|
|
Surety Requirements For
Oil and Gas Operators
All operators of oil and gas and/or
service wells are required by State Statute to provide to the Oklahoma
Corporation Commission (OCC) surety in the form of either a bond, letter of
credit, certificate of deposit, cashier's check or other negotiable instrument
in the amount of $25,000 in U.S. dollars.
The rules of the OCC state that "any
person who drills or operates any well for the purpose of exploration,
development or production of oil or gas, or as an injection or disposal well,
within this State, shall furnish in writing, on forms approved by the
OCC, an agreement to drill, operate and plug wells in compliance with the rules
and regulations of the OCC and the laws of this state, together with evidence of
financial ability to comply with the requirements for plugging, closure of
surface impoundments, removal of trash and equipment as established by the rules
of the OCC an by law." [52 O.S. 318.1] Any operator violating this
Section shall be fined $500 and face having all of the operator's wells shut
down without a hearing, notice or order of the OCC. The wells of any such
person violating these provisions shall remain shut-in for non-compliance until
the required evidence of surety is obtained and verified by the OCC. To
establish evidence of financial ability, the OCC shall require one of the
following for operator's with less than 3 years of registration with the OCC:
-
BOND - Form 1006: $25,000 in U.S. dollars. The bond shall be issued
for a minimum of one year in length and issuing agent must be recognized by the Oklahoma State Insurance Commission. This form must
be accompanied by a Form 1006B.
-
Letter Of Credit - Form 1006C: $25,000 in U.S. dollars issued for a
minimum of one year. It can be issued for longer periods if so stated. Issuing agent must be recognized by the Oklahoma
Banking Association. This form must be accompanied by a Form 1006B.
-
Certificate Of Deposit - (CD): $25,000 in U.S. dollars issued for a
minimum of one year, but can be for an indefinite period. Usually the CD is with an automatic renewal. The CD must be made out
in the following manner: "(NAME OF THE OPERATOR AND OKLAHOMA CORPORATION OR OKLAHOMA CORPORATION COMMISSION". A copy of the CD
and a Form 1006B must be provided to the OCC. Please setup your CD with the bank in such a way that the interest earned is diverted to
a separate account accessible only to the operator. Issuing agent must be recognized by the Oklahoma Banking Association.
-
Cashier's Check:
$25,000 in U.S. dollars made out in favor of the OCC. The cashier's
check must be accompanied by the Form 1006B.
-
Negotiable Instruments:
For other types of negotiable instruments, please contact the Surety
Department of the OCC.
-
Form 1006B - Operator's Agreement To Plug Oil, Gas and/or Service Wells Within
The State Of Oklahoma: This form must be submitted
along with any of the above mentioned types of surety. This form must
be submitted on an annual basis irregardless of the type of surety being
provided. The operator shall furnish the names and addresses of all
officers, board of directors and/or any other persons that are involved
with the day to day operations of the entity.
All forms submitted to the OCC
concerning Surety must be delivered on OCC approved forms and must contain
original signatures. NO FAXED COPIES WILL BE ACCEPTED.
ALL FORMS MUST BE COMPLETED IN INK.
Upon receipt and approval of
surety, an Operator's Number will be assigned. This operator number
will be used on all forms submitted to both the OCC and the Oklahoma Tax
Commission. All forms must show the operator's name exactly as it is
on the filed documents (i.e.: "John Q. Public" not just "John Public").
Any changes in an operator's Federal Employer Identification Number may
require an operator to receive a new operator number, questions concerning
the change in an FEI number should be directed to either the OCC Surety
Department or Taxpayer Assistants at the Oklahoma Tax Commission.
If the address of the Operator
changes, it is required by the OCC rule OAC 165:10-1-16 to notify the OCC
in writing on Company's Letterhead within 30 days after the change has
occurred.
It is the responsibility of the
operator to remember to renew their surety on an annual basis.
The OCC Rules Book is available
for $20.00 for a hard copy or you can go to the OCC web site and download
it for free. We encourage all operators to obtain one and familiarize
yourself with the rules. This can be done in writing, and must
include a check made out to:
Oklahoma Corporation Commission
Attn: Well Records Department
PO Box 52000
Oklahoma City, OK 73152-2000
Requests for individual
specific forms can be directed to the same above address in writing or by
calling 405-521-2271 or 405-521-2275 or by visiting the OCC website.
The Well Records Department can
also be of help with the Form 1073 "Transfer of Operatorship". They
may be reached at the above listed phone numbers or you can mail your
completed forms to the above mentioned address.
The Surety Department can be
reached at 405-521-2246 or 405-522-6196.
The UIC Department (concerning
MIT Tests and/or Form 1073I)can be reached at 405-521-6296.
The Oklahoma Secretary of State
can be reached at 405-521-3912.
The Oklahoma Tax Commission can
be reached at 405-522-5883 or 405-522-5884.
|
