Oklahoma § 52-318.1 - Agreement as to compliance with drilling and plugging

§ 52-318.1. Agreement as to compliance with drilling and plugging

regulations - Evidence of financial responsibility - Bond - Cost of

plugging - Notice - Remedial operations.

A. Any person who drills or operates any well for the

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 Corporation Commission, his or her

agreement to drill, operate and plug wells in compliance with the

rules of the Commission 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 Commission and by law.

To establish evidence of financial ability, the Commission shall

require:

1. Category A surety which shall include a financial statement

listing assets and liabilities and including a general release that

the information may be verified with banks and other financial

institutions. The statement shall prove a net worth of not less

than Fifty Thousand Dollars ($50,000.00). Category A surety will no

longer be accepted as valid form of surety for new operators to

select beginning November 1, 2025. All current operators who have

valid Category A surety and are in good standing with the Commission

will be able to retain their Category A surety for the time they are

a valid operator in the State of Oklahoma; or

2. Category B surety which shall include an irrevocable

commercial letter of credit, cash, a cashier's check, a Certificate

of Deposit, other negotiable instrument, or a blanket surety bond.

Except as provided in paragraph 1 of subsection B or subsection C of

this section, amount of such letter of credit, cash, cashier's

check, certificate, bond, receipt or other negotiable instrument

shall be based on the number of wells that the person operates as

follows:

a.

for one to ten wells, Twenty-five Thousand Dollars

($25,000.00),

b.

for eleven to fifty wells, Fifty Thousand Dollars

($50,000.00),

c.

for fifty-one to one hundred wells, One Hundred

Thousand Dollars ($100,000.00), and

d.

for more than one hundred wells, One Hundred Fifty

Thousand Dollars ($150,000.00).

The Commission is authorized to determine a higher amount of

Category B surety based upon the past performance of the operator

Oklahoma Statutes - Title 52. Oil and Gas

and its insiders and affiliates regarding compliance with the laws

of this state, and any rules promulgated thereto including but not

limited to the drilling, operation and plugging of wells, closure of

surface impoundments or removal of trash and equipment, provided

that such higher amount shall not exceed One Hundred Fifty Thousand

Dollars ($150,000.00). Any instrument shall constitute an

unconditional promise to pay and be in a form negotiable by the

Commission.

B. 1. The Commission upon certification by any operator

subject to Category B surety that its plugging liability statewide

is less than the amount based on the number of wells operated as

specified in this section may allow said operator to provide

Category B type surety in an amount less than the amount required by

this section, but at least sufficient to cover the estimated cost of

all plugging, closure, and removal operations currently the

responsibility of that operator. The liability certification

referred to in this subsection shall take the form of an affidavit

from a licensed well plugger estimating the costs of all plugging,

closure, and removal operations of the operator requesting such

relief. This alternative amount shall be modified upward upon the

assumption of additional operations by such operator, the maximum

amount of Category B surety to be posted not to exceed One Hundred

Fifty Thousand Dollars ($150,000.00).

2. New operators, operators who have outstanding fines or

contempt citations and operators whose insiders or affiliates have

outstanding contempt citations or fines as of June 7, 1989, shall be

required to post Category B surety.

3. Operators using Category A surety who are assessed a fine of

Two Thousand Dollars ($2,000.00) or more and who do not pay the fine

within the specified time shall be required to post a Category B

surety within thirty (30) days of notification by the Commission.

C. For good cause shown concerning pollution or improper

plugging of wells by the operator posting either Category A or B

surety or by an insider or affiliate of such operator, the

Commission, upon application of the Director of the Oil and Gas

Conservation Division, after notice and hearing, may require the

filing of additional Category B surety in an amount greater than

Twenty-five Thousand Dollars ($25,000.00) but not to exceed One

Hundred Fifty Thousand Dollars ($150,000.00).

D. If the Commission determines that a blanket surety bond is

required, the bond shall be conditioned on the fact that the

operator shall cause the wells to be plugged and abandoned surface

impoundments to be closed, and trash and equipment to be removed in

accordance with the laws of this state and the rules of the

Commission. Each bond shall be executed by a corporate surety

authorized to do business in this state and shall be renewed and

Oklahoma Statutes - Title 52. Oil and Gas

continued in effect until the conditions have been met or release of

the bond is authorized by the Commission.

