1. (1) Before any person(s) shall commence drilling, completing, converting, operating, or producing any oil, gas, or Class II injection well, including production facilities, processing facilities, injection facilities, underground storage facilities in reservoirs, offshore plants, pipelines, and other equipment associated with such well, said person(s) shall file with the Board a single well bond on Form OGB-3. Such bond shall be payable to the State of Alabama, executed by said person(s) as principal(s), and by a surety approved by the Supervisor or Board; conditioned that such person(s) shall, in connection with the drilling, completing, converting, operating, or producing of such well, including production facilities, processing facilities, injection facilities, underground storage facilities in reservoirs, plants, pipelines, and other equipment associated with such well, prevent the escape of oil or gas out of one stratum to another, prevent the intrusion of water into any oil or gas stratum from a separate stratum, prevent the pollution of the sea, prevent pollution of all surface and ground water; conditioned also that such person(s) shall file all reports required by the Board, including drilling records and all logs of such well, if taken, and shall file drill cuttings and cores or core chips, if cores are taken, within six (6) months from the time of completion of such well, and in the event such well does not produce oil or gas in commercially profitable quantities or ceases to produce oil or gas in commercially profitable quantities or if the operations of such well shall cease for a period of six (6) months or if such well should become dangerous to the public, such person(s) shall plug and abandon such well in compliance with Rule 400-2-4-.11, dispose of all tank fluids in compliance with Rule 400-2-4-.10, clear the location in compliance with Rule 400-2-4-.13; and conditioned further that such person(s) shall drill, operate, produce, and plug and abandon, such well, and that such person(s) shall dispose of tank fluids, clear the location, and maintain the site in compliance with all lawful rules, regulations, and orders of the Board now existing or hereafter promulgated, and with the laws of the State of Alabama now existing or hereafter enacted. The amount of such bond shall be in accordance with the following relationship to measured depth:

   Measured depth (ft)	Amount of bond required
   0 - 6,000	$100,000
   Greater than 6,000	$500,000

2. (2) The Board may, however, accept a blanket bond on Form OGB-4 in the amount of one million ($1,000,000). Such blanket bond shall be conditioned upon the same requirements as set forth for single well bonds, except that a blanket bond may apply to more than one well. Furthermore, the Board may require a separate Bond of one hundred thousand dollars ($100,000.00) for an operator of a processing plant and associated facilities and pipelines where such plant operator does not operate any oil and gas wells.
3. (3) Any such bond filed with the Board, including any amendment or addendum thereto, must set forth the correct legal name and address of the principal and the surety thereto and must be countersigned by an Alabama agent of such surety, setting forth the correct legal name of such agent and such agent’s company affiliation and correct business address. If more than one person is to be designated as operator, then each such person shall file a separate bond or a joint bond, whichever is appropriate.
4. (4) Provided, further, the Board, in its reasonable discretion for good cause, after notice and hearing, may require a different amount of bond because of environmentally sensitive conditions at the site or for other justifiable reasons for good cause and may deem and determine any existing bond to be inadequate and may require the filing of a new bond, that shall be approved by the Board or Supervisor, upon the Board’s own motion or upon petition by any party allowed to file a petition by these rules and regulations, and the amount of such bond required may be more or less than hereinabove set forth.

Author: State Oil and Gas Board

Statutory Authority: Code of Ala. 1975, §§9-17-1, et seq.

History: New Rule: Filed April 11, 2000; effective May 16, 2000. Amended: Published October 31, 2022; effective December 15, 2022.