Bonds
Bond Requirements
A Plugging Bond is required to be in force for a well from the time an application is submitted until the well is plugged and abandoned or transferred to another operator. Commercial wells are also required to have a Reclamation Bond (see below).
Acceptable Bond Instruments
The Oil & Gas Program accepts four types of bond instruments:
- Cash bonds. Please make all checks payable to the Tennessee Department of Environment & Conservation.
- Letters of Credit. Please follow all guidance in the Guidelines for Letter of Credit to ensure the instrument meets the criteria for bonding.
- Certificates of Deposit. Please follow all guidance in the State Oil & Gas Program Certificate of Deposit Guidelines to ensure the instrument meets the criteria for bonding.
- Surety Bonds. Please follow all guidelines in the Surety Bond Guidance Language for Oil and Gas Wells and Class II UIC Wells to ensure the instrument meets the criteria for bonding.
Prior to submitting a Letter of Credit, Certificate of Deposit, or Surety Bond, the Oil & Gas Program is available to review the documentation to ensure all requirements are met. Please contact the Oil & Gas Supervisor if you would like to have your bonding instrument reviewed prior to submittal.
Bond Release
Bonds are held in perpetuity by the State until the well is transferred to another operator or plugged and reclaimed. After an approved transfer, plugging and reclamation bonds are eligible to be returned to the old operator. After well plugging, the plugging bond is eligible to be returned immediately. Reclamation bonds are held for two growing seasons or upon submittal of a landowner affidavit stating they are satisfied with the reclamation work. The Oil & Gas Program must receive and process all proper paperwork prior to bond release.
To request the release of bond money, please contact the Oil & Gas Supervisor in writing with the permit number, bond amount, bond type, and current address. Please allow four to six weeks for final release.
Bond Amounts
Bond amounts are prescribed by the classification and depth of the well. Use the tables below to determine the bond amount based on these criteria for each well to be permitted.
Reclamation Bond
Each commercial well is required to have a $1,500 reclamation bond. Wells that are classified as Non-Commercial Domestic Gas wells do not have to post a reclamation bond.
Single Well Plugging Bonds – Commercial Wells
| Total Depth | Bond Amount |
|---|---|
| 0' – 2,500' | $2,000 |
| 2,501' – 5,000' | $3,000 |
| More than 5,000' | $3,000 plus $1 per foot for every foot deeper than 5,000' |
Single Well Plugging Bonds – Non-Commercial Domestic Gas Wells
| Total Depth | Bond Amount |
|---|---|
| 0' – 2,500' | $1,500 |
| More than 2,500' | $1,500 plus $1 per foot for every foot deeper than 2,500' |
Blanket Well Plugging Bonds
Blanket well plugging bonds are available for up to 10 wells.
| Total Depth | Bond Amount |
|---|---|
| 0' – 5,000' | $20,000 |
| 5,001' – 10,000' | $30,000 |
| More than 10,000' | No blanket bonds allowed |
| Contact | Phone | |
|---|---|---|
| Oil & Gas Program | (865) 594-6035 | TDEC.OilAndGas@tn.gov |
| George Stephens, Supervisor | (865) 221-3214 | George.Stephens@tn.gov |
| Elaine Foust, Geologist | (615) 476-0489 | Elaine.Foust@tn.gov |