On March 2, Congressman Alan Lowenthal (D-CA-47) introduced the Bonding Reform and Taxpayer Protection Act to increase the bond amount oil and gas companies are required to post before drilling on federal land for oil and gas resources. The bond acts as a form of financial assurance that an operator will clean up, or reclaim the well site after a well ceases operation. Once a well is properly reclaimed, the bond is returned. However, the bond minimums today are so low that it is cheaper for oil and gas companies to forfeit the bonded amount than clean up their wells, and taxpayers end up paying for the cost of reclamation. The new bill is an important step towards ensuring oil and gas companies, not taxpayers, pay to reclaim abandoned wells.
A fact sheet with more information on oil and gas bonding is available for download here and viewable below.