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Well Drilling, Plugging & Operating

Drilling Wells Bond

Oil and gas commissions do not issue drilling permits without a bond on file. The bond guarantees you will plug wells at end of life, protect groundwater, and restore the surface. Every producing state requires one.

$2.5K-$250K Bonds
State and well count dependent
1-3 Day Approval
For experienced operators
All Well Types
Oil, gas, water, injection
BLM & State Bonds
Federal and state land
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State and Federal Well Bond Regulations

Official Texas RRC Requirements

"Each operator of oil, gas, or geothermal resource wells in Texas must maintain financial security sufficient to ensure proper plugging. Operators with 1-10 wells must furnish a $25,000 bond."
Texas Railroad Commission • 16 TAC Section 3.78 - Financial Security Requirements

Official Federal BLM Requirements

"The lessee must furnish a bond of not less than $10,000 for each lease conditioned upon compliance with all lease terms and regulations. A statewide bond of $25,000 or nationwide bond of $150,000 may be furnished."
Bureau of Land Management • 43 CFR 3104 - Bonds

Well bonding is fundamentally about the endgame. Every well drilled today will eventually need to be plugged. Plugging costs run $20,000 to $300,000 depending on depth, casing condition, and location. The bond ensures money is available to plug the well if the operator cannot or will not do it. States that underpriced their bonds for decades are now dealing with tens of thousands of orphaned wells and billions in cleanup costs. Expect bond amounts to continue rising.

State Well Bond Requirements

Texas

Railroad Commission
$25K-$250K

Tiered by well count. P-5 Organization Report required annually.

North Dakota

Industrial Commission
$50K-$100K

Per-well or blanket options. Increased in 2023.

Oklahoma

Corporation Commission
$25K-$100K

Category system based on well count and compliance history.

Pennsylvania

DEP
$2,500-$25K

Per well based on depth. Conventional vs unconventional rates differ.

Colorado

COGCC
$10K-$100K

Financial assurance rules updated. Per-well or blanket.

Federal (BLM)

Bureau of Land Management
$10K-$150K

$10K per lease, $25K statewide, $150K nationwide blanket.

Frequently Asked Questions

What does a drilling wells bond guarantee?
A drilling wells bond guarantees that you will plug and abandon wells properly when they reach end of life, restore the surface to its pre-drilling condition, protect groundwater from contamination, and comply with all state oil and gas commission or BLM regulations. If you fail to do these things, the regulatory agency can forfeit your bond and hire contractors to do the work at your expense.
How are well bond amounts determined?
Bond amounts depend on the number of wells, well depth, type of operation, and state formula. Texas uses a tiered system based on well count: 1-10 wells require a $25,000 bond, 11-99 wells require $50,000, and 100+ wells require a $250,000 blanket bond. Other states calculate per-well amounts based on depth. Federal land (BLM) requires $10,000 per well or a $150,000 statewide blanket bond.
What is the difference between an individual well bond and a blanket bond?
An individual well bond covers one specific well and its plugging obligation. A blanket bond covers all wells you operate within a state (statewide blanket) or across all federal leases nationwide (nationwide blanket). Blanket bonds are more cost-effective for operators with multiple wells. A $25,000 individual bond premium versus a $150,000 blanket bond premium can save thousands when you operate 20+ wells.
When is a well bond released?
Your bond is released after you plug and abandon the well according to state regulations and the regulatory agency inspects and approves the plugging work. The surface must be restored. In most states, there is a 1-2 year waiting period after plugging before the bond is released to ensure no subsurface migration or surface subsidence occurs.
Do I need a bond for water wells?
Many states require bonds for commercial water well drilling to protect aquifers. California requires water well drillers to be licensed and bonded. Bond amounts are typically lower than oil and gas wells, ranging from $2,500 to $25,000 depending on the state and the number of wells drilled annually.
What happens to orphaned wells with no valid bond?
When an operator goes bankrupt or disappears without plugging wells, those wells become "orphaned." If the bond is insufficient to cover plugging costs (which average $20,000-$100,000+ per well), the state must use taxpayer funds or federal grants to plug them. This is why states have been increasing bond amounts in recent years.

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Written by BuySuretyBonds.com
Surety bond specialists operating nationwide with direct integrations to Treasury-certified surety carriers. Our platform enables instant approval for license and notary bonds, with 24-48 hour underwriting for commercial bonds. All content is researched from official state and federal sources (.gov) and reviewed by bond industry experts.

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