California Oil & Gas Indemnity Bond | Reclamation Bond, Well Plugging

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Bond Penalty: $25,000 to $3mn Individual to Blanket

Operators in California’s oil and gas sector are legally required to post an Oil and Gas Well Indemnity Bond or other suitable financial assurance before commencing operations such as drilling, redrilling, deepening, or permanently altering a well’s casing. This requirement also applies to the acquisition or transfer of well ownership. The obligation is governed by the California Public Resources Code §3204 through 3205.8, and enforced by the Department of Conservation's Geologic Energy Management Division (CalGEM).

A California oil and gas plugging bond is a financial guarantee. This reclamation obligation ensures that the operator will comply with applicable state laws, regulations, and any lawful orders issued by the State Oil and Gas Supervisor or district deputies. The bond covers liabilities including, but not limited to, the proper plugging and abandonment of wells, site remediation, and payment of associated charges and administrative costs assessed by the state. The indemnity bond must be filed when submitting a Notice of Intention (NOI) to drill, alter, or plug a well, and at the time of acquiring a well through purchase, assignment or transfer. The required penal sum of the bond depends on the type and scale of operations:

Individual Well Bonds

  • Less than 10,000 feet total depth – $25,000
  • 10,000 feet or greater total depth – $40,000
  • Commercial Class II waste disposal wells – typically require higher bonding.

Blanket Bonds

  • 20 to 50 onshore wells – $200,000
  • 51 to 500 onshore wells – $400,000
  • 501 to 10,000 onshore wells – $2,000,000
  • Over 10,000 onshore wells – $3,000,000
  • Any offshore operations – $1,000,000 minimum

Additional financial security may be requested by CalGEM based on site-specific risks or compliance history. The regulator offers more detail for operators its Q&A page.

Applying for a California indemnity bond should be accomplished through a surety underwriter with thorough knowledge and experience with this sector. Surety One, Inc.'s underwriters are surety bond "specialists". We offer both surety and fidelity bonds needed by local, state and federal government entities in all fifty states, Puerto Rico and the U.S. Virgin Islands. Questions about a plugging or reclamation bond? Call us at (800) 373-2804, email us at Underwriting@SuretyOne.com or click here for live chat (no "bots").

Surety bond application review and quoting are free of charge. There is no obligation to purchase.

What We Need From You

Additional Attachments

  • Current Business Financial Statement(s)
    Previous full fiscal year + current year to date
    *Must be CPA prepared if bond over $50,000
  • Copy of ALL correspondence between the applicant and the state environmental agency
  • Current liability insurance policy/certificate
  • Key personnel resumés demonstrating experience in the extraction/exploration sector
  • If there have been ANY regulatory actions (sanctions, etc.) against the owner/operator or any of his/her companies, a full disclosure with supporting documents