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What's New: Advocacy

SFAA Cautions Alaska Agency on the Impact of High Bond Amounts for Oil and Gas Well Permits

Friday, September 21, 2018  

SFAA Cautions Alaska Agency on the Impact of High Bond Amounts for Oil and Gas Well Permits

SFAA wrote to the Alaska Oil and Gas Conservation Commission (Commission) to explain the impact of a proposed increase to the bond amount required for a permit for an oil or gas well. Under current regulations, the bond must be for $100,000 for a single well or for $200,000 to cover all wells in the State. The proposed rules would establish a schedule for the required bond amounts based on the number of wells in an amount ranging from a minimum of $500,000 to a minimum of $30 million. SFAA did not take a position on the specific bond amount, but we explained the surety’s underwriting process and the relationship between the bond amount and its availability. The higher the bond amount is, the higher the surety’s financial threshold likely will be for the bond principal to qualify for the bond. We advised the Commission to consider the impact of the proposed rules on the availability of the bond given these factors.

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