20 AAC 25.025. Bonding

(a) An operator proposing to drill a well for which a permit is required under 20 AAC 25.005 shall file a bond and, if required under (2) of this subsection, security to ensure that each well is drilled, operated, maintained, repaired, and abandoned and each location is cleared in accordance with this chapter. The bond must be

(1) a surety bond issued on Form 10-402A in favor of the Alaska Oil and Gas Conservation Commission by an authorized insurer under AS 21.09 whose certificate of authority is in good standing; or

(2) a personal bond of the operator on Form 10-402B accompanied by security guaranteeing the operator's performance; security must be in the form of a certificate of deposit or irrevocable letter of credit issued in the sole favor of the Alaska Oil and Gas Conservation Commission by a bank authorized to do business in the state, or must be in another form that the commission determines to be adequate to ensure payment.

(b) A bond and, if required, security must be in the amount of not less than $100,000 to cover a single well or not less than $200,000 for a blanket bond covering all of the operator's wells in the state, except that the commission will allow an amount less than $100,000 to cover a single well if the operator demonstrates to the commission's satisfaction in the application for a Permit to Drill (Form 10-401) that the cost of well abandonment and location clearance will be less than $100,000.

(c) A bond and, if required, security must remain in effect until the abandonment of all wells covered by them and until the commission approves final clearance of the locations. The commission will then release the bond and security upon written request of the operator.

(d) Payment under a surety bond or security does not relieve an operator from the requirements of AS 31.05 and this chapter except to the extent that a default is actually cured, or from any liability under AS 31.05.150 .

History: Eff. 4/13/80, Register 74; am 4/2/86, Register 97; am 11/7/99, Register 152

Authority: AS 31.05.030

AS 31.05.150

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