The Oil and Gas Well Bond is required for operators by the Alabama State Oil and Gas Board prior to beginning and throughout work on gas, oil, or class II injection wells. The surety bond is a financial guarantee to the Board, provided by Jet, if the operator does not abide by the rules, regulations, and laws.
Whether you need a Single Well Bond or a Blanket Bond (operating multiple wells), Jet will work with you to obtain the necessary bond.
The price for the bond varies depending on a few factors including the required bond limit, financial status of the company and owners and well lifespans. The price you pay will only be a small percentage of the bond limit.
By cutting out the middleman, who collects commissions and other fees, Jet can provide the bond at a lower rate.
For the Single Well Bond, Form OGB-3, the bond limit starts at $5,000 and goes up to $50,000. The well’s measured depth in feet is what determines your bond limit. Refer to the chart below for Single Well Bond limits:
|Measured Well Depth||Bond Limit|
|0 - 5,000 ft||$5,000|
|5,001 - 10,000 ft||$10,000|
|10,001 - 15,000 ft||$15,000|
|15,001 - 20,000 ft||$30,000|
|Greater than 20,000 ft||$50,000|
For the Blanket Bond, Form OGB-4, the bond amount is $100,000.
The State Oil and Gas Board may, for good cause, require a different bond amount for either the Single Well Bond or the Blanket Bond if they consider it necessary because of environmentally sensitive site conditions or for any other justifiable reason.
The State Oil and Gas Board of Alabama has the purpose of protecting the environment, and owners’ rights relating to it, by enforcing rules and regulations that prevent waste and encourage gas and oil conservation. Well operators are regulated by the Board, and are required to hold a surety bond while drilling, converting, operating, producing, or completing oil, gas, or Class II injection wells.
The bond is financial assurance for the Oil and Gas Board if an operator fails or refuses to comply with statutes and the Board. For example, if an operator doesn’t plug a well in accordance with Alabama Administrative Code Chapter 400-1-4, the Board may seek compensation from the bond to complete the job.
Working with Jet speeds up the traditional application process. Basic information is needed in addition to a soft credit check (which doesn’t affect your score) within our online application. After submission, Jet will review your application to see if any additional information is needed and get back to you quickly with an approved rate via email. Once payment is received, you will get a copy of the bond and receipt right away.
The bond form must be completed with signatures from both you and Jet. Jet will seal the bond, and if you are part of a corporation you must also apply your company seal. If operators are acting as principals, individual names must be on the bond form. The bond is to be accompanied by a power of attorney.
Jet will send you all the necessary documentation for you to complete and get to the Board. Once completed, the Oil and Gas Well bond and any other paperwork must be sent to the address below:
State Oil and Gas Board of Alabama
PO Box 869999
Tuscaloosa, AL 35486
If the bond needs to be overnighted, it should be sent here:
State Oil and Gas Board of Alabama
420 Hackberry Lane
Tuscaloosa, Alabama 35401
No; the Board does not allow for cancellation of the bond. It must be in place for the duration you are operating the well or wells.
The bond is offered in 1-, 2-, and 3-year terms. Upon renewal, Jet will send a notice via mail and email for you to make payment before the bond’s expiration date. You can either fill out the mailed renewal invoice with your payment information or use our simple online process. If the bond limit has changed, please let Jet know so we can adjust the coverage accordingly.
The best way to avoid claims is to follow the rules and regulations in place within the Alabama Administrative Code and Code of Alabama 1975. The most common reason claims occur is failure of the operator to plug a well.
Chapter 400-1-2, Section .03, of the Alabama Administrative Code lists the obligations of well operators including maintaining the site, plugging the well, disposing of well fluids, and restoring the site location.
Should any issues arise, the Alabama State Oil and Gas Board will schedule a hearing. Complying with the Board and fixing the issues is in the best interest of the operator. Civil penalties may be imposed for violating provisions, including up to a $10,000 fine for each day of the violation, pursuant to Section 9-17-32 of the Code of Alabama 1975.
Although the Alabama State Oil and Gas Board has a thorough process for handling claims, Jet will review the details prior to paying out the claim; we ensure no details were missed and that the claim is in fact valid.
A valid claim will be paid to the Board by Jet. Since the operator is ultimately responsible for their actions, they must restore the bond to its full capacity by paying Jet back. Failure to restore the bond will lead to complications with allowance to proceed with operations and purchasing future surety bonds.