for wells 10,000 feet or less deep. Surety bond by a corporate surety authorized to do business in Arizona. $20,000 for wells deeper than 10,000 feet. Certified check. from a bank whose deposits are federally insured. Although the state Oil and Gas Conservation Commission is authorized to issue a rule requiring an additional bond if the surface landowner is not in a contractual relationship with drilling permittee, no such rule has been issued. $25,000 for 10 or fewer wells. $50,000 for more than 10 but fewer than 50 wells. $250,000 for 50 or more wells. Conditioned on compliance with all statutory requirements for drilling, redrilling, deepening, or permanently altering the casing of the well. Individual indemnity bond. Indemnity bond. Blanket indemnity bond covering all wells in the state. $15,000 for wells less than 5,000 feet deep. Idle well indemnity bond. $20,000 for wells at least 5,000 feet deep but less than 10,000 feet deep. $30,000 for each well 10,000 or more feet deep. that (1) does not exceed the federally insured amount, (2) is insured, and (3) is issued by a bank or savings association authorized to do business in California. $250,000 plus the idle well bond. If a bond was provided prior to Jan. 1, 1999, its amount must be increased by a minimum of $30,000 per year beginning on Jan. 1, 2000, until the bond reaches $250,000. Savings accounts and evidence of the deposit in the account. The account cannot exceed the federally insured amount, must be federally insured and with a bank authorized to do business in California. $100,000 plus the idle well bond for operators having 50 or fewer wells, exclusive of properly abandoned wells. $1 million dollars. Investment certificates or share accounts issued by savings associations authorized to do business in California. The account’s balance cannot exceed the federally insured amount and must be insured. $5,000 per well, if the operator chooses to post a bond rather than pay an annual fee, open an escrow account, or have filed a management plan by July 1, 1999. share accounts issued by credit unions whose share deposits are guaranteed. The account’s balance cannot exceed the guaranteed amount. Every operator must provide assurance that it is financially capable of fulfilling applicable requirements (1) to protect the health, safety, and welfare of the general public in the conduct of the oil and gas operations; (2) to ensure proper reclamation of the land and soil affected by oil and gas operations and to ensure the protection of the topsoil of said land during such operations; and (3) associated with terminating operations and permanent closure. (1) Surface Owner Protection Financial Assurance: individual well or statewide blanket bond. The Oil and Gas Conservation Commission has the authority to increase any of these amounts for an operator under certain circumstances. operator has sufficient net worth to guarantee performance, which the Commission must review annually. To protect surface owners who are not parties to a lease or other agreement with the operator from unreasonable crop loss or land damage. (1) Surface Owner Protection liability insurance. Bond or other surety instrument. (2) Soil Protection, Plugging, Abandonment and Site Reclamation Financial Assurance: individual or statewide blanket bond. $2,000 per well for non- irrigated land. Letter of credit. $5,000 per well for irrigated land. Certificate of deposit. instrument. $25,000. Escrow account or sinking fund. (2) Soil Protection, Plugging, Abandonment and Site Reclamation $10,000 per well for wells less than 3,000 feet deep. Lien or other security interest in real or personal property of the operator that is acceptable to the Commission and reviewed annually. $20,000 per well for wells greater than or equal to 3,000 feet deep. $60,000 for less than 100 wells. $100,000 for 100 or more wells. If the operator has excess inactive wells, the financial assurance amount increases by $10,000 for each excess inactive well less than 3,000 feet deep. $20,000 for each excess inactive well greater than or equal to 3,000 feet deep. The Commission can modify or waive this increase if the operator submits a plan for (1) returning the wells to production in a timely manner or (2) plugging and abandoning the wells on an acceptable schedule. Additional finance assurances required for off- site, centralized exploration and production waste management facility and seismic operations. Conditioned upon compliance with the legal and regulatory requirements for drilling, maintaining, operating, and plugging of each oil and gas well. Individual well bond. Statewide blanket bond. Individual bond of not less than $10,000 per well. Blanket bond of not less than $25,000 for all wells in the state. Surety bond by a corporate surety authorized to do business in Idaho. Cash. Separate bond requirements govern wells on state and school lands. Conditioned on properly plugging each dry or abandoned well and restoring the surface of the location. Single well bond. Multiple well bond. $1,500 if the well’s depth is 2,000 feet or less. The Board of Oil and Gas Conservation can increase the bond requirement to $3,000 under certain circumstances. Surety bond issued from a company licensed to do business in Montana. Federally insured certificate of deposit held by a Montana bank. $5,000 if the well’s depth is greater than 2,000 feet and less than 3,501 feet. The Board can increase this amount to $10,000 under certain circumstances. Letter of credit issued by a Montana commercial bank whose deposits are FDIC insured. $10,000 where the well’s depth is 3,501 feet or more. The Board can increase this amount to $20,000 under certain circumstances. $50,000. The Board can increase this amount to $100,000 under certain circumstances and/or limit the number of multiple wells that can be covered by a multiple bond. If existing wells are covered by a bond with an amount less than $25,000, the owner or operator must increase coverage to $25,000. Conditioned on (1) dry or abandoned well being plugged in accordance with state regulations and (2) operation and repair of well in a manner that does not cause waste. Individual well bond. Blanket statewide bond. Individual well bond of not less than $10,000. Blanket statewide bond of not less than $50,000. Bond issued by a corporate surety authorized to do business in Nevada and approved by the state regulatory agency. Cash deposit. Savings certificate or time certificate of deposit issued by a bank or savings or loan association in Nevada. being plugged and abandoned and the location restored and remediated in compliance with applicable rules. The financial assurance is not to secure payment for damages to livestock, range, crops or tangible improvements or any other purpose. assurance. Irrevocable letter of credit that meets certain conditions. Blanket financial assurance for all wells statewide. $5,000 plus $1 per foot of well depth in certain counties. $10,000 plus $1 per foot of well depth in all other counties. federally insured account in New Mexico. Surety bond that meets certain conditions. $50,000. Insurance policy that meets certain requirements. Wells that have been in temporary abandonment for more than 2 years must be covered by a one-well financial assurance, unless the well is shut-in because of the lack of a pipeline connection. Bond will not be released unless well has been properly abandoned, including site reclamation. Single well bond. Surety bond. Blanket bond for multi- well operations. $10,000 for wells less than 2,000 feet deep. $15,000 for wells between 2,000 and 5,000 feet deep. $25,000 for wells greater than 5,000 feet deep. The Department of Geology and Mineral Industries has the discretion to accept an irrevocable letter of credit or other form of financial security. Amount equals the sum of individual bonds required for the wells, although some wells might be excluded from this calculation. $100,000. Conditioned upon the operator plugging each dry or abandoned well, repairing each well causing waste or pollution, and maintaining and restoring the well site. Individual well bond. Statewide blanket bond. At least $1,500 for a well less than 1,000 feet deep. Surety bond with performance guarantee of a corporation that meets certain requirements. At least $15,000 for a well more than 1,000 feet deep but less than 3,000 feet deep. $30,000 for a well more than 3,000 feet deep but less than 10,000 feet deep. At least $60,000, for wells more than 10,000 feet deep. At least $15,000 for wells less than 1,000 feet deep. At least $120,000 for wells more than 1,000 feet deep. If the Division determines that these amounts will be insufficient to cover the costs of well plugging and site restoration, a change in the form or amount of bond coverage may be required. The Board has the discretion to allow bond coverage in a lesser amount for a specific well. (3) negotiable certificates of deposit issued by a federally insured bank authorized to do business in Utah that do not exceed FDIC insurance limits; (4) irrevocable letter of credit that meets certain requirements. Since July 1, 2003, operators who want to establish a new blanket bond that consists either fully or partially of a collateral bond must be qualified by the Division first. If the Division finds that a well is violating regulatory requirements for shut-in and temporarily abandoned wells, the required bond amount increases to the cost of actual plugging and site restoration costs. A combination of a surety and collateral bond. Individual well bond. each dry or abandoned well, reclaiming and cleaning up the well drilling site, repairing wells that cause waste, and complying with all applicable laws, regulations, orders, and permit conditions, including regulations and guidelines for reclamation of land impacted by oil and gas drilling and production activities. Surety bond that meets certain requirements. Statewide blanket bond. Not less than $50,000 for most wells. Cash deposit. $20,000 for wells less than 2,000 feet deep drilled solely to obtain subsurface geological data. Savings account assigned to the state. Not less than $250,000. a Washington bank and guarantee of payment of the principal in the event penalties are assessed for early redemption. Letter of credit from bank acceptable to the State Oil and Gas Supervisor. Conditioned on (1) the well being operated and maintained so as not to cause waste or damage to the environment; (2) plugging each permanently abandoned well in accordance with regulations; (3) reclamation of area affected by the oil or gas operations; and (4) compliance with all applicable laws, regulations, and orders. Individual well bond. The state Oil and Gas Conservation Commission can increase the amounts listed below after notice and a hearing if good cause can be shown. Surety bond. Statewide blanket bond. Cashier’s check and binding, first-priority pledge agreement. To secure payment of damages to the surface owner. Instead of posting a bond, the operator can execute an agreement with a surface owner (1) addressing compensation for damages to land and improvements; or (2) waiving the surface owner’s right to seek damages. $10,000 for wells less than 2,000 feet deep. for an initial term of not less than 1 year that renews automatically and a binding, first- priority pledge agreement. $20,000 for wells 2,000 feet or more deep. $75,000. Letter of credit issued by an FDIC-insured bank with an initial expiration date of not less than 1 year from date of issuance and that is automatically renewed. An increased bond level up to $10 per foot may be required for each idle well once the operator’s total footage of idle wells exceeds a certain threshold. The level of additional bonding will increase every 3 years in accordance with the percentage change in the Wyoming consumer price index. The operator can request a different bonding level based on evaluation of specific well conditions and circumstances. In lieu of additional bonding, the supervisor may accept a detailed plan of operation which includes a time schedule to permanently plug and abandon idle wells. Individual well bond of not less than $2,000 per well on the land. Blanket bond amount is determined by the oil and gas supervisor. The state’s oil and gas supervisor has discretion in establishing the amount of these bonds. Performance bond for the entire permit area. Cumulative bond schedule and the performance bond required for full reclamation of the initial area to be disturbed. Incremental bond schedule and the performance bond required for the first increment in the schedule. Alternative bonding system if it achieves certain objectives and purposes. The amount of the bond required for each bonded area shall (1) be determined by the regulatory authority; (2) depend upon the requirements of the approval permit and reclamation plan; (3) reflect the probable difficulty of reclamation, given consideration to such factors as topography, geology, hydrology, and revegetation potential; and (4) be based on, but not limited to, the estimated cost submitted by the permit applicant. Surety bond that meets certain requirements. The amount of the bond shall be sufficient to assure the completion of the reclamation plan if the work has to be performed by the regulatory authority in the event of forfeiture. Collateral bond (including cash; cash accounts that do not exceed FDIC insurable limits; certificates of deposit that do not exceed FDIC insurable limits and meet other requirements; a first mortgage, first deed of trust, or perfected first-lien security interest in real property; and irrevocable letters of credit that meet certain requirements). In no case shall the total bond initially posted for the entire area under one permit be less than $10,000. Self-bond (indemnity agreement executed by the applicant or the applicant and a corporate guarantor that meets certain requirements). The regulatory authority must adjust the bond amount from time to time as the area requiring bond coverage is increased or decreased or where the cost of future reclamation changes. A combination of any of these types. To guarantee compliance with all terms and conditions of the lease, including structure removal and site clearance. Lease specific bond. Areawide bond. Amount of bond is determined by stage of development/activity. Posting a lease exploration bond exempts owner/operator from posting a general lease bond. Posting a development and activities bond exempts the owner/operator from posting a general lease bond and lease exploration bond. Surety bond issued by a surety company approved by the Department of the Treasury (Treasury). Treasury securities. $50,000 lease specific bond. $300,000 areawide bond. Alternative types of securities provided the MMS Regional Director determines that the alternative protects the interest of the United States to the same extent as the required bond. $200,000 lease specific bond. A combination of these types. $1 million areawide bond. Development and production activities bond $500,000 lease specific bond. $3 million areawide bond. MMS can require an additional security if it determines that it is necessary to ensure compliance. Such a determination is based on an evaluation of the lessee’s ability to carry out present and future financial obligations. In lieu of an additional bond, MMS may authorize the lessee to establish a lease-specific abandonment account or third- party guarantee. To ensure compliance with the Mineral Leasing Act of 1920 as amended, including complete and timely plugging of the well(s), reclamation of the lease area(s), and the restoration of any lands or surface waters adversely affected by lease operations. Individual lease bond. Statewide bond. Nationwide bond. Surety bond issued by a qualified surety company approved by Treasury. Nationwide: not less than If an operator has forfeited a financial assurance in the previous 5 years because of failure to plug a well or reclaim lands in a timely manner, BLM must require a bond in an amount equal to the estimated costs of plugging the well and reclaiming the disturbed area before approving an application for a permit to drill. Personal bonds accompanied by (1) certificate of deposit issued by an institution whose deposits are federally insured; (2) cashier’s check; (3) certified check; (4) negotiable Treasury securities; or (5) irrevocable letter of credit that meets certain conditions. BLM has the authority to require an increase in the bond amount whenever it determines that the operator poses a risk due to factors including, but not limited to, a history of previous violations, a notice from MMS that there are uncollected royalties due, or that total cost of plugging existing wells and reclaiming lands exceeds the present bond amount. To ensure compliance with the all the lease terms, including rentals and royalties, conditions, and stipulations. Individual lease bond. Individual lease: $100,000. Reserve-wide bond. (either as a rider to existing nationwide bond or a separate bond). Surety bond issued by a qualified surety company approved by Treasury. Personal bonds secured by (1) certificate of deposit issued by an institution whose deposits are federally insured; (2) cashier’s check; (3) certified check; (4) negotiable Treasury securities; or (5) irrevocable letter of credit that meets certain conditions. To cover (1) any activities related to exploration, drilling, utilization, or associated operations on a federal lease; (2) reclamation of the surface and other resources; (3) rental and royalty payments; (4) compliance with applicable laws, regulations, notices, orders, and lease terms. Individual lease bond. Statewide activity bond. bond. BLM has the authority to increase the following bond amounts when (1) the operator has a history of noncompliance; (2) BLM previously made a claim against a surety company because someone covered by the current bond failed to plug and abandon a well and reclaim the surface in a timely manner; (3) a person covered by the bond owes uncollected royalties; or (4) the bond amount will not cover the estimated reclamation cost. Corporate surety bond issued by a surety company approved by Treasury. Individual: $10,000. Statewide: $50,000. Nationwide: $150,000. Personal bonds secured by (1) certificate of deposit issued by a federally insured financial institution authorized to do business in the United States; (2) cashier’s check; (3) certified check; (4) negotiable securities, such as Treasury notes; and (5) irrevocable letter of credit that meet certain conditions. Electrical Generation Facility: at least $100,000. Direct Use Facility: BLM will specify amount. Released when (1) all royalties, rentals, penalties, and assessments are paid; (2) all permit or lease obligations are satisfied; (3) site reclaimed; and (4) effective measures are taken to ensure that the mineral prospecting or development activities will not adversely affect surface or subsurface resources. Individual lease bond. Statewide bond (to cover all leases of the same mineral). BLM determines bond amounts considering the cost of complying with all permit and lease terms, including royalty and reclamation requirements. Surety bond issued by a qualified company approved by Treasury. cover all leases of the same mineral). Individual lease: minimum $5,000 (minimum $1,000 for prospecting permits). Statewide: minimum $25,000. Personal bonds in the form of a (1) cashier’s check; (2) certified check; (3) or negotiable Treasury bond. $75,000. To meet the reclamation standards specified in the mineral materials sales contract. Performance bond for contract. No performance bond required if sales contract from a community pit or common use area and party pays a reclamation fee. For contracts of $2,000 or more, BLM will establish bond amount to ensure it is sufficient to meet the contract’s reclamation standards. However, the amount must be at least $500. Corporate surety bond issued by a company approved by Treasury. that is issued by an institution whose deposits are insured and does not exceed the maximum FDIC insurable amount. For contracts of less than $2,000, BLM may require a bond. If BLM requires a bond, it cannot exceed an amount greater than 20 percent of the total contract amount. Cash bond. Irrevocable letter of credit from a bank or financial institution organized or authorized to do business in the United States. If party pays reclamation fee, no performance bond is required. bond of the United States. Individual financial guarantee covering a single notice or plan of operations. Blanket financial guarantee covering a statewide or nationwide operations. Amount is based on the estimated cost as if BLM were to contract with a third party to reclaim the operations according to the reclamation plan, including construction and maintenance costs for any treatment facilities necessary to meet federal and state environmental standards. Surety bonds that meet certain requirements. federal depository account of the U.S. Treasury. Irrevocable letters of credit from a financial institution organized or authorized to do business in the infrastructure maintenance costs needed to maintain the area of operations in compliance with applicable environmental requirements while third- party contracts are developed and executed. environmental damage or the operator has an excellent past record for reclamation. United States. In addition to the financial guarantee, BLM may require the establishment of a trust fund or other funding mechanism to ensure the continuation of long-term treatment to achieve water quality standards and for other long-term, post-mining maintenance requirements. The funding must be adequate to provide for construction, long-term operation, maintenance, or replacement of any treatment facilities and infrastructure, for as long as the treatment and facilities are needed after mine closure. deposit or savings accounts not in excess of the FDIC insurable amount. Negotiable U.S. government, state, and municipal securities or bonds maintained in a Securities Investors Protection Corporation-insured trust account by a licensed securities brokerage firm. Investment grade securities having a Standard and Poor’s rating of AAA or AA or an equivalent rating from a nationally recognized securities rating service that are maintained in a Securities Investors Protection Corporation-insured trust account by a licensed securities brokerage firm. insurance that meet regulatory requirements. financial assurances under state law or regulation. Trust funds or other funding mechanisms. In addition to the contact named above, Andrea Wamstad Brown (Assistant Director), Jeffrey B. Barron, Casey L. Brown, Jerome Sandau, Jeanette Soares, Anne Stevens, Carol Herrnstadt Shulman, and Walter Vance made key contributions to this report.

Summary: The Federal Land Policy and Management Act of 1976 directs the Department of the Interior (Interior) to manage lands for multiple uses while also taking any action to prevent "unnecessary or undue degradation" of the land. To do this, Interior's Bureau of Land Management (BLM), among other things, requires oil and gas operators to reclaim the land they disturb and post a bond to help ensure they do so. Despite these requirements, not all operators perform reclamation. If the bond is not sufficient to cover well plugging and surface reclamation and there are no responsible or liable parties, the well is considered "orphaned," and BLM uses federal dollars to fund reclamation. The 12 western states where most oil and gas production occurs and other Interior agencies also require bonds to ensure reclamation. GAO was asked to (1) determine the number, value, and coverage of bonds held by BLM for oil and gas operations; (2) determine the amount that BLM has paid to reclaim orphaned wells over the past 20 years and the number of orphaned wells BLM has identified but has not yet reclaimed; and (3) compare BLM's bonding requirements for oil and gas operations with those the 12 western states use for oil and gas operations on state and private lands and other Interior agencies' bonding requirements for other resources. Among other things, GAO analyzed BLM data on wells and BLM-held bonds, and interviewed BLM officials. According to GAO's analysis of BLM data, as of December 2008, oil and gas operators had provided 3,879 bonds, valued at $162 million, to ensure compliance with lease terms and conditions for 88,357 wells. BLM regulations establish minimum bond amounts: $10,000 for an individual lease, $25,000 to cover all leases of a single operator in a state, and $150,000 to cover all leases of a single operator nationwide. The bond amount for individual leases was set in 1960, while the statewide and nationwide bond amounts were set in 1951. For fiscal years 1988 through 2009, BLM spent about $3.8 million to reclaim 295 orphaned wells in 10 states and has identified an additional 144 orphaned wells in 7 states that need to be reclaimed, according to BLM. The amount spent per reclamation project varied greatly, from a high of $582,829 for a single well in Wyoming in fiscal year 2008 to a low of $300 for 3 wells in Wyoming in fiscal year 1994. BLM reclamation cost estimates were not available for all of the wells it has yet to reclaim, but BLM field office officials have completed reclamation cost estimates of approximately $1.7 million for 102 of the 144 orphaned wells. The 12 western states (Alaska, Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming) and other Interior agencies and offices have bonding approaches that differ from BLM's oil and gas bonding requirements. The states generally require higher bond amounts than the minimum amounts established by BLM regulations for individual and statewide oil and gas leases. Regulations governing the extraction or use of other federally owned resources generally require bond amounts based on the cost of reclamation or use minimum amounts that were established more recently than the bond amounts for oil and gas. GAO provided a draft of this report to the Department of Interior for review and comment. The Department provided technical comments, which were incorporated as appropriate.