Colorado Oil or Gas Well or Plugging Operator Bond
What is a Colorado Oil or Gas Well Operator or Plugging Bond?
The Colorado Oil and Gas Conservation Commission (COGCC) requires that well operators post financial assurance guarantees in the form of a cash or surety bond. Currently operators with fewer than 100 wells are required to post a $60,000 bond and operators with more 100 or more wells will post a $100,000 bond.
New rules for bond amounts will go into effect under Colorado’s SB 19-181. Instead of fixed amounts of $60K and $100K, operators will have a sliding scale based on the number of wells. Operators with fewer wells will have a higher per well bond amount and the per well amount declines for operators with more wells. Hypothetically, an operator with 20 wells may be required to have a bond of $12,000 per well for a bond total of $240,000 whereas an operator with 2,000 wells may be required to post a bond of $3,000 per well for a bond total of $6,000,000. (These numbers are for example only based on the current draft of regulation changes at the time of writing).
COGCC has produced this fact sheet regarding the new financial assurances required.