Utah Board of Oil, Gas and Mining

Draft Bond Rule

Summary:

The existing rules are over two decades old, and the number of documented orphan wells is increasing, along with their plugging costs. The draft rule aims to provide operators with tools to manage their bond amounts based on operational risks and production, potentially reducing the state's financial liability. This involves a tiered bonding system and considers factors like production levels and well risk ratios, ultimately striving to better manage funds for plugging and abandoning wells better serving the state and industry.

Division Presentation to the Board:

Submit Public Comment

Public comment closed April 16th, 2025, end of business day.

Public CommentDivision Response
This bonding increase will have the opposite effect you intend. Based on the DNR presentation, DOGM may have 38 orphaned wells. That's a very small number. I'd argue if there are only 38 potential orphans, DOGM doesn't have an orphaned well problem. If you pass these increased bond rules, you'll instantly have around 1,000 orphaned wells. Small operators can't afford bond increases of this magnitude. The unintended consequences of this rule will be staggering. If you pass this bonding increase, prepare to be the proud owner of hundreds and hundreds of newly orphaned wells.We appreciate your engagement in this rulemaking process and encourage continued participation as we work to develop a regulatory framework that protects the state while remaining mindful of industry realities. The Division understands that bonding requirements can have an impact on operators, particularly smaller operators, and we are committed to approaching this issue with care and balance. To help address potential financial burdens, the Division has drafted rule language that includes a phased implementation of bonding increases over a five-year period. This extended timeline is intended to ease the transition and allow operators to plan and adjust accordingly. Additionally, the draft rules include a provision allowing operators to petition the Board for an alterative bond amount.