The $100,000 surety bond for Alabama Underground Storage Facilities for a Solution-mined Cavity and Storage Well, also known as the Underground Storage Facility Bond, is required by the State Oil and Gas Board of Alabama for storage operators commencing work on underground gas storage facilities.
The bond provides reassurance to the Board that compensation will be available if a storage operator fails to act in accordance with the state rules, regulations, and laws.
The price you pay for the bond will only be a small percentage of the $100,000 bond limit. There are multi-year options, which allow you to save some money in the long run by paying a larger sum up front. Other factors will be considered, including a review of financials and personal credit.
The State Oil and Gas Board may, for good cause, and after notice and hearing, require an increased bond amount due to environmentally sensitive site conditions, or other valid reasons.
The State Oil and Gas Board of Alabama is charged with protecting the environment, and owners’ rights, by creating and enforcing regulations that encourage oil and gas conservation and prevent waste. Storage facility operators, specifically, are regulated by the Board and are required to get a surety bond to work on underground storage facilities for solution-mined cavities and storage wells.
The bond is a tool used by the Board to ensure funds are available should the storage operator not comply with Alabama Administrative Code Chapter 400-6. For example, the bond may be used to clean up and restore the site if the facility operator fails or refuses to properly plug a well and abandon a cavity pursuant to Chapter 400-6-10.
After you submit the basic information in our online application, one of Jet’s underwriters will reach out shortly afterwards with the next steps. We may require financial statements or bank statements.
The underwriter will look over the details and work to get you an approved rate shortly, which will be sent to your email. From there, you are able to purchase the bond and receive a copy of the bond and your receipt.
A completed Form OGB-3D bond form includes signatures from the surety company (Jet) and the storage operator. It also needs to have a surety seal, and a corporation seal from the operator if applicable. All partners must sign the bond.
We fill out our part of the bond and send it to you to complete and get to the Board. 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.
When renewal is approaching, Jet sends an invoice via email and mail. Either fill out the mailed invoice and return it or go through the email to pay online. You must make payment prior to the bond’s expiration date to avoid complications.
A storage facility operator fulfilling duties according to the rules, regulations, and laws in the Alabama Administrative Code, Chapter 400-6, and Code of Alabama 1975, Title 9, Chapter 17, Article 6 can avoid bond claims.
Form OGB-3D specifies general duties of storage operators as follows:
Should any issues arise, the Alabama State Oil and Gas Board will schedule a hearing to decide how to proceed. Working with the board is your best bet to avoid a claim payout for which you’ll be responsible to pay back.
Any claim that comes to Jet has already had a ruling handed down by the State Oil and Gas Board of Alabama. However, Jet will review all the claim details and may ask you for additional documentation prior to paying the claim. If the claim is valid, Jet will make payment to the Board and you will be responsible to reimburse Jet since you are responsible for your actions.