Petroleum Association Says It Supports Bonding Increase

Feb 17, 2014

The Senate Minerals Committee approved a bill Monday that would increase the amount of money oil and gas operators have to put up before accessing split estate properties.

A split estate is when a private landowner owns the surface land and not the mineral rights. The bill raises the minimum bonding amount from $2,000 to $10,000. The bond covers any damages to the property from development, when a surface use agreement can’t be negotiated.

In a reversal of its previous position, the Petroleum Association of Wyoming now says it supports a slight increase in the bond amount.

Petroleum Association executive director Bruce Hinchey testified that he understands that well pads today are bigger than when the law was first passed, in 2005.

“So we certainly feel a higher bonding level would be necessary," Hinchey said. "We don’t know that $10,000 is the right number. We think a smaller number might be appropriate."

Senator Jim Anderson of Glenrock, who sponsored the bill, countered that it isn’t enough to just take into account the acreage affected when setting the bond amount.

“There's a lot more to surface disturbance than just grass,” Anderson said.

He cited dust problems, road construction and other issues that are often addressed in surface use agreements, but which aren't considered in the current bonding amount.

The committee ultimately rejected an amendment that would have set the bonding amount at $6,000. The bill moves to the full Senate for further discussion.