E. The agreement provided for in subsection A of this section

shall provide that if the Commission determines that the person

furnishing the agreement has neglected, failed, or refused to plug

and abandon, or cause to be plugged and abandoned, or replug any

well or has neglected, failed or refused to close any surface

impoundment or removed or cause to be removed trash and equipment in

compliance with the rules of the Commission, then the person shall

forfeit from his or her bond, letter of credit or negotiable

instrument or shall pay to this state, through the Commission, for

deposit in the State Treasury, a sum equal to the cost of plugging

the well, closure of any surface impoundment or removal of trash and

equipment. The Commission may cause the remedial work to be done,

issuing a warrant in payment of the cost thereof drawn against the

monies accruing in the State Treasury from the forfeiture or

payment. Any monies accruing in the State Treasury by reason of a

determination that there has been a noncompliance with the

provisions of the agreement or the rules of the Commission, in

excess of the cost of remedial action ordered by the Commission,

shall be credited to the Oil and Gas Revolving Fund. The Commission

shall also recover any costs arising from litigation to enforce this

provision. Provided, before a person is required to forfeit or pay

any monies to the state pursuant to this section, the Commission

shall notify the person at his or her last-known address of the

determination of neglect, failure or refusal to plug or replug any

well, or close any surface impoundment or remove trash and equipment

and said person shall have ten (10) days from the date of

notification within which to commence remedial operations. Failure

to commence remedial operations shall result in forfeiture or

payment as provided in this subsection.

F. It shall be unlawful for any person to drill or operate any

oil or gas well subject to the provisions of this section, without

the evidence of financial ability required by this section. The

Commission shall shut in, without notice, hearing or order of the

Commission, the wells of any such person violating the provisions of

this subsection and such wells shall remain shut in for

noncompliance until the required evidence of Category B surety is

obtained and verified by the Commission.

G. If title to property or a well is transferred, the

transferee shall furnish the evidence of financial ability to plug

the well and close surface impoundments required by the provisions

of this section, prior to the transfer.

H. As used in this section:

1. "Affiliate" means an entity that owns twenty percent (20%)

or more of the operator, or an entity of which twenty percent (20%)

or more is owned by the operator; and

Oklahoma Statutes - Title 52. Oil and Gas

2. "Insider" means officer, director, or person in control of

the operator; general partners of or in the operator; general or

limited partnership in which the operator is a general partner;

spouse of an officer, director, or person in control of the

operator; spouse of a general partner of or in the operator;

corporation of which the operator is a director, officer, or person

in control; affiliate, or insider of an affiliate as if such

affiliate were the operator; or managing agent of the operator.

Added by Laws 1971, c. 25, § 1, emerg. eff. March 22, 1971. Amended

by Laws 1983, c. 91, § 1, eff. Nov. 1, 1983; Laws 1984, c. 117, § 1,

eff. Nov. 1, 1984; Laws 1986, c. 310, § 4, operative July 1, 1986;

Laws 1987, c. 45, § 1, emerg. eff. April 24, 1987; Laws 1989, c.

381, § 3, emerg. eff. June 7, 1989; Laws 1991, c. 332, § 9, eff.

July 1, 1991; Laws 1992, c. 362, § 2, emerg. eff. June 4, 1992; Laws

1997, c. 275, § 11, eff. July 1, 1997; Laws 2025, c. 24, § 1, eff.

Nov. 1, 2025.

§52-318.1a. Confidentiality of financial statement.

Pursuant to the Oklahoma Open Records Act, the Commission is

authorized to provide for the confidentiality of any financial

statement filed pursuant to Section 318.1 of Title 52 of the

Oklahoma Statutes. Copies of such financial statements may only be

obtained upon written request to the Director of the Oil and Gas

Division. Upon good cause shown, upon the discretion of the

Director, copies of such financial statements may be released.

Added by Laws 1987, c. 45, § 2, emerg. eff. April 24, 1987.