WyoFile editor-in-chief Dustin Bleizeffer writes in the Wyoming Energy Blog about a failed effort to increase the minimum bond-on requirement for oil and gas companies wishing to develop minerals on split-estate lands from a minimum $2,000 per well to $10,000. The issue tests the reality of good-faith negotiations between landowners and mineral developers.
Usually, the oil and gas developer strikes a “surface use agreement” with the surface owner, which involves paying a fee to the surface owner for damages and loss of permanent or temporary use of the surface.
But Schiffer and others argued that some developers have figured out it’s easier, and cheaper, to not actually negotiate in good-faith and simply post the $2,000 bond. The surety (not the full dollar-amount) resides with the Wyoming Oil and Gas Conservation Commission, which can cash it in to pay for the cost of clean-up in the event the developer doesn’t meet reclamation requirements.
In this scenario, the surface owner still receives no “surface damage” payment. Schiffer and advocates of the bill said that by raising the minimum bond-on requirement to $10,000, more developers would be enticed to actually strike a surface use agreement resulting in some payment to the surface owner.
“We know that the chance of something happening is minimal, and if it is indeed minimal, then why the concern (about raising the bond),” said Patricia Hawk, a surface owner from Laramie County.