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What is a Montana Oil & Gas Well Surety Bond?

For businesses that operate or own oil and/or gas wells, a surety bond needs to be posted in order to legally work within Montana.

Required by the Montana Board of  Oil and Gas Conservation, the bond amounts vary depending on the well depth and how many wells are owned by the operator.

For this type of surety bond, the obligee is the well operator, and  the principle is the Montana Board of Oil and Gas Conservation. The surety company is the company that agrees to ensure the well operator.

For only a single well or future planned well, the required bond amounts are:

$1,500 if the depth of the well is 2,000 feet deep or less

$5,000 if the depth of the well is 2,000-3,501 feet deep

$10,000 if the depth of the well is more than 3,501 feet deep

Ownership of multiple wells call for a bond amount of $50,000.

However, if the Board judges that the required bond amount needs to be altered, the Board has the power to change it.

It is important to know which license and bond types are listed on the bond form. The several types of bond forms are:

Blanket bond to cover all wells drilled or obtained in the state

Limited bond to cover all wells drilled or obtained subject to limitations

Individual well bond to cover one well

UIC bond to cover salt water disposal or increased recovery injection wells

Replacement bond to replace & accept all wells covered by the bond

Why is this bond required?

This surety bond ensures the provisions of the state laws are followed  in order to protect Montana’s nature and land. The regulations and orders of the Board of Oil and Gas Conservation need to be followed which this surety bond outlines. The proper plugging of well/s, the restoration of the well location/s, and the filing of all required notices and the records is implemented with the surety bond.

As stated on Montana’s official website, The Montana Oil & Gas Well Surety Bond helps protect and enforce the Board’s mission to:

  1. prevent waste of oil & gas resources
  2. conserve oil & gas by encouraging maximum efficient recovery of the resource
  3. protect the correlative rights of the mineral owners

More information about the Board’s background and regulations can be found here.

To locate all of Montana’s rules and regulations, visit Montana Secretary of State Corey Stapleton’s official site.   The Administrative Rules of Montana and the Montana Administrative Registrar can be located on this page.

